How many business owners thought about business plans while they were getting started? How many business owners do you know have business plans either for their business or personal life? Business planning is the key to success. The type of business plan, and at what stage of the business it should be written depends on what you want to accomplish.
- 1 Why Do Most Small Businesses Fail in the First Year?
- 2 What is a Business Plan?
- 3 Why Write a Business Plan?
- 4 What are the Benefits of Business Plans?
- 4.1 Provides Future Focus
- 4.2 Serves As a Roadmap
- 4.3 Serves As a Communication Tool
- 4.4 Provides a Basis for Investment Decisions
- 4.5 Helps Identify Areas Where Business Owners Are Weak
- 4.6 Provides A Contingency Plan
- 4.7 Provides A Business Strategy
- 4.8 Provides a Basis for Evaluating Investment Opportunities
- 4.9 Helps Business Owners Avoid Common Myths About Successful Businesses
- 5 Why You Should Consult with a Business Lawyer Before Going into Business for Yourself
Why Do Most Small Businesses Fail in the First Year?
There are many reasons for business failure.
9 out of 10 business fail in their first year. Some business owners blame a poor economy, lack of business experience or getting into business too late (after the prime earning years). Others say that it’s because banks won’t loan money to small business owners. However, many business owners involved in business coaching and business planning say that the #1 reason why businesses fail is because business owners didn’t have a business plan.
What is a Business Plan?
Definition: A written document setting out an overview of your business, its financial projections for at least 3 years, strategies, operations and policies. Like a roadmap for business, business plans should be both long term and daily business objectives.
Why Write a Business Plan?
There are thousands of business books on business planning with countless business plan examples and templates available. However, all good business book authors say you should write your own business plan.
What’s Included in A Business Plan?
Business plans are generally divided into business planning, business finance and business marketing.
Business Planning – this section of your business plan discusses the business opportunity, the business concept, market demand for products or services provided by your business, business competencies and capabilities to meet customer requirements, future business objectives and strategies to accomplish those objectives.
Business Finance – business owners must know the business costs when determining business pricing and business profitability. The business finance section of a business plan provides business owners with this essential business information.
Business Marketing – Your business marketing plan should respond to your business planning goals, such as increasing customer satisfaction in order to increase sales revenue. One way of achieving these business objectives is by business planning and business pricing your business products and services accordingly.
What are the Benefits of Business Plans?
Writing business plans benefits business owners in numerous ways. Here are nine important reasons why business planning is essential for small business success.
Provides Future Focus
Enables business owners to focus on the future rather than just day to day business issues.
Serves As a Roadmap
An important business tool, business plans outline business objectives and strategies business owners need to accomplish in order for business success.
Serves As a Communication Tool
Business plans can be used as a business plan template or business plan example when communicating with other people like employees, bankers, investors and business partners.
Provides a Basis for Investment Decisions
If business owners need to raise money or attract investors, business plans are essential.
Helps Identify Areas Where Business Owners Are Weak
There may be areas business owners don’t understand very well. Or perhaps business owners have strengths in certain business areas but lack business experience in other business areas. Business plans will help business owners identify business strengths and business weaknesses.
Provides A Contingency Plan
What would business owners do if their business failed? Without a business plan, there may be nothing left to do except close the doors. However, with a solid business plan in place, management can focus on growing the business, business owners can focus on making business decisions and business investors can make business investment decisions.
Provides A Business Strategy
Business planning is the process of developing a business strategy to achieve business objectives. For example, one business strategy may be to develop new markets within 3 years. Another business strategy may be to reduce costs by 20% in order to improve business profits.
Provides a Basis for Evaluating Investment Opportunities
When business owners evaluate investment opportunities, they should use a business plan to ensure they don’t lose money.
Helps Business Owners Avoid Common Myths About Successful Businesses
There are many myths and misconceptions about success: like believing that you have to be in business for yourself, or that business owners live glamorous lives. Business plans can help business owners avoid myths and set goals accordingly.
Why You Should Consult with a Business Lawyer Before Going into Business for Yourself
Many business owners have an idea of how they want to run their business. But most do not have any idea how to start or more importantly, how to set up and operate the business in a way the complies with law, minimizes risk, and creates a firm foundation for success.
For example, business owners may not know what happens to the business and its assets if the owner divorces, becomes disabled, or the business fails and must dissolve. Further, most business owners are not aware of the governmental regulations, tax issues, and employment related concerns that arise when operating a business.
Reduce Liability Risks
It’s important for business owners to hire business lawyers early on to help minimize potential liability risks to the business and the owner.
Business owners should retain attorneys early on because business lawyers can provide recommendations based on potential legal risks, which business owners may not have considered.
Maintain Business Continuity and Succession
Business lawyers help plan for continuity and succession. All business owners hope they will succeed. However, a lot of business owners don’t think about what happens when they do. A business lawyer can also help plan for the operation of the business long term, including how the business can and will be transitioned when the time comes for the owner to move on.
Protect Your Business
It is paramount to protect the business legally, and not wait for something to happen to seek help. If legal troubles arise, a business lawyer can represent you and help through the troubles.