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Your Business Plan IS Your Business

How Important Is Your Business Plan?

❶However, I was a minnow in a highly competitive sea dominated by whales.

By having a great plan, you are taking a huge step toward strategizing, positioning, planning, and managing your business well. At best you are running your business by the seat of your pants; at worst you are setting yourself up for unnecessary challenges and disappointments.

Sometimes their product or service is different from competitors but not in a way that customers really care about. A great business plan analyzes key variables such as your target market and your competitors, as well as your strengths and weaknesses, to help you develop, change, or refine your business concept.

It helps you challenge yourself to determine whether your concept is viable, and, importantly, if your concept is truly differentiated from your competitors in a way that really matters to customers. A great business plan pulls together all of the major issues facing your business in a balanced and analytical way. Creating your plan helps you to decide where to focus your resources and time in ways that will matter the most. Once your business is operating, your business plan gives you a framework, a big picture, for evaluating the day-to-day issues and opportunities that you will encounter.

Businesses operating without plans tend to give less thought to how they package, price, and deliver their goods and services. They tend to operate more by chance and impulse, and less by analysis and deep thought. They also tend to run out of cash or become so cash flow crimped that they must cut back on crucial expenditures that limit their future potential.

OK, so you bring a lot of energy, ideas, and enthusiasm to your business. But not having a business plan is like not having a rudder or a navigational map. How important is a rudder? Bismarck suffered minor damage herself, despite several direct hits. There was fear that Bismarck was invincible and would roam the Atlantic sinking Allied convoys and warships at will. The navy ordered dozens of warships to follow Bismarck, leaving troopship convoys carrying tens of thousands of soldiers totally unprotected from the danger of German submarines.

A squadron of British fighters and torpedo planes eventually located and attacked Bismarck. They caused little overall damage but did score a direct hit on her hull.

For years I competed in the book publishing business. However, I was a minnow in a highly competitive sea dominated by whales. Nonetheless, by the time I sold this business, my profit margins were three times higher than those of the largest publishers.

I had developed a business plan that truly differentiated us from our competitors in way that mattered. The authors were the brand names more than the publishers, so an established author had bargaining power. I sat down with my employees one year and very carefully thought through our strategy and our business plan. We decided that instead of bidding tons of money for big name authors, we would focus on our own series where we owned the brand.

Instead of waiting for a literary agent to propose a book topic to us, we would research and decide what book topics were most saleable and go find our own writers. We paid a good fee, but we paid no royalty. So if the books sold well our costs were a fraction of other publishers.

There are many other instances where having and following a good business plan made a huge difference for me.

Yes, I am aware of these tales of people who managed to succeed without a business plan. I admit it is possible to succeed in business without a plan, especially if you start with a truly unique concept and plenty of funding. But not having a plan will greatly decrease your odds of success. Why shoot yourself in the foot and then try to prove that it is still possible to run a marathon?

But why handicap yourself? Or maybe they are just lazy about writing one. The nature of the human mind is to avoid deep thinking and to avoid challenging our currently held beliefs. So instead we might tend to work long hours day in and day out, all year long, doing things the same way, as opposed to really thinking deeply about whether or not we are working on the right things at all. I believe many business plans lack a truly differentiated strategy, utterly failing at one of the core purposes of a business plan.

For example, I often hear independent retail business owners say they differentiate themselves by offering superior customer service. To develop a successful differentiated strategy, a good business plan should first carefully analyze customers, customer needs, and competitors.

Plenty of business plans do a decent job of summarizing the basic competitive inputs. But many plans fall short when it comes to the critical and insightful analysis that is required to move from summarizing the facts to assessing strengths and weaknesses and then probing for risks and opportunities. There are many other reasons business plans are often worth little. They may not be realistic. What are you selling? What's so great about your product or service?

How will customers benefit? How is it better than your competitors products or services? Do you currently have or anticipate developing a prototype, or filing for a patent or copyright?

Note all planned activities. For example, if you are writing a plan for a coffee shop, you would include a detailed menu that would outline all your products. Before writing the menu, you would include a short summary indicating why your particular menu sets your business apart from others. You may state, for example, "Our coffee shop will provide five different types of beverages, including coffee, teas, smoothies, soda's, and hot chocolates.

