Starting a business can be a very daunting adventure if a proper plan is not put in place. Most entrepreneurs start up their businesses without putting adequate procedures in place to succeed. No wonder one out of every five companies crumbles within five years! If one thing should be taken very seriously, it should be your business plan. This is your “blueprint for success.”
Every business begins from a thought. A thought or idea can only become a reality when expected actions are taken. When a picture is conceived, the logical corollary is that such statements need to be written out, in black and white and on paper, or else the idea will fade off when the enthusiasm that the thought initially brought subsides. Hence, having a written business plan is pertinent if your business stands the test of time.
Now, what is a Business Plan?
One definition, according to entrepreneur.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 notice a paragraph on the back of an envelope describing your business strategy, you have already started a written plan, or at least the first draft of a project. The business plan itself consists of a narrative and several financial worksheets.
The very act of planning helps you to think things through systematically and thoroughly. Study and research your market niche if you are not sure of the facts and critically look at your ideas. It may take some time now but helps to avert costly and disastrous mistakes in the future.
In this article, I want to provide a very brief look at the steps involved in planning a business:
1. Identify Your Passion: Knowing what you love doing, even without making money, is the stepping stone in starting any business. Most people enter into a business they know nothing about and stop after only a few months. Some get tired of their companies simply because they are not happy with the activities involved in running the company anymore. According to Sabrina Parsons (CEO of Palo Alto Software), “Know yourself, and work in a job that caters to your strengths. This knowledge will make you happier.”
Many businesses fail in their first five years because the entrepreneurs do not find fulfillment in running their business anymore. Hence, they tend to move on in search of happiness.
You must look within by evaluating yourself and identify what you are good with. If what you are good at gives you happiness, think of how you can monetize it and make it a business. You do this by sharing your passion with others. However, power alone is not enough in starting a business. You need to plan, set goals and above all, know yourself.
2. Conduct Intense Market Research: As stated above, passion alone is not enough in determining the type of business endeavor you should get involved in. You need to be sure if there are interested people in paying for what you have to offer. Apart from that, you need to identify the category of people who can afford the prices of your products or services and in what quantity.
It would help if you also determined how to attract your prospective customers. How do you intend to reach your targeted customers? How do you want to distribute your products to your targeted customers? How do you know the actual price that 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 towards achieving your business goals and objectives. It explains 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 successful business.
Writing down your plans helps you to anticipate the future of your business. Anticipating your business allows you to identify and possibly avoid any challenge that may bedevil your business in the future.
4. Register Your Business: After you have written down your business plan, you must register your business so that clients will take you seriously. Apart from that, registering your business makes your company have a life of its own. It separates you from your business. Any serious-minded entrepreneur must have his business registered.
The most common type of business is that of a Sole Proprietor. You run your business yourself and keep accurate books (for tax purposes). You deduct your expenses and pay taxes on the gains. This is the simplest type of business to open. It is also the most vulnerable to having your assets taken away by an angry customer who would file a lawsuit against you for whatever reason. This is one reason business owners opt for one of the other types of business setups.
A Partnership is a type of business where two or more people enter into a business arrangement. Two friends, etc., decide to open a business. If you choose to enter into a partnership, you need a document that details how the company will be divided if the association is broken up. It may sound crude to plan this before opening the doors, but it will save many heartache and expenses in the end. Besides, if you never dissolve the partnership – the document is never needed. This is one of those “it is better to have it if needed rather than need it and not have it” moments.
Corporations: There are several types of ways to incorporate. I am not going to get involved with a detailed discussion here. My recommendation is to plan on incorporating your business – hire an attorney with expertise in this area. There as several types of corporations, and your attorney can evaluate the facts surrounding your business and guide you to the most appropriate type of corporation for you to use.
5. Get The Necessary Capital: This is the most challenging aspect of starting a business. Getting the capital to finance a business is the primary factor that discourages most entrepreneurs from moving ahead with their plans.
There is no doubt that most businesses start through self-financing. The reason for this is apparent – Nobody believes in your dream until there is a physical manifestation. As a potential business person, you must learn to save aggressively to meet the financial requirements of operating your business while taking care of your family at the same time. You can also opt for loans from friends, family, or corporate bodies (banks, saving and loans, etc.).
A general rule of business states that in addition to your startup costs, you should also have at least six to twelve months’ worth of your family’s budget in the bank. To finance your company, you will need to match its needs to the appropriate financing option. You should seek the assistance of a good accountant in this area. The accountant will advise you on what is best in your situation and offer service in tax planning.
6. Taking Risks: Once the financial aspect of starting a business is settled, what risks you should take should be the following line of action. It would be best if you kept testing different things to ascertain what works well for you and your business plan. By accurately listing the acceptable risks you are willing to take beforehand (in your business plan) and in what situations these risks would be taken will give you valuable guidance when obstacles occur (and they will occur).
By having your plan of action already in place, it will be straightforward for you to refer back to your well-thought-out plan and decide on the course of action to take concerning a pre-identified obstacle to your business success.
It is essential to know from the beginning that you may fail in this business. You may not want to acknowledge this fact. I mean, who wants to “plan” on dying, right? But, recognizing this now will help to keep you going when you experience any setback in the future. What matters most in business is your level of discipline, persistence, and belief.
Whenever you experience any failure, go back to your business plan and pinpoint where you missed it so that you can implement the appropriate corrections. If the trouble you are experiencing was not identified in your original business plan, now is the time to add it to your project.
Take the time to go through all of the steps in identifying and mitigating 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) You are now adding this unforeseen problem to your plan! If it ever manifests again, you will be able to quickly determining what you did and if it was effective (saving time and stress later).
If followed, the steps above will help you build a top-level business that will could be your opportunity to change the world! Ensure you do not go into a business without prior planning.
Always remember the 5Ps – Proper Planning Prevents Poor Performance!
On my website, http://www.bobthibodeau.com, I am helping those who are new to Internet Marketing not make the same mistakes I (and countless others) have made getting started. I also help those marketers who are struggling in the area of getting their business going. I offer no promises – just plain, straightforward training and assistance for those who are serious about making a high online income.