Is it absolutely necessary to write a business plan before embarking on a business venture? After all, it has been done before. Yet beginning a business without a clear, concise, written vision and making a success of it is rather the exception than the rule, and when well-thought-out (and well-executed) business plans have helped countless entrepreneurs to start and build good businesses, there is no reason you should not give your business the very best chance of succeeding in a tough market. Creating a business plan may seem complicated or constrictive, but the essence of a good plan is simplicity and flexibility. Some say you should liken it to a road map, but maps have a limited number of roads to take. Perhaps think of it instead as a navigation system: you can plug in your starting point, destination, and any intended stops; it'll give you the best route available, but you can always opt for alternate routes as you proceed!
The following are the key ingredients to a well-made business plan:
State Your Vision
Like those pesky thesis statements in your school research papers, your vision statement should briefly outline your business. It should highlight the product or service your business will sell as well as the purpose, ultimate goal, and distinctive quality of your business.
Here you will elaborate on your vision. List the products or services your business will supply, expound upon the goals you have for your venture, and note what exactly it is that will set your business apart from the others in a competitive market. What is your angle, or what edge will you have over the competition? What gap will your business fill?
Analyze the Market
Not only should you know the current market situation, you should understand how your market operates. How are your potential competitors doing, and how have current economic weather patterns affected their businesses? What do experts predict for the future of your target market? Which leads to another important market analysis: What is your market? Who comprises your target customer pool? And how do your potential clients think, compare and buy in general?
Know Your Competitors
The likelihood that your intended business venture is so unique that competition would be nonexistent is quite low"next to zero, in fact. You may find a nice little niche for your business, but there is a good chance that competitors will pop up in reaction to your presumed success, so you must be armed with the knowledge of current companies and prepared for future competition. Beyond knowing the basic details of others' success, you should learn the secrets behind that success. Learn from their successes and failures before your own foray into trial and error begins. You should also understand the risks and threats associated with your particular corner of the market, and that includes an understanding of how your potential competitors operate and how they respond to threats like the one your intended venture would pose to them.
Before you can strategize properly, you should understand your strengths and weaknesses"both yours and your business's. Afterward, you can formulate a strategy that will work for you and for your business, and can outline exactly how you plan to implement this strategy. Who and what and how much time, money and effort will it take to implement your ever-clever strategy? It's okay if it wouldn't work for most people"it must work for you. And just because a strategy works for others doesn't mean it will work well for you. Your strategy and your implementation process should be custom tailored to you, so long as it is manageable by your partners and employees as well.
Without a product or service to sell, you would not have a business. Identify with clarity and accuracy what it is your business will provide, why people need it, that people"enough people"need it, and how it is your business will provide it. Also consider how you can branch out into other, relatable areas"how your business can grow. Perhaps you intend to provide a product"down the road you may wish to provide services to go along with it; or perhaps you will be able to form partnerships with others in order to offer a broader range of products or services to your consumer base.
Marketing and Sales
Without the means by which to sell your product or service, you may as well close up shop. What is the good in having a great product or service if no one knows about it? Marketing is a cost often underestimated, and a necessity too frequently viewed in a box. There are a number of ways to get the word out, and while word of mouth is the best and generally most effective way to bring in new customers, you will need to explore the myriad methods of advertising and judge which of them best suits your particular business and will best reach your intended clientele. Also, do not underestimate the power of networking.
You have your goals written out; you've listed your products and services; you know how you intend to spread the word about your business. Good! How will your business operate? How will your business be organized? Who will be running and managing each faction? Consider operational needs like key personnel, customer service, transporting of products, necessary facilities, and hiring and operational policies.
It would be grand if starting up a business took no initial investments and stood no financial risks, but, alas, businesses could hardly run without money. You will want to project your cash flow and your profit-and-loss ratios, and to do that you will need to calculate how much your product or service costs you to make or provide. You will want to figure in materials, transportation, cost of buying or renting facilities, maintenance, overhead, insurances, advertising, and so forth; then you must determine how much you will need to charge for your product or service in order to not only cover your expenses but make you a bit of a profit as well. And what you charge will need to not only be competitive, but also reasonable in the eyes of your target customer base. If what you offer is currently in short supply but great demand, you're off to a good start. If what you offer is something most households consider a luxury, or merely something they want but do not need, your product or service, no matter how dazzling, may take some time to start flying off the metaphorical or literal shelves.
But What If It Isn't Perfect?
A good business plan will not only sell you on the idea of your creation, but others"like potential investors/backers"as well. Perhaps you'll realize that your idea is not feasible"at least not at this time or as you initially dreamt it. Great"you've not wasted your money or the money of others in a foolhardy venture. But let's say it looks as good to you on paper as it sounded tumbling about in your head. Now you need to decide whether it will look good to the people you'll need to help you begin your business; look over it with an objective eye and make certain that it is clear, concise, well organized and informative.
A business plan is not carved in stone. Markets change. Economies change. People and politics and world events, etc., change. Your plan is a flexible document that gives you the perspective, direction, and information you need to start, build, and grow your business. A business is an organic entity and should grow accordingly. Furthermore, a business plan will cover the basics, not the minute details of each aspect of your intended business. Those details should be worked out, of course, but your business plan, while comprehensive, is not exhaustive. The pages containing all your lists, research, calculations, and speculations"those will be exhaustive! You're certain to forget things"which is why it is a good idea to have others look over it and note any glaring gaps in it.