I’ve been writing a series of posts on business plans – why you need one, how to write one, the importance of mission and vision, etc. I wanted to talk about it on the podcast because it’s a topic that comes up all the time.
If you’re starting a new business, creating a new division in your company or launching a new product, you need to know the ins and outs and be able to explain every detail of the new venture. Many entrepreneurs write a business plan for an investor, which I don’t recommend. Instead, I think a business plan should exist to answer questions like:
- What are the start-up costs?
- What’s the viability of the product, service or company?
- Define the product, services, customers and competition.
- What’s the vision? Where are we going and what does it look like when we get there?
- What’s the mission? When, why and how are we going to accomplish the mission?
- What are the goals? Goal setting isn’t dreaming. Goal setting is the actual plan and steps to accomplish the vision.
- What’s the selling strategy? What are we selling and who are we selling to?
- What’s the marketing platform? Who’s the right customer? Do we understand the customer? What kind of market research has been done?
- Who’s doing the work? Are you utilizing sub-contractors or hiring employees?
- What is your budget? Do you have a sample profit and loss for the next 90 days, 6 months, and year?
These are all important questions you must answer and understand. Once that information is outlined and in place, then you can move forward. If you would like help with the process or anything else when it comes to operating your business, check out the What We Do tab and go to the Coaching page. We can schedule a time to get together over Skype or in person if you’re in the Nashville area.
Why You Should Write A Business Plan
Many of you have asked about how to write a business plan so today we start with the WHY.
While some businesses make it without a business plan, I’ve seen a TON of businesses close their doors because they never had a plan to begin with.
You’ve heard the old saying, “Few people plan to fail, but many fail to plan.” So have a plan!
For me, there are three main reasons to write a business plan. Ok, there’s a fourth, but you’ll see my response below.
Definition– Start by defining a few things:
- Product or Service – What in the world is it that you’re planning on doing? You have to be able to completely define what the product or service is, what it does, how it’s used, etc. If the customer can’t understand it, they surely won’t buy it.
- Customers – You would be shocked at the number of highly profitable corporations that have launched products that nobody wanted. Hello, New Coke circa 1985. Everyone has an idea that is their baby. The problem is, not everyone thinks it’s cute. Do a lot of market research to find out if people even want to purchase your baby…uhhh, product.
- Competition – It’s not enough to have a great product idea, you have to know if anyone else had a great idea too. Is your idea going to catch fire more than what’s out there? If you run up against someone who already has a foothold, you might find your incredible idea struggling to get any attention. Does anyone remember Betamax?
By definition, viability is having the ability to live and grow normally. Can the product or service you have grown because of demand, or will it just be a flash in the pan?
Way too many times I see people want to launch a product because of the “perfect storm” moment, only to realize by the time it gets to market, the storm has changed direction.
You have to be able to forecast your Product Life Cycle to the best of your ability. This can be both stunning and comforting at the same time.
It doesn’t matter how great your product idea is if you have no clue how much it will cost to get it to a sellable model. It’s vital for you to think through every possible cost on the front side, before going into production. It’s hilarious how the standard of building a house is to give the customer a budget, and then go 30% over. Everyone in the construction community understands that but the customer.
I’ve coached a few entrepreneurs who started building their businesses before counting the cost, only to come to a screeching halt due to a lack of funds. It happens a lot in the restaurant world.
Oh heck no. I’m not going to give you the financing as a reason why to write a business plan. If you have to borrow or get venture capital, then start your business plan with, “This will most likely cause me a great deal of pain, stress, pain, anxiety, and PAIN!”
So, those are just a few reasons WHY you need to write a business plan. Understanding these aspects, in the beginning, could be the difference between moving forward or not, as well as succeeding or not.
We’ve been in a series on business plans and have covered:
Question: Where do you get stuck when it comes to creating a business plan?