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.
There are several versions of this quote floating around and finding an original source ended being a lesson in futility but I like this version best. A goal without a plan is just a wish. If you want something but don’t have a plan to get it you are just wishing you had it, which is fine, but rarely gets you what you want. If you truly want to go after something come up with a plan. As you set your goals and plans use the S.M.A.R.T. acronym to help you along.
- Specific – Being too general with your goals makes them harder to achieve. Make sure you break giant goals up into more specific goals.
- Measurable – If it’s not measured it’s not managed. Measuring is the only way to be sure you are making progress.
- Achievable – Do you have the resources to do it? If not you need to rethink your goal.
- Relevant – Does it apply to you and your life? Is it part of your overall ambitions and needs?
- Timely – Can it be done in a reasonable time frame. Longer-term goals are harder to accomplish, consider breaking the timeline down into smaller time frame goals.
There you have it. Out with the easily breakable New Years Resolution and in with the S.M.A.R.T. goals for a better year.
I have never liked New Years Resolutions, mostly because of the negative baggage attached to them. I was told as I grew up the only purpose of a New Years Resolution was to see how long it took to break it so from an early age I made goals. Sometimes I achieved my goal, sometimes I didn’t but since I could keep going towards my stated goal I hadn’t broken a promise, it just took longer than a year to accomplish it. The last couple of Years I had heard Dr. Larry Hass talking about what he does for the new year and it seemed very affirmational and useful so I have adopted it to my practice of goal reviewing each year. Mind you I set goals all the time but the first of the years seems as good a place as any for a goal review. Here are the 3 questions Dr. Hass writes down.
- What are my Achievements from last year?
- What Commitments Should I make for this Year?
- What are my Goals for this year?
Make sure to write down your answers because an unwritten goal is just a wish. Make sure to use the S.M.A.R.T. method when writing your goals to make sure they are good ones. That is to make sure your goal is specific, measurable, achievable, relevant, and timely. Make sure to send me a note or give me a call if you need help with your business goals this year.
It’s never too late to get started on this. Which ones have you done?
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