When you want to launch a new business, you’ll probably search around online for things you can do to make that process easier. Perhaps you’ll want to know exactly how it can be done. This is a good tactic; there is a wealth of information online that will give you plenty of advice (some good, some bad) about starting a new business, and if you can work out which steps to follow, you should do well.
Something that most if not all advice will mention is that you need to have a business plan. This might not seem like something you particularly want to spend time working on; after all, you already know what you want from your business. However, that time will not be wasted if you can take your business plan seriously and ensure that you do it correctly. In fact, this could be an invaluable step to creating, maintaining, and building your business. Read on to find out just why a business plan is so important if you want to succeed.
It Proves You’re Serious
These days it’s very easy to start a business. There are templates online to follow, there are free websites you can build, and marketing can be done quickly and cost-free on social media. Of course, this is not enough to have a successful business, but if you simply want to start one, the tools are all there for you, thanks to the amazing technology we have at our disposal.
This means that many people will start their business without really thinking things through. They will have an idea they think is a fairly good one, and they’ll quickly launch it as a business. Unfortunately, these businesses have no substance, there has been no market research carried out, and in most cases – unless you happen to be very lucky – you’ll find that the business fails quickly.
If you have a business plan, firstly, this is less likely to happen, and secondly, it will show you and anyone else that you are serious about the business. If you have taken the time and put in the effort to write a business plan, then you must want the business to succeed, and you didn’t start it on a whim without any real thought or care. This will be useful when it comes to getting ahead of your competition, and for asking investors or lenders for money since if you have a business plan, you clearly have thoughts about the future of the business.
You Can Establish Business Milestones
Something that any good business plan must include is a list of business milestones you intend to achieve and a timeline in which you intend to achieve them. These long-term goals are crucial to the success of your business and having them listed out is a good way to understand them better and work towards them. In addition, when they are part of your business plan, they are much more tangible and concrete, rather than just some vague ideas. In this way, they are easier to grasp and do something about.
When your business plan is written in the right way, you’ll essentially have a map that guides you to each milestone one by one, allowing you to reach your goals and become as successful as you ever planned to be.
You’ll Understand Your Competition Better
When you write a business plan, you’ll necessarily need to think about your competition. Ideally, you’ll carry out a deep analysis of them, determining what it is they do well and what you can do better than them. Once you do that, your business plan will more easily take shape; you’ll know what to avoid and what to work on, and you’ll get a much clearer idea about what it is your industry does.
Don’t assume you don’t have any competitors; every business does. They may not be direct ones, but even indirect competition – those who sell something similar or who might branch into your territory if they want to expand, for example – can be a useful tool to find out more about what you should be doing.
When you start your business you won’t have any kind of competitive advantage, and if you leave things as they are, you’ll never grow. Your business plan can detail every move your competition makes and what your countermove might be, and in that way, you can become better than all of them.
You’ll Understand Your Customers Better
Something that is just as important as understanding your competition is understanding your customers. If you don’t know why they buy or how they buy, or what they need from you, you won’t be able to offer them the user experience they are searching for, no matter how good your products or services might be. This is why market research is so important and why you need to include it in your business plan.
When you know your customers, not only can you ensure they receive exactly what they want in terms of the products and services they buy from you, but you can also manage your advertising much better. You can market to the people who are most likely to buy from you, thus making your advertising budget stretch further and getting a better return on this particular investment.
Knowing your customers well will also ensure you choose the right products when you want to try something new. So rather than running the risk of alienating your loyal customers and not finding any new ones, you’ll be able to ascertain exactly what the right products are and integrate them seamlessly into your range, exciting your clientele and not pushing them away.
You’ll Understand Yourself Better
A business plan is an ideal way to understand more about your own goals and hopes for the future. Then, when you write them all down and include a timeline (albeit a flexible one), you’ll see just what you want to achieve and galvanize those ideas in your mind. Alternatively, you’ll start to get a picture of what is needed to reach those goals, and you can start moving in that direction.
