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Running
a business without a business plan is like rock climbing blindfolded. Your
chances of making it successfully to the top are slim. And the process will
surely be a death-defying one.
Contrary
to popular practice, a business plan is not a means to securing financing.
Instead it is a step-by-step guide to running your business and creating a
product or service that will make it in the marketplace. And like any other
map, your plan will have to be adjusted according to your vision for the
company, conditions and opportunities in the marketplace and your
business’ current condition.
Whether
it’s formal or informal, every business has a plan. The local hair salon
may not have formally written down the plan but before setting up shop, a
smart owner would have assessed the need for a shop in that area of town,
the ability to attract clients there, the appropriate amount of chairs,
whether to hire someone to do the shampooing and sweeping, the cost of
utilities and the parking availability for clients. The owner who waits to
figure these things out using trial and mostly error will be lucky to be
left with his/her wits, much less any customers. A business plan minimizes
pitfalls.
Several
things a business plan should consider are:
-
What
is a reasonable expectation of profitability and when?
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How
will the business pay you and any team members?
-
What
are the estimated expenses?
-
What
is the pricing strategy?
-
What
is the need for what you are offering and what profit margin can you
expect?
While
much of this may have occurred to you informally, it is very important to
write it down. If you ever need to approach a bank or investors, you will
need it. Writing it down will reinforce your vision, give you a reference
point for checking your business’ progress and will most likely bring up
factors you did not consider when creating the plan in your head.
Writing
your business plan down:
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Helps
you determine and coordinate all aspects of business operations
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Gives
you a means to analyze and determine what might be the best change to
boost your business out of a stagnant situation
-
Assists
you in determining the risks and benefits associated with any changes
-
Decreases
your chances of making a mistake or not considering important factors in
your business
-
Increases
your chances of success
Business
plans are not only for those just setting out on their journey in the
marketplace. They are useful when acquiring a new business, forecasting
growth, introducing a new product or service, entering a new market,
responding to changes in the market or changing a significant aspect of your
business.
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