Our wide variety will be a key competitive advantage as we can provide a diversity of product offerings that our main competitors are currently not offering". Write your marketing and sales strategy.

In this section, explain how you intend to penetrate the market, manage growth, communicate with customers, and distribute your products or services. Will you use sales representatives, billboard advertising, pamphlet distribution, social media marketing, or all of the above? Make a funding request. If you will use your business plan to secure funding, include a funding request.

Explain how much money you need to start and maintain your small business. Provide an itemized summary of how start-up capital will be used. Give a timeline for your funding request. To accurately complete this step, in some cases it might be necessary to hire an accountant, lawyer, or other professional. For one full year, provide monthly and quarterly statements. Each year after that, yearly statements. These documents will be placed in the Appendix Section of your business plan. Include projected cash flows for at least 6 years or until stable growth rates are achieved and if possible, a valuation calculation based on discounted cash flows.

Write the executive summary. Your executive summary will serve as an introduction to your business plan. It will include your company's mission statement and provide readers with an overview of your products or services, target market, and goals and objectives.

Remember to place this section at the beginning of your document. When was the business first conceptualized? What are some notable growth benchmarks? Start-ups will focus more on industry analysis and their funding goal. Mention the company's corporate structure, its funding requirement, and if you will provide equity to investors. Existing businesses and start-ups should highlight any major achievements, contracts, current or potential clients and summarize future plans.

This is the very last section and it's meant to provide additional information. Potential investors might want to see this information before making a decision. The documents you include here should support claims made in other sections of the business plan. There should a section clearly outlining the risk factors affecting your venture and your mitigation plans.

This also indicates to the reader how well prepared you are for contingencies. Review your business plan for spelling and grammatical errors. Do this several times before deciding on the final version.

Rework or completely rewrite content to ensure it works from the perspective of the reader. This is especially true if you are creating a "presentation plan". Read your document aloud. This allows you to detect if any sentences do not flow together well, and it also makes any grammatical mistakes more obvious. Make a copy and give it to a trusted friend or colleague to proofread and provide feedback.

Create a cover page. The cover page identifies your document and gives it aesthetic appeal and professionalism. It also helps your document to stand out. Your cover page should include: The words "Business Plan" centered in large bold font, along with your company name, company logo, and contact information.

Not Helpful 11 Helpful What is a marketing business plan sample for a boutique and fashion store? Not Helpful 14 Helpful You can start with something small. Business cards, website, or anything that will alert people about your company. When your emotions get the best of you, having a business plan lets you step back, and take an objective look at what you are doing and why, what you know for a fact and what you are trying to figure out.

To make sure everyone's on the same page: Chances are, you are not building a company by yourself. Ideally, you'll have partners, so you can launch faster, smarter, and with less need to pay employees or suppliers. Even if you don't have partners, you'll have family, friends, and advisers involved. A business plan helps get everyone involved in your start-up heading in the same direction. To develop a game plan: At a start-up, execution is everything. That means you have to set priorities, establish goals, and measure performance.

You also need to identify the key questions to answer, like "What features do customers really want?

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A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've .

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Oct 23,  · The marketing and sales plan section of your business plan details how you plan to reach your target market segments, how you plan on selling to those target markets, what your pricing plan is, and what types of activities and partnerships you need to make your business a success/5(). And in the game of business, the number one trick is having a fabulous business plan. Takeaways You Can Use. Your business plan is the business. Running a business without a plan is like sailing a ship without a rudder. If you don’t have a differentiated strategy, your business plan is worthless.

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Jan 20,  · How to Write a Business Plan. Four Parts: Doing Your Homework Structuring Your Business Writing the Business Plan Sample Business Plans Community Q&A. Creating a business plan will help you achieve your entrepreneurial goals%(22). The business plan is the blueprint for your business. You wouldn't walk over to an empty lot and just start nailing boards together if you wanted to build a house. Starting a business without a business plan is just as foolish. .