CREATING A BUSINESS PLAN: WHY YOU SHOULDN’T WING IT
Which of these groups would win a race from Los Angeles to New York City?
Group one decides to wing it and starts walking east along the I-10, hoping that it they just keep at it, they’ll make it there first. And they are indeed in first place for about an hour.
Group two hops into a car together and starts driving without really knowing where I-10 goes. They agree that as long as the signs say “east” they’ll make it. They finally end up in Florida after a harrowing six days on the road.
Group three spends the entire first day in Los Angeles with Google maps, charting every gas station and faster back road, every wi-fi dead zone, every toll plaza and road construction project. Four days later, they emerge from the Lincoln tunnel with high fives and stop to gawk at Times Square.
…Group one is never heard from again.
Learn from those who have been this way before. Charting your course before you run into trouble will help you weather the storms in way better shape than those without a plan. In other words…
DON’T WING IT!
Why Produce a Business Plan?
Your business plan will help you to determine feasibility, organize resources, and marshal the resources you need to make your new venture fly. Business plans are essential if you want to attract funding, win regulatory approval, or pitch your concept to initial clients.
Still not sold? Here are a few more reasons to stop right now and work on your plan.
Creating a business plan keeps all stakeholders on the same page
Even the most basic processes are completely new for a fledgling business, and the decisions you make about how to operate will resonate in your company culture for a long time. When it’s time to hand off responsibility to others on a team, your plan can be a huge help. A detailed business plan helps to keep everyone involved and pointed in the same direction— one less thing to worry about!
It helps you know what to expect
When was the last time a new project or product rolled out with zero hiccups? Did you have a plan for maintaining scope, schedule and budget? Or did you process each as they arose and hoped for the best? While no one can predict the future, there are certainly aspects of your business that you can plan for. Even having a reserve in your product launch for those for the potential unknowns that eat your time and budget takes a little planning.
Do you know how to deal with innovative competitors and manage complex financials while keeping an eye on the right key performance indicators? Do you know what the right key performance indicators are? A comprehensive business plan will alert you to what you need to know and manage at each stage so that you can prepare yourself in ways that would be impossible if you blindly dive right in.
Your business plan commits you to a definite course of action
When starting a new business from scratch, you will probably have dozens of concepts that you could implement and hundreds of possible directions to go with each concept. Making a business plan commits you and your team to a definite and final plan of action that is agreeable to everyone from the beginning. Indecision can be a killer.
A business plan keeps you away from dead ends
Sometimes our dreams exceed our resources. As you craft a business plan, you will be forced to address the limitations and risks associated with your concept. While doing your research, you may discover roadblocks that are impossible to overcome, and your planning will have saved you from spending years working toward an unattainable goal.
What’s in a Business Plan?
A typical business plan has these elements:
This is a quick summary of everything in the plan. It’s a one page, at a glance, summary. Do this last.
- The nature of your business— why is the business necessary, what problems does it solve?
- A general industry overview and your place in it
- Product or service descriptions and how they are different from other similar products or services?
- Legal and financial structure (sole proprietor? LLC? Incorporated?).
Mission, Vision and Values
Details the foundation of your business. This is where you’ll outline ‘Your WHY’.
Who are your best customers and why? What are the historical and projected trends in your industry? What competition is already in your space?
You have to know your competition as well as you know your own business. How will you beat your competition on consumer cost? What else can you do better than your competitors? What segments do you hope to dominate?
Suppliers, production, facilities, equipment, shipping, inventory— all the factors that go into delivering your product or service.
What debt do you need to incur and how will you pay it back? Detail your expenditures (the cost of doing business). This is also where you’re going to forecast your sales. Include balance sheets, your cash flow plan, and banking requirements.
We’ll cover more about these elements in future blog articles, so stay tuned!