Excellent! You have the new business idea, the time, the passion, the commitment, and the money. Time to start your own business. Time to control your own time, income and destiny. Own the corporate ladder vs. trying to climb it again.
However, most new start-ups will fail within three years. One of the biggest reasons? No business plan. Many thinking that writing a business plan was not necessary. A waste of time, since they were not trying to raise money from anyone.
Want to dramatically improve your chances of business survival and growth, and avoid the startup graveyard? Write a business plan.
A ROOT CANAL
A big mistake-don’t equate writing a business plan as the equivalent of getting a root canal. The smart, successful entrepreneurs take a different approach, a different mindset towards writing a business plan. They don’t look at it as a painful experience. They look at is as an opportunity. An opportunity to survive, grow and prosper. Increasing their chances of getting it right the first time. More importantly, increasing their chances of never having to go back and work for someone else again.
BUSINESS PLAN DEFINED
Simply put, a business plan is a written description of what you are going to do. And how you are going to do it. It will force you to completely think about every aspect of the new business, especially marketing and sales. Most new entrepreneurs come in with limited, narrow skill sets (including this one) gained from corporate America. But as a new business owner, you need to know a little about everything, all functions of the business. Especially during the early years, when most entrepreneurs are the chief, cook, and bottle washers of the business.
WHY? TOP 10 REASONS
- You have never started your own business before.
- You don’t want to lose your life savings.
- You don’t know, understand marketing and sales.
- You don’t know, understand numbers.
- You don’t know, understand intellectual property issues.
- You don’t know, understand technology.
- You need to raise money from bankers/investors.
- You don’t want to fail the first time out.
- You want to form strategic alliances with bigger companies.
- See #1 again.
Now you know what a business plan is and why it’s important. What needs to be in it? Here are the key, 16 sections that are included in a well thought-out, credible, and persuasive business plan. These are also must have sections for bankers/investors:
- Executive Summary
- Source/uses of funds
- Company objectives
- Keys to success
- Company summary
- Service/Product description
- Consultants to planning process
- Marketing analysis
- Illustrative (show and tell)
MARKETING AND SALES
While all sections are important, place major time and emphasis on these sections. Tip for future entrepreneurs still in college? Take as many marketing and sales courses as possible. Tip for those just starting their careers but want to become future entrepreneurs? Get as much sales and marketing experience as you can from your company. The reader’s digest version of marketing? How are you going to find clients/customers? Sales? How are you going to sign them up? Nothing else matters unless you have paying customers. Most new companies will fail. Why? A lack of marketing and sales.
BEST TIME TO WRITE ONE
Before you start the business. Keep your day job, still collecting your regular paycheck and insurance. But writing the business plan at night and on the weekends. Bonus reason? You may find that after writing the draft, you come to the conclusion that it really was not a very good, sound business idea after all. Thereby, potentially saving you time and money. Maybe even your marriage.
WORST TIME TO WRITE ONE
A terrible time to write a business plan? When you are under the gun. Panic sets in with the entrepreneur/small business owner, (who is running out of money) when a banker or investor asks the question; where’s your business plan? Now the business gets neglected at the worst time. As the entrepreneur has to “stop the presses” and take time to write one. Plus, you are not going to do your best thinking, writing under such tight time constraints. This will be reflected in the quality of your work. If the money people don’t have confidence in your plan, sorry, no money here.
THE HIGHWAY ANAOLGY
It’s true. Not taking the time to write business plan, especially for first-time entrepreneurs, is like driving down the highway without a steering wheel. Pretty scary. To succeed, you have to know what you are doing. Otherwise, you are setting yourself up for a potential train wreck. Worse, having to give up on your dream and end up going back and working for someone else again.
Writing a well-thought out plan takes time. A certain amount of sacrifice will be needed on your part. But what is more important? Watching a game on television, streaming an old movie, which will do nothing to improve your life. Or doing something that can help you control your own time, income, and destiny. Short term sacrifice for long-term gain.
LOSE THE MUMBO JUMBO
Want to dramatically improve the chances of receiving start-up/expansion funds from bankers and investors? Then lose the mumbo jumbo from your vocabulary. The money people want to see straightforward English in a business plan. They don’t want to guess what the business model is. They want to read it and immediately understand it. So they can decide right away to continue or take a pass.
Most people during their lifetimes will not start a company from scratch. But for the courageous ones that do, do yourself a favor and write a business plan. It will be a very valuable learning opportunity. The old adage is true; “Failing to plan is planning to fail.”
So, friend, if you want to keep your savings intact, your existing paycheck intact, your existing lifestyle intact, your existing career intact, your friends/family relationships intact, and possibly your sanity intact, entrepreneurship may not be for you. (at least not now). Otherwise, jump in. The waters fine.