Why do I need a business plan?
IGOR ROITBURG
Igor Roitburg is from New York which is based in the USA. Igor Is a Chief Operating Officer at Default Mitigation Management LLC. He has a lot of experience in this field.
Business plans serve several key functions that make them indispensable for successfully launching a new company. Not only do they serve as a roadmap to guide you in the early days of your business, but they also serve as an opportunity to research market conditions, competitors and potential pitfalls you might not be aware of.Â
Business plans are both an analytical and planning tool, two components that are essential for getting a new business off the ground. This guide offers you key insights into how to create a high-quality business plan that will serve your business now and in the future.
1. Determine your purpose.
Having a plan to make a profit is important, but it's not the only thing that matters when you start a business.
"Business plans … encourage entrepreneurs to focus on what they are going to do," said Alan Williams, co-author of The 31 Practices (LID Publishing Inc., 2014). "This overlooks two more important questions: 'why' – why it exists and why employees would want to get out of bed in the morning, and 'how' – the values of the business, what it stands for, and how people representing the business will behave."
Williams advised entrepreneurs to take time to identify and articulate their business's core values and purpose – both will serve as your organization's compass for decision-making at all levels. Williams' co-author, Alison Whybrow, said that this "compass" can be discovered by having an honest, open conversation with your team.
2. Build your vision.
The key to business success is having a clear vision of what you want to accomplish as a company, experts say. But before you write a business plan, you should come up with three to five key strategies that will enable you to achieve that vision, advised Evan Singer, CEO of SmartBiz, a provider of SBA loans. "Sometimes, less is more," Singer said. "It's far better to do three things very well versus 10 things not so well." An additional, imperative aspect of your business plan is the mission statement, which is the "why" you're doing what you do.
"The first sentence of the mission statement should be why you're in business," said Tina Bacon-DeFrece, president of Big Frog Franchise. "After you fully understand the why, then you need to define 'what' you are going to do and 'how' you're going to do it. The third and final part of the mission statement should be the 'who' you want as customers and how you are going to treat them."
3. Clarify your business model.
Alex Muller, senior vice president and chief product officer of GPShopper at Synchrony, said a good financial model includes many of the details you put in your formal business plan – for example, hiring, pricing, sales, cost of acquisition, expenses and growth. Like a business plan, your model should be revisited and updated as the realities of your business unfold.
"Start [answering] what-ifs," said Muller. "'If I sell this product at this price point and this is the cost of client acquisition, what rates of return can I get?' When you're done building [and testing] the business model, then you can go back [and] write a business plan."
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