Business Planning – What Works and What Doesn’t?
Creating a Viable Business Planning Strategy
New owners of businesses should feel compelled to engage in the business planning process, whether they are starting a brand new venture or taking over one that is already up and running. Anyone who fails to take this all important step – akin to jumping out of an airplane before making sure that your parachute is working properly – is in for a big surprise at the end of that journey. A business plan makes good sense for so many reasons, but primary among them is the fact that no one will loan you money unless a formal, written business plan is available – and one that realistically examines the pros and cons of your enterprise. In its most basic form, a business plan serves two functions. First, it must convince a banker or some other investor that your enterprise is worth their effort to put money into it. Second, and more importantly, it is the master blueprint you will follow to achieve your financial success.
Business Plan Process: Small Goals Lead to Greater Achievements
There are some simple goals that every business owner shares. They want to build an honest business that makes them proud to own it. They want to make a comfortable living commensurate with the effort they expend. They want to build something for the future. They also believe in the product or service they are offering for sale, convinced that it will improve the lives of their customers in some large or small way. Your business plan does not need to be hundreds or even dozens of pages long – unless you’re building the next Intel or Microsoft, in which case, best of luck! Anywhere from four to ten pages should be enough to get your point across, both to your investors and yourself, especially if your goals are small and easily attainable early on.
The Business Planning Process
By setting clear goals, you will create a story that is compelling to read and easy to implement. The business planning process should begin by asking and answering these questions:
- Why am I planning to start or acquire this business?
- Who will run the company – including partners and co-owners – and how does any of their previous experience benefit them in the role(s) they will play?
- Who are my customers, and why will they be interested in my product or service?
- Who is the competition, and why will my business be better?
- What sort of market share do I expect to achieve over what period of time, and what steps will I take to meet that goal?
- What form will my advertising take, how much will it cost, and what level of business to I hope to capture through its use?
- How will I measure my progress – what milestones have I created and when do I expect to reach each of them?
- What are my expected profits during the first “x” years of business, and how do I plan to use them?
- What is my exit strategy?
A Business Planning Guide: Stay Flexible and Pay Attention to What Works
The ideal business plan is a living document. Sure, it serves a purpose at the beginning of the process to guarantee that you will have enough capital on hand to get things started and keep them going. But business practices change over time, the competition never stands still, and the public’s mood is a fickle thing. Imagine that you had opened a coin-op video game arcade in 1982. Would you be in business today under that same business planning model? “Not bloody likely,” as the Brits are fond of saying. It only makes good business sense to use current market trends, your improved financial situation, and those ever-fascinating “intangibles” to help you move forward as a business owner. Toss out what is not working and adapt to plans and procedures that will work. Your business will flourish as a result.
If you don’t know where your new business will be in five years, how can you expect to write a credible business plan?