Taking Care of Business in the 21st Century: 7 Steps to a Great Business Plan
It’s a guide, a roadmap, a blueprint for success—it’s a Business Plan, and every business, large or small, online or offline—needs one. The challenge for today’s start-up entrepreneur is to formulate an effective business plan—a plan that can help them achieve solid, sustained growth within a realistic length of time. Although business plans vary from business to business, just like blueprints for houses, there are key steps that all entrepreneurs would do well to follow in creating a plan that will get them where they want to go. With that goal in mind, here’s a look at 7 steps to a great business plan.
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Don’t plan your exit strategy at the beginning: When formulating a plan for success it’s best to begin with the end in mind. But if your end game is to be bought out for big bucks sooner than later, you’ll want to leave that lofty goal out of your business plan. Instead of focusing your time and energy on trying to make your business look attractive to potential buyers, you need to focus all of your efforts on building the foundation of a solid business—the kind of business you would never want to sell.
Plan for working “on” your business, not just “in” your business: A lot of entrepreneurs fall into the trap of creating a business plan that calls for too much of their time to be spent in the trenches. Although working “in” your business is critical, you need to plan on taking time each week to focus on the business as a whole—the process, the strategies, the short and long-term goals. After all, if you don’t do it, who else will? The key to freeing up time to work “on” your business is hiring the right people to work “in” your business.
Plan to struggle/boot strap for a while: Most investors really like it when a business has made some headway despite having limited funds. Anyone can say “give me some money and I’ll show you what I can do.” But it’s much more impressive to say, “Look at what I did with nothing. Imagine what I could do with more resources.” The struggling phase is also an acid test to prove to yourself and others just how much you really believe in what you’re doing. If you can live on bread and water for 6 months and still be genuinely happy, that’s a pretty good indication that you’re doing the right thing.
Plan on making realistic sales forecasts…then divide by 2: Okay. Maybe dividing by 2 is a little drastic, but the point is that when making sales forecasts, most entrepreneurs tend to error on the generous side. Unrealistic expectations such as, “If I can sell this product to every person in China for $1, I’ll be a billionaire,” have no place in your business plan. The truth is that, no matter how wonderful your product or service may be, market saturation takes time. Realistic sales goals help to keep you motivated and to plan much better for the future. They are also much more attractive to potential investors.
Plan on keeping your business plan short, and revising it often: Remember that a business plan is a tool to help define what your business is and keep you focused on where you want to take it. It’s also a means of attracting potential investors. What your business plan shouldn’t be is too lengthy. Although the loud thud of a drawn out, overly detailed business plan landing on a table may seem impressive, the reality is actually the opposite. All that you and any potential investors should care about is a plan that spells out as simply as possible, who you are, where you’re going, and how you expect to get there. Although it’s important to have models and forecasts, trying to plan too far ahead can actually make you lose focus. Both you and your potential investors get it that you don’t know for certain that everything is going to go as planned—that is unless you have access to a real crystal ball. What is crystal clear about the future of any business is that those that are able to adapt survive, and those that cannot are soon a thing of the past. So don’t etch your business plan in stone because, after all is said and done, it’s just a plan.
Plan on defining and sticking to your core: One of the biggest mistakes many start-up entrepreneurs make is trying to be good at everything. Although the idea of being all things to all customers sounds good in theory, in practice it only leads to mediocrity and brand dilution. Structuring your business plan on what you do best and not deviating from your core sounds simple enough, but it takes real discipline to stay focused on one thing. However, the dividends are well worth it. Once you’ve mastered the thing you do best and you’ve established your brand accordingly, then you can begin to branch out. If you find yourself wanting to diversify too soon, resist the urge and stick to your business plan. Being okay at a lot of things won’t get you anywhere.
Don’t let your business plan bog you down: Great business plans aren’t written overnight, but the process shouldn’t be so long and laborious that it delays you from actually starting your business. If you feel that the process is going to bog you down, a good approach is to enlist the aid of a mentor or business coach to assist you in creating a clear, concise, and well developed business plan—a plan that will help you to move forward quickly and effectively, gaining brand equity, and attracting investors along the way.