A business plan is a roadmap for your business that outlines its goals and details how you plan to achieve those goals. And just like you wouldn’t go on a trip without a map, you should not enter into business without a plan.

You just landed yourself a face-to-face meeting with a prospective client.  You’ve washed your hands; you have your face mask and your hand sanitizer ready.  You get in the car to drive to their office.  Do you wing it?  Do you just say to yourself, “all roads eventually lead to where I want to go”, or do you trust your GPS to evaluate the quickest route to your prospect’s office?  I think I am safe in assuming you rely on your GPS.

Forging ahead in business without a business plan is winging it. Poor decisions can cost you time, money, and even your business.  Why not take out guess work with a business plan?  A business plan cannot guarantee that everything will work out seamlessly, but a business plan can help businesses grow 30% faster.  Some studies have shown that companies that had 92% growth in sales from one year to the next, typically have plans.  In fact, 71% of fast-growing companies have business plans.

Statistics prove that business plans matter. 

You cannot go to a bank or investor and ask for a loan without a business plan.  They require that a business plan be submitted with the loan application.  They need to read and evaluate your business plan because your plan will indicate the viability of your business.  You can have all the passion in the world regarding your business or business idea, but passion, in and of itself, does not translate to feasibility.

The most important attribute to business planning is not actually the plan.  You have probably heard that life is about the journey not the destination.  That is true in business planning as well.  The final document is important, but the research, strategizing, forecasting, and planning that goes into the business plan is the most valuable aspect.  The business plan helps you to talk to others about your idea, as well as helps you understand your target market, buyer personas, sales strategies, marketing strategies, operations, and cash flow.  It helps you nail down your why.

Building a business plan is like building a house.  You must start off with a good foundation.  The foundation of a business plan is success planning.  You need to dive deep into your reason for starting or running your business.  This should include your personal goals, personal financial resources, commitment, capability, character, and contingency planning?  This is the time to ask yourself why you want this business?  Why should you own this business?  What can offer the business?  What do you need from the business, financially and emotionally?  What kind of time and financial resources can you provide?  What happens if something goes wrong?  Many times, when I have coached someone on creating a business plan, he or she discovers that owning a business is not really the right choice for them.  For others, as they work on the business plan, especially the foundation, their passion ignites, and the flames of excitement abound.  By going through the process, you also undergo self-discovery, which helps point the prospective or existing business owner in the right direction.

After laying the foundation of a house, or success planning in business planning, it is time to build the first floor, which is market planning.  When crafting the market plan the following things needs to be considered:  products/services, distribution, customers, industry, and competition.  Don’t forget the four Ps of marketing:  pricing, promotion, packaging, and position.  All these need to be established in order to generate sales, a.k.a., revenue.  75% of a business plan is the market plan.  Do you know why?  You can have the best operations, product, cash flow, and people in the world, but if you do not have consumers, you do not have a business.  If you have read our other blogs, you know what I always say, “Marketing is not about creating demand.  It is about meeting demand.”  Through developing the market plan, the needs of the market will appear. That may cause you to pivot your business model, which ultimately could save your business and make you money.

Once the first floor is built, you can move on to the second floor: cash flow and operations planning.  A business owner needs to develop a cash flow projection.  According to a U.S. Bank study, 82% of businesses that failed cited that cash flow problems factor into their failure.  Cash flow isn’t about the money that is coming in and out.  Cash flow is about the timing of when money is coming in and out.  Look at a landscaping business.  Their money doesn’t flow in until the summer, so they wind up struggling during the cold seasons.  It is important to budget for the seasonality of a business and to prepare and analyze cash flow statements to make sure you are keeping on top of it.  I highly recommend employing a good accountant.

In terms of operations, business owners need to research and identify applicable laws, regulations, and issues that apply to their businesses.  This requires extensive research.  Also, this is the time to consider legal form of your business, i.e., sole proprietorship, partnership, limited liability company, corporation, or s-corporation, as well as the assumed name you choose for your business.  Insurance, taxes, tax-id numbers, employment relationships, insurances, recordkeeping, suppliers, and customer service should all be outlined in the operations segment.

Ultimately, the finalization of the business plan should determine the desirability, viability, and feasibility of your business.  While working on the plan, you may have to change course or pivot, but making mistakes on paper are much less time consuming and costly than in real life.

Your business plan should answer the following questions:

• What are your products or services?
• Who are your customers/clients?
• How will prospective customers/clients find you? How will you find and sell to them?
• Where is your business located? What does the location look like?
• How many employees are working? Who are they?  What are they doing?
• What is your role in the business?
• Do you like what you will be doing? Why?
• How do you see the business in two years? Have expanded?  Hired employees?  Moved?  Added new product lines?
• After two years what do you want your role in the business to be? Will it be right for you?
• Why do want to do this business?
• What do you personally want to achieve?
• What do you want your business to achieve?

Once the business plan is complete, the next step is to implement the plan.  The plan is the roadmap to create your dream, but the implementation of the plan turns your dream into reality.  Remember that the business plan is not just a document that occupies space on your cloud or on your bookshelf.  It is a living and breathing document that should be cited frequently and adjusted on occasion, much like a GPS may change your course when there has been a car accident causing a traffic jam.

If you have questions on how to craft a business plan, MPWRSource offers a Business Planning Bootcamp which utilizes the CORE FOUR Business Planning Course to teach aspiring or existing business owners the information and skills in business planning. Reach out to the MPWRSource Squad for more info today!