You’ve probably heard stories about successful businesspeople who scribbled down a business plan on a napkin, proceeded to ignore it, and yet became so wealthy that their only problem now is deciding which Bentley they should take home today.
Sweet deal, if unrealistic for the rest of us. For us, the fact is, we need a business plan. It need not be a 30-page manifesto, but it does need to explain – to yourself and others – how you plan to get to where you want to go. It will discuss, among other things,
Who will buy your products
Whether your company going to be a luxury brand or a bargain deal
How you are going to get customers
That is what you need to figure out in your business plan.
Studies have suggested that entrepreneurs who create business plans have almost double the chances of growing their businesses and securing financing.
The fact is, if you expect investors to contribute to your success and invest in your dream (whether it be the Silicon Valley mogul or Uncle Marty), you’ll need to convince them that doing so makes economic sense. That is where a smart business plan comes in.
What Investors Want to See
Your potential investors will want to know that you have solid strategies in place for your business, and that you’re being realistic about your prospects and position in the market.
Your business plan needs to describe what products and services you will offer, your qualifications to do so successfully, and how you see your place in the industry and in relation to the competition.
You should also be prepared to inform them on how you’re going to build your brand, how you’d like your company to be perceived, and how you’re going to establish that brand image in the public mind. How will you market your products? Will you advertise through social media, print, radio, television, maybe all of the above? Who will buy your products? Is your company going to be a luxury brand or a great bargain?
You better cover it all if you want to get the dough.
Beyond Raising Money, Look at What is in it for You
Perhaps you are financing your own start-up. Or maybe you have some cool angel investors looking at your venture. Whatever the case may be, you will still need a good business plan. While the plan is a prerequisite for convincing potential investors that you are legitimate, the act of creating the plan itself may be much more valuable than the average entrepreneur realizes.
Creating a business plan will put your company’s financial requirements in black and white, giving you a realistic understanding of your costs of operation and income potential. In addition, it should contain all the information you’ll need keep you on the right track when it comes to fulfilling the legal requirements that owning a business entails. It makes you think through the entire enterprise thoroughly.
Maybe that is why studies have shown that entrepreneurs who create business plans have almost double the chances of growing their businesses and securing financing.
Knowing Where You Stand
A well-written business plan will force you to critically analyze your prospects. You’ll need to clearly define your business’s identity, the niche you plan to carve out, and decide how you’ll differentiate your brand from the brands of your competitors.
Taking the time to do extensive research and subjecting your big idea to intense scrutiny may not sound like a good time now, but you can bet it should lead to good times later.