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Starting a Business

Should You Write A Business Plan?
And Tips For Aspiring Entrepreneurs…


A sober step for aspiring business professionals is the construction of a solid business plan. The idea is that the plan will not only map out potential kinks in the road, but that it will also entice loan providers and angel investors to see the business as a viable, well-thought plan that provides minimal risk to them, should they want to part with some of the extra cash in their coffers. 

 

Is It Possible To “Skip” The Business Plan Step?

You may be surprised to learn that, in a recent Inc survey, only 40 percent of business owners said they’d completed a formal business plan before launching their enterprises. Of those, 65 percent said they’d strayed considerably from their original conception and adapted as time went on. You may not find it worth your while to create a business plan if:

  • You don’t need to / plan to raise capital from outside sources.
  • Your industry is highly turbulent and changing by the minute (like the tech industry, for example).
  • You’re faced with a fleeting opportunity and not a lot of time to “strike while the iron is hot,” as they say.
  • You aren’t investing much to launch, so there isn’t much capital to lose even if things do go awry.

 

Tip #1: Just Do It!

The business plan seems like such a daunting task, especially if you’re not really into writing or number crunching. However, once you break down your plan into sections and focus on one at a time, you’ll find the whole process is actually quite manageable. Think of your business plan as, not only a tool to acquire financing, but also as a representative who is trying to “sell” your business. A written business plan embodies the heart and soul of your business and can be a helpful referral document when you go into company meetings or bring fresh blood onto your team. Whether you want to attract top talent, land a big client, obtain a strategic alliance, or acquire another company, your business plan – if well-written -- will be the glue that seals the deal. So take time and care in developing your mission statement. Devise a clear big picture, but consider the road map and how you get there by prioritizing and creating short-term goals too.

 

Tip #2: Avoid Common Pitfalls.

You can run fast and free with your first draft, writing whatever comes to mind under each section and editing later. Yet, keep in mind some of these common pitfalls:

  • Failing to include successful competitors, for fear that the business won’t sound “unique” enough
  • Focusing too much on the future and forgetting to highlight past achievements and milestones
  • Defining the target market in too broad of terms, rather than examining the niche market size
  • Making overly optimistic, unrealistic financial projections that only “tell investors what they want to hear”
  • Trying too hard to sell the brand, rather than identifying the problem that inspired the company’s creation
  • Creating economic spreadsheets that work on paper, but not in the real world
  • Not focusing on the main challenges the fledgling company will face and outlining the team’s experience in problem solving. Investors don’t want your rose-colored glasses: they want honesty.

 

Tip #3: Gather Resources.

You are not alone! At this point, you’re likely so wrapped up in your own little world that you’ve lost sight of all the resources you can tap. Start by reading several books by masters of business plan writing (like Guy Kawasaki’s The Art of the Start comes to mind; so does David and Laura Gladstone’s Venture Capital Handbook.) Then pick up a software program to help you quickly and easy get through the task using templates, formatting and pointers. Palo Alto’s “Business Plan Pro” is a good go-to resource. Lastly, involve partners in the plan writing process and have experienced entrepreneurs in your inner circle read over the plan before you submit it anywhere.

 

In business, there is nothing wrong with calculated risk. When you create your business plan, you are identifying all these risk factors, delving deep into the intricacies of your market, and building your own confidence to tackle any obstacle that comes your way.  

 

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Related Articles:
INC: Seat of the Pants
Wall Street Journal: Why Business Plans Don’t Deliver
Small Business Administration: Writing A Business Plan


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