When most people think of starting a business, it’s usually when they feel that they have found their niche. They get positive feedback about their ideas from their family and friends, and that continues to build the momentum to proceed with starting their dream business. Unfortunately, many think that their business does not need a formal business plan so they conduct their business research through informal inquiries and note-taking about what they think is necessary to know prior to executing their idea into a successful business. I often meet with people who say, “I don’t need a business plan for my business. I have the passion and motivation. I am determined to make things happen, and it’s all up here”.
“Proper Planning” is a bridge between being passionate and making things happen. If not planned properly then instead of developing a foundation of long term success, it might result into a foundation of short term business with the assumption that they are moving along the right path. When they don’t know what they don’t know, it can hurt in the long run.
Nationally, the majority of startup businesses that fail do so within the first few months to a few years of their launch. It’s true that poor economy conditions add more risk to small business operations. However, most startups fail because owners are not adequately prepared. The fact is that most owners never write a formal business plan or lack the patience to do it properly. Therefore, when they encounter marketing and sales challenges, they experience inconsistency in revenue that leads to overall instability regardless of it being a home-based business or commercial.
So being passionate and motivated helps but it does not guarantee success. Correct business planning determines the feasibility, successful start and overall projection into the future of the business. A good business plan may take from days to months to research and write. And it’s not about the quantity of writing, but the quality of thought and research that goes into the plan which is more than just taking notes prior to starting a business.
Consider this as part of an initial assessment to learn why one should write a business plan:
1. Do you need a business loan to start or grow your business?
Applying for a business loan involves more than just filling out a loan application. The first question most bankers and financial institutions ask is, “do you have a written business plan with financial projections”?
2. Have you fully assessed how you are going to market your products and/or services?
Most businesses fail due to poor sales because they were unsuccessful in reaching their target market. Unique products and services alone do not generate sales or revenues. When I attend major business conventions, I often see unique products from all over the world. Unfortunately, just a small percentage of these products make it into the market. Without successful marketing strategies and strategic relationships, businesses cannot succeed. A marketing plan is a critical element of business planning.
Ideas are often born from the mind of a visionary. They should be nourished with research and planning, carefully bred until they form into a young business, then gradually nurtured into a successful business. Prior to starting a business, determine the feasibility of success by planning and discovering the roadblocks today. A business plan is not only a blueprint of your business; it’s also a key exercise that enhances the entrepreneurial mind.