Starting a business can be a very daunting venture if a proper plan is not put in place. Most entrepreneurs start their businesses without putting in place proper plans to be successful. No wonder one in five companies collapses in 5 years! If anything is to be taken very seriously, it should be your business plan. This is your “blueprint for success.”
Every business starts from a thought. A thought or idea can only become a reality when the expected actions are taken. When an idea is conceived, the logical corollary is that such ideas need to be written down, in black and white and on paper; or else the idea will fade when the enthusiasm that the thought initially brought subsides. Therefore, having a written business plan is relevant if your business is going to stand the test of time.
Now, what is a Business Plan?
One definition, according to enterprise.com, is that a business plan is a “written description of the future of your business; a document that indicates what you intend to do and how you intend to do it.” If you see a paragraph on the back of an envelope describing your trading strategy, you have already started a written plan, or at least the first draft of a plan. The business plan itself consists of a narrative and various financial worksheets.
The very act of planning helps you think things through systematically and thoroughly. Study and research your niche market if you are unsure of the facts and critically analyze your ideas. It may take some time now, but it helps avoid costly and disastrous mistakes in the future.
In this article, I want to provide a brief overview of the steps involved in planning a business:
1. Identify your passion: Knowing what you love to do, even without making money, is the springboard to starting any business. Most people go into a business they know nothing about and stop after just a few months. Some get tired of their businesses simply because they are no longer happy with the activities involved in running the business. According to Sabrina Parson, (CEO of Palo Alto Software) “Know yourself and work at a job that meets your strengths. This knowledge will make you happy.”
The reason many businesses fail in their first five years is because entrepreneurs no longer find satisfaction in running their businesses. Therefore, they tend to move forward in search of happiness.
You must look within evaluating yourself and identify what you are good at. If what you are good at makes you happy, think about how you can monetize it and turn it into a business. You do this by sharing your passion with others. However, passion alone is not enough to start a business. You need to plan, set goals and above all, know yourself.
two. Conduct extensive market research: As stated above, passion alone is not enough to determine the type of business you should get involved with. You must be sure if there are people who are really interested in paying for what you have to offer. Other than that, you need to identify the category of people who can pay the prices for your products or services, and in what amount.
You must also determine how to attract your potential customers. How do you intend to reach your target customers? How do you intend to distribute your products to your target customers? How do you know the real price potential customers are willing to pay for your products? These and many other things are what you should know before investing your money in starting any business.
3. Write a business plan: A Business plan is a written document that describes your business idea. Your business plan will give you a sense of direction toward achieving your business goals and objectives. It describes what you want to do, when to do it, where to do it, and how to do it. A written business plan can also be used as a guide to running your business successfully.
Writing down your plans helps you anticipate the future of your business. Staying ahead of your business helps you identify and possibly avoid any challenges that may beset your business in the future.
Four. Register your business: After you have written your business plan, you need to register your business so that customers will take it seriously. Other than that, registering your business gives your business a life of its own. It separates you from your business. Any serious minded entrepreneur should have their business registered.
The most common type of business is that of a Single owner. You run your business yourself and keep accurate books (for tax purposes). You deduct your expenses and pay taxes on the earnings. This is the simplest type of business to open. You are also the most vulnerable to an angry customer taking your assets and filing a lawsuit against you for whatever reason. This is one of the many reasons business owners choose one of the other types of business establishments.
HAS camaraderie It is a type of business in which two or more people enter into a business agreement. Two friends etc decide to open a business. If you decide to form a partnership, you need a document detailing how the business will be divided if the partnership is dissolved. It may sound crude to plan this out before you open the doors, but it will save you a lot of headaches and expense in the end. Also, if you never dissolve the partnership, the document will never be needed. this is one of these “It’s better to have it if you need it than to need it and not have it” times.
Corporations: There are several types of ways to incorporate. I am not going to engage in a detailed discussion here. My recommendation is if you are planning to incorporate your business: hire an attorney with experience in this area. There are various types of corporations and your attorney can assess the facts surrounding your business and guide you to the most appropriate type of corporation for you to use.
5. Obtain the Necessary Capital: This is the most difficult aspect of starting a business. Obtaining the capital to finance a business is the main factor that discourages most entrepreneurs from going ahead with their plans.
There is no doubt that most businesses start out through self-financing The reason for this is clear: no one believes in your dream until there is a physical manifestation. As a prospective businessperson, you must learn to save aggressively to meet the financial requirements of running your business while taking care of your family at the same time. You can also opt for loans from friends, relatives or legal entities (banks, savings and loans, etc.).
A general rule of business states that, In addition to the start-up costs, you should also have at least six to twelve months’ worth of your family’s budget in the bank. To finance your business, you will need to match the needs of the business with the appropriate financing option. You should seek the help of a good accountant in this area. The accountant will be able to advise you on what is best in your situation and also offer assistance with tax planning.
6. Take risks: Once the financial aspect of starting a business is taken care of, the risks you need to take should be your next course of action. You need to keep trying different things so you can determine what works well for you and your business plan. By accurately listing the acceptable risks you’re willing to take up front (in your business plan) and in what situations these risks would be taken, you’ll provide valuable guidance when roadblocks occur (and they will).
By having your action plan already in place, it will be very easy for you to refer back to your well thought out plan and decide on the course of action to take regarding a pre-identified obstacle to your business success.
It is important to know from the beginning that you can fail in this business. You may not want to acknowledge this fact. I mean, who wants to “plan” to fail, right? But recognizing this now will help you move forward when you experience setbacks in the future. What matters most in business is your level of discipline, persistence, and belief.
Every time you experience failure, go back to your business plan and identify where you missed it so you can implement the appropriate corrections. If the issue you are experiencing was not identified in your original business plan, now is the time to add it to your plan.
Take the time to go through all the steps to identify and mitigate risks, just as you did when you wrote the original plan. By doing this, you accomplish two things:
1) You are methodically thinking through the problem and determining a solution, and
2) Now you are adding this unforeseen problem to your plan! If it ever shows up again, you’ll be able to quickly determine what you did and if it was effective (saving you time and stress later on).
The above steps, if followed, will help you build a top notch business that could be your chance to change the world. Make sure you don’t go into a business without planning ahead.
All forms remember the 5 P’s – Proper planning prevents poor performance!