This might mean that you need to gain more knowledge, for example, and you choose to apply for a degree in business or a related sector. Or perhaps you want to find a mentor because that’s how you feel you can best achieve what you want to achieve. On the other hand, it could be that you already have a degree, and you’re wondering what can you do with a masters in public policy that will help to grow your business; in that case, you can think about all the skills you gained while studying and start to employ them in a useful way within your business and specifically within your business plan.
Understanding yourself means you’ll be much better equipped to run and grow your business, no matter what sector it might be in and what you feel is best for you to do in the future.
To Make Your Thoughts More Firm
You might have a lot of ideas swirling around your head when it comes to your business and how best to run it. This can often become overwhelming, and many will become lost unless you do something about all these millions of thoughts. This would be a shame, as there could be some excellent ideas in the melee. This is yet another reason why a business plan is a great idea.
When you stop for a while and write down your ideas, you are much better placed to truly assess them and determine what’s good and what isn’t going to work. Perhaps you think that you could partner with another local company to achieve much greater reach, for example. Writing this down and thinking about the pros and cons will lead you to decide whether to contact that company or not. Or may you think that a fleet of vans is ideal. Only when you write it down, think about cost, and what you really need will this be either validated or not.
Think about each idea you have and consider what would happen if you did go ahead with it and if you didn’t. What offers you the better outcome? Once you know, you can add these much firmer and more well thought out ideas to your business plan and start working towards them.
You Can Assess Feasibility
Everyone hopes their business idea will work and bring them in a huge amount of money and be massively successful. However, there are dozens that didn’t make it for every successful business and that failed before they could really even take off. This is due to many different things, but something that often causes problems is that the business was simply not feasible in the first place. In other words, it was never going to work.
Writing a business plan and being truly honest about the chances of success, whether the business is actually needed, and how many people are likely to buy from you (if it’s a very niche market, will you be able to sustain your income?) will help you to determine the long term feasibility of your idea. You’ll be able to see whether or not your business has any chance of success. If it doesn’t look likely, it could be best to seek out a new idea rather than going any further forward with the one you currently have.
This might make it sound as though writing a business plan and putting the appropriate amount of time and effort into one is a waste of time. If the business isn’t going to survive, why create a business plan in the first place? This is the point; until you have a business plan, you won’t know what the feasibility of your business really is. If you’re serious about things, as we mentioned above, you’ll be happy to write the business plan even if there is a chance that you have to start from scratch once you have all the information. If you’re not interested in doing this, then perhaps you aren’t so serious about making your business a success, or, even if you are, you might not be ready to make such a commitment; running a business is hard work and requires a lot of time and effort. If you can’t find the time to write a business plan, you won’t have the time to run a successful company.
You Can Determine Your Financial Needs
It’s all but impossible to start a business without any money. Even if you fund it yourself with a few dollars, you have spare each month, that’s still a financial need. Of course, some businesses require a much larger investment right from the start, and this can mean borrowing money from a traditional lender, from friends and family, or perhaps finding an investor who is interested in helping you grow your business for a return on any money they give you.
Until you know exactly what your financial needs are, it’s going to be impossible to go to any of these people and ask for assistance. Imagine applying for a loan, for example, and not knowing how much you want to borrow or what you need the money for. It would be unlikely you would be approved, and even if you were, you might borrow too little or too much, and both scenarios are problematic. Too little money and you might have to borrow more which can be difficult; too much and your monthly repayments will be higher and potentially too high to sustain.
By using your business plan to set out each purchase requirement and how much starting your business is going to cost, you will know just what you need to borrow. You’ll also be able to show any potential lender, whoever they might be, why you need the money, and what your pain is to pay the loan back. This will instill confidence in anyone lending you money and will prove that you have done your research, making it much more likely that they will lend to you in the first place.