It’s a question as old as business itself – why should I bother with a business plan when I already know how to make money?
Let’s face it. Writing a traditional business plan is a pain. Nobody loves the reading, writing and arithmetic that go into a plan. We mostly just want to get started.
There are, however, a lot of great reasons to plan before you starting a business. Not the least of which is that a plan might convince you not to do it at all! But besides saving you from possible doom, a business plan will help you grow faster, stay in business longer and generate more net revenue than any other single thing you can do for your business.
Here are the 5 key to keep in mind when considering whether to write a business plan:
1. Slower is Faster
Professional drivers say that before you set out on a long drive you check the oil, tune up the engine and buy a map. Sure, all that preparation slows you down, but starting off with the right equipment is ultimately faster than re-tooling later.
2. Paper Never Forgets
It's great that the plan is in your head and you have a good idea of how to go forward. Now write it down. A written plan can capture an unlimited amount of detail … and never forget it. In six months, when your development is finished, will you remember the names of the 27 websites that are available to resell your product? A great plan can be a reference tool for months and years to come.
3. You Are Not Alone
You need other people to help you grow a business – employees, vendors, partners, investors, bankers, and customers. All these people need to understand your ideas and vision. They need to believe in you and to know where you are going. A written plan says you are credible – you’ve thought through things. It sets a clear and compelling goal for all partners to work toward. How else are you going to get them all pulling in the same direction?
4. Plans = Profits
The most important part of a plan is the financial forecast. Will your business idea actually make any money? You won’t know for sure until you add up all the costs. A good forecast includes staff salaries, rents, utilities, supplies, insurance… and on and on. Finding customers to pay for a product is easy compared to delivering it at a profit. Be sure you’ve done all the math.
5. Failure is an Option
The best part of a business plan is identifying all the ways it could fail. By researching the competition, pricing, markets and trends you will see how you might fail – and how you can avoid failure. Failure happens. Acknowledge it, and plan some contingencies. You’ll be glad you did.
Do you still not want to bother with a plan? If none of these reasons is reason enough to spend a few hours in quiet contemplation, consider the words of Ben Franklin who said “Failing to Plan is Planning to Fail.” Venturing out into the world requires action. But action, in turn, deserves careful planning. You owe it to yourself and you owe it to your new business.