By: Jeff Bell, Partner at Rankin McKenzie
A business plan is a compass that can lead entrepreneurs to make the right decisions over and over again. However, many business owners find excuses to not write a business plan. Here is a list of just five of the many reasons why a business plan can fast track your success.
- You are forced to be clear about your strategy. By answering questions about your target market, products offered, and pricing models, you can properly find your niche through your business plan. Once your niche is clearly defined, you can make decisions about the best strategies to focus on those customers.
- You assess the competition. A SWOT analysis (strengths, weaknesses, opportunities, threats) helps you identify how to be successful in the market by offering benefits and solutions that your competition may be neglecting. In addition, the SWOT analysis helps you anticipate and prepare for potential problems (threats) that could arise in the future- social, economic, and regulatory and others.
- You develop a marketing plan. Using the SWOT analysis and the crucial niche, the marketing plan further develops the target market, the most effective promotional strategies, and can even define the brand voice of the company. Without a defined marketing strategy, companies often fade into the sea of other businesses in their industry.
- You set goals, objectives, and proposed milestones for the future of the business. These projections can fuel the growth of the company as business owners and employees work to meet those standards. Everyone needs a little motivation and the business plan can be where it all originates.
- Finally, you forecast revenue and expense projections for a particular length of time, usually at least two years. It is essential to figure out