Success isn’t something that just happens; it’s planned for ahead of time. One of the key ways to create success in your business is to write up a business plan. For every business you intend to create, each one should have its own unique business plan. A business plan isn’t just a document that shows others how you intend to create your business, it’s also a financial and strategizing tool that will help your business succeed. When your investor wants to hear your “big business idea” you can pull it out and let them get down to the details, upping your chances of getting financial backing. When your business opens, your business plan will already have in it, the crucial ways you differ from your competitors and how you plan to exploit those differences for financial gain. At the end of the year, you can compare your projections to the actual results to provide insights in how to make your business even better the following year.
Think Your Business Idea Through First
A good business plan will force you to look at your business idea with an objective eye. According to The Huffington Post it will cover: an executive summary, a market analysis, the company description, how you intend to set up your organization and management, what types of marketing and sales strategies you will use to build up your business, what services or products you will offer, how much money you will need to get started, and the projected financials from three to five years in the future. All of these details needed to create a business plan will make you research current data to see if your business idea even has a shot at working. If you find there is little market for it or the costs would be exorbitant, you might have to either give up, or tweak the idea a little more to make it profitable.
Run the Numbers Ahead of Time
A business plan will include specific goals, financial and otherwise, in the short-term as well as in the long-term. This will give you some idea whether you are going in the right direction or falling behind. It can be the warning signal that helps you create course corrections when things start to go wrong. According to the Gilkey Restaurant Consulting Group, “by running the numbers ahead of time, you will be able to gauge the health of your business with metrics that don’t lie. If your numbers don’t add up, then it hints that you’ve made some errors in the business plan, whether it’s from competitive strength or market niche. If you have estimated these correctly, without glossing over competition in the marketplace, those numbers that you determine ahead of time can also help you sell your business idea to venture capitalists too.”
Getting to the Bottom Line
What most lenders want to see (when you come looking for a loan) is your business plan. Since you have no record of prior performance, the business plan is the one document that will determine whether your business idea has merit or not. It will be weighed heavily against your ability to repay the loan. If you need a lot of upfront cash to even start a business, you will need a business plan to get a traditional loan through any bank or to convince a venture capitalist to fund your venture. In this way, a business plan is an essential part of any business success. A good business plan generates support and financial backing, while also helping you plan to succeed via measurable metrics that you can compare to at the end of the first year in business or beyond.
Tribby, M. Huffington Post (2013) The Eight Key Elements of a Successful Business Plan and How to Make Them Work for You. Retrieved from: http://www.huffingtonpost.com/maryellen-tribby/the-eight-key-elements-of_b_3623800.html
Lavinsky, D. Forbes (2013) Writing a Business Plan: 5 Keys to Your Success. Retrieved from: http://www.forbes.com/sites/davelavinsky/2013/08/19/writing-a-business-plan-5-keys-to-your-success/