The short answer is yes. In my opinion, every business needs a business plan. It doesn’t have to be long and complicated, but it needs to exist in a written form. It’s not good enough to have a half-formed idea, you need to get it written down. Clemson University entrepreneurship professor William B. Gartner points out, that with a business plan “You’re two and a half times more likely to get into business, that’s powerful.” Why else would you want a business plan? Let’s take a look.
A business plan is a roadmap for your success. It shows strengths, weaknesses and the potential for your business to do well. This is especially important if there are multiple people involved in the business. How do you know your partner’s idea of success is the same as yours? How can you tell if you all are moving in the same direction? The business plan gives you focus and clarity. It shows you where you want to go and gives a path to get there. Just remember, with business, detours are the rule rather than the exception so be ready for them.
If you are looking for any kind of funding you must have a business plan. I recommend being conservative with your numbers if funding is a goal of your plan. The people loaning out money have been around the block a few times and will know if your calculations are realistic or not. I have helped many businesses that thought they had billion dollar ideas, but the entire market they were entering was barely a tenth of that. Keep the end reader in mind. Would you loan money based off unrealistic numbers?
Understanding Your Market
You really can’t go into business if you don’t know the market. Who is going to buy? Why are they buying from you? How do you stack up against your competitors? These questions are essential and a business plan helps bring them out and sets you up for success.
Over the next few days, I am going to guide you through a business plan. The traditional plan, which is what I will teach, is good for most businesses and is what you want when you plan to get financing. If you need something quick and dirty, use the traditional plan as a basic sketch. Remeber, the more time you spend on your plan the less time you are putting your business on the market. A plan is important but don’t let it be the excuse for not starting.