Far too many aspiring entrepreneurs jump-start their businesses without taking the time to plan properly. Just as a builder uses a blueprint to ensure a new construction project will be structurally sound, a carefully researched and well-thought-out business plan allows you to determine whether or not your business concept will succeed and make money.
A solid business plan can not only serve as a roadmap to guide your company’s progress, but it can also allow you to test the validity of your business model, research the market, understand your competition, and avoid potential pitfalls. And if you are applying for a loan or seeking investors, a business plan is a must-have to demonstrate that you’ve thoroughly vetted your business’ financial feasibility.
In the end, developing a solid business plan can be the difference between the success or failure of your business. While you should consult with your Family Business Lawyer™ before you open your doors to ensure your company has the needed legal, insurance, financial, and tax (LIFT) foundation needed to survive and thrive, here are seven tips for creating a winning business plan.
01 – Communicate Your Company’s Purpose And Vision
Developing a plan to make money is essential, but it’s not the only—nor most crucial—factor. In identifying how you will generate revenue, you must also clarify and communicate why your company exists (its purpose) and what you intend to accomplish (its vision) with your brand.
Your company’s purpose and vision will serve as your organization’s compass for making future decisions at all levels and provide a framework for hiring a team, marketing and selling your services or products, and running your operations. Once you’ve come up with your business’ purpose and vision, you can more easily define what makes your business unique from competitors and how you plan to deliver your product or service to the public.
02 – Identify Your Competition
When creating your plan, it’s vital to understand who else serves the market you plan to serve. While these people are often considered competitors, you may be able to turn them into collaborators. The best part of clarifying your “competition” is that if there is a healthy market for the services or products you want, you’ll likely know that there is a need and desire for your services or products.
Document your research on the competition, identifying the market size, the market share you need, and what will make your product or service better and different from the others.
03 – Outline Your Business Model
While your business plan narrative is a broad overview of your company’s purpose and how you plan to fulfill your goals, your “business model” focuses on the specific ways in which you plan to generate revenue. In other words, what are you going to sell, how much are you going to sell it for, and who is going to buy it? This is a critical part of your business plan if you seek financing or investors.
That said, outlining your business model is necessary even if you are funding the business yourself, as you want to ensure that you’re clear on how your investment of time, energy, attention, and money (TEAM resources) will result in returns for you. Indeed, developing financial projections, including an estimate of start-up costs, a break-even analysis, a profit-and-loss forecast, and a cash-flow projection, will help you decide if your business is worth starting or if you need to rethink your concept. We call this process the development of a “Money Map” that doesn’t just take into account your financial outlays and objectives but your time outlays and objectives.
04 – Set Specific, Time-Based Goals For Your Business
Be specific with your goals for yourself and your company, including time-based benchmarks you feel confident you can meet. Setting defined goals sharpens your focus and allows you to track your company’s progress as you grow your operation.
Look out three years into the future, document the vision — both big picture and micro down to the numbers — and then walk that back to 1-year goals that will assure your 3-year success. And finally, walk that one-year vision back to quarterly actions that will get you to your one-year goals. We call this “practical magic” because each time we’ve walked our clients through it, we’ve seen them create magic.
05 – Get Help From Outside Professionals
While you may be a whiz at delivering your core product or service, you are likely too close to all of it to create your plans on your own. You almost certainly need legal, accounting, financial, and insurance support.
Don’t Neglect Your Foundation
From setting up your financials and creating solid agreements to managing taxes and buying insurance, we can support you.