Business Plan Basics: A Practical Introduction to Business Planning
Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight. – Henry R. Luce
The Business Plan You ‘Need’
Many entrepreneurs approach me to help them piece together a business plan. I’m thankful for that honor. Yet, most of them think they “need” a business plan because someone else expects it from them.
The usual suspects are:
- The Bank
- Venture Capitalists
For this reason, business planning becomes a bothersome chore that many entrepreneurs choose to hire out the entire process. In other words, for most, the business plan is just one of the many criteria to getting their businesses financed. It’s a reactionary effort, and one that means little to the long-term success of the business.
Follow these business plan basics – it’s not just about the money.
The Business Plan You Really Need
There’s a much more important reason to prepare a business plan, one that is far more motivating and enjoyable to be a part of, and that’s to conceive and design a business with a view to its long-term success – and yours (I wrote another article where I discuss key factors to business success called Small Business Advice). After all, let’s say you do get that business loan. Can you really see yourself building this business for the next 3 – 5 years? Will it contribute towards achieving your life goals?
While you may be tempted to find the ‘easy way out’ of business planning, realize that the easiest way really is to plan for your own success. No sense in being excited about getting a loan you’ll have to repay if your business model fails to produce the results you expect.
And remember that if you’re among a crowd of entrepreneurs who want financing for their business.
Once you’ve addressed your own needs, you can then focus, with a sense of clarity, on important issues like how to fund your business.
The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand. – Sun Tzu
Map Your Journey
Think about your business plan as a map for your business, with clearly marked directions and signs leading you to your ultimate destination. When looking at it this way, it becomes a functional document you can use to make clear and tempered decisions, and to take specific actions leading towards your desired goals.
It’s easy enough to convince you that business plans focus heavily on the future. But I can’t stress enough how important it is to know where you stand now. If you don’t your starting point, having a map is useless. It’s the foundation for all futuristic planning.
By viewing your business plan as a roadmap, you give yourself the opportunity to understand the ‘terrain’ of your industry and market. You equip yourself with meaningful information to make sound decisions for your business. And you place yourself in an advantageous position by understanding the strengths and shortcomings of your competitors.
Get to Know the Terrain of Your Industry and Market
Perhaps the most important aspect about business planning is learning about your industry and target market. While so many entrepreneurs focus their energy on getting the money they need to start or grow their business, the few who place their initial efforts on surveying the landscape of their industry and market gain the intelligence and confidence needed to develop a realistic and carefully planned roadmap.
As you go through the process of building your business plan, you’ll learn how to better relate with your target market, design and connect your product or service to a specific market need, and focus your business on those core activities that lead to building a solid and successful business with a loyal following of clients.
A former market research consultant myself, I can say with utmost certainty that the most successful businesses invest heavily in market research. Those insights – small or major – can have a major lasting impact on the success or failure of your business.
When I started out in business, I spent a great deal of time researching every detail that might be pertinent to the deal I was interested in making. I still do the same today. People often comment on how quickly I operate, but the reason I can move quickly is that I’ve done the background work first, which no one usually sees. I prepare myself thoroughly, and then when it is time to move ahead, I am ready to sprint. – Donald Trump
Make Smart and Informed Decisions
Grounding your business plan on solid background research on your market is key. With that market intelligence, decisions pertaining to your business will be easier and rational. You’ll be aware of the major market forces at play that affect your business directly or indirectly. You’ll be able to shape your business decisions with this awareness as your ally.
Your business plan will give you the opportunity to carefully plan your:
- Growth and Evolution
Establish Your Place in the Market
If you’re “just another” restaurant, dry cleaner, or auto mechanic, for example, your chances of survival are slim, so your chances of success even slimmer. When developing your business plan, the knowledge you will acquire about your target market, competitors and your own strengths and weaknesses will help you devise a clear and unique voice in the market. Positioning your business in ways that buyers can recognize as offering something different to your competitors will take your business to new heights.
It isn’t necessary to have a unique product or service. It is, however, vital that you offer a distinguished experience for the buyer. This can be as simple as location or office hours, or as complex as adding unique features into your product or service that make it superior to other offers in the market.
Never Underestimate the Power of a Outstanding Plan
If you’ve developed a clear vision and concept for your business, and have backed it up with a rock-solid business plan, you’ve acquired the kind of focus and intensity that few others don’t even bother to attempt. Your decisions will be fast, clear and driven by the core actions that move your business to the ultimate success – yours.
You’ve bulletproofed your business and mapped out your journey so that little time, energy and money is wasted on distractions and detours.
Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. – Sun Tzu