Why it’s important to conceptualize your business before focusing on the numbers
If you don’t yet have a business concept, your plan efforts won’t go very far. You’re going to spin tires on any business planning you do. It’s critical to long-term business success and is the best small business advice I could give to a startup entrepreneur. So it should be no surprise that the first stage in the business plan process is to develop a precise business concept.
But is it enough just to know what product or service you want to sell? No. You do need to be clear about who your target market is made up of, what kinds of trends, opportunities and risks affect the industry. You also need to have a very clear understanding of who your main competitors are, and how effectively they meet a need to your target market.
Most entrepreneurs fail because they don’t follow the business plan process correctly – or at all.
The sad truth is that many small businesses – when faced with the task of developing a business plan, focus first on the numbers and persuasiveness of the plan from a writing quality standpoint. In fact, many businesses simply pay someone else to write a business plan for them in the hopes of getting a loan or investment. There’s little value in such plans.
Investors have very clear criteria on what makes a good potential investment, and smart money always flows towards smart business planning. That means a proving an existing market demand or an underserved need. It means showing how your business will be able to deliver on that need. And it means demonstrating a track record of success through experienced and capable management, even if your business is a startup.
Only when you have a clearly defined business concept – further refined through extensive market and industry analysis – do you then develop your business plan by fleshing out your marketing and sales strategies and your financial projections. At that point, finding a professional writer to formulate your business plan into a persuasive proposal is fairly straightforward, because your fundamentals are concrete.
Read the full article I’ve written on the business plan process.
What are your thoughts and experiences on putting together a well-defined business plan?