The age-old adage is true: if you fail to plan then you’re planning to fail. Your business’s success depends on a plan.
Unfortunately, plans and passion are rarely seen as compatible. Often, they’re mutually exclusive. The passionate entrepreneur – eager to start a business – forgoes a plan. The business may flounder or it may succeed. Even if it does succeed, chances are it may not succeed for long.
Planning your business is one of the best ways you can create a likelihood of success.
Using both kinds of plans will help you.
The back-of-an-envelope business plan is likely going to be your first go/no-go decision-making device. It’s a thumbnail estimation of the viability of your business. I don’t know how many of these I’ve done over the years as I start businesses. I’ll get a good idea and think to myself “I like it, but is it viable?” A few minutes of scratching out on a scrap piece of paper will tell me yes or no.
For example, a great business idea might suddenly spring to mind but a few minutes with a calculator and a piece of paper would reveal that I have to sell an unrealistic number of units to be profitable. However, if a business passes the “go/no-go” back-of-the-envelope test, then it’s time to start a formal business plan document. The formal document is your second go/no-go test of business viability. Having the smaller test first ensures that you won’t kill the passion you have for starting a business each time you get an idea.
This is where you find a business plan template for a business model similar to the one you’re considering and you start filling in the spaces. This formal business plan is the one you’ll use to shop around for investors and it will be the one you’ll turn to when you need to find your North Star again. A good business plan should contain:
1. Executive Summary
2. Objectives
3. Mission
4. Keys to Success
5. Company Summary
6. Products
7. Market Analysis Summary
8. Strategy and Implementation Summary
9. Management Summary
10. Financial Plan
Once you have a business plan, and a business, then what?
I see a lot of business plans created then left on the shelf once the business is running. But yesterday’s business plan can help you to do business today, and tomorrow. Remember: your business plan may be a formal document, but it is a living document. That means that you need to keep it changing and updated as regularly as possible. Is there something that changes with your niche market? Add it into your business plan and consider the necessary changes to your business model. Has your wholesale price increased? You’ll want to recalculate the projections in your business plan. Is there new competition in town? Include them in your business plan and recalculate the impact. It is only when you make the conscious effort to consider the market’s impact on your business will you be able to make good choices to steer your business.
Keep your business plan readily available and turn to it regularly. Use it to help you make good decisions. When you do that, you’ll ride high when times are good and you will minimize the times that are tough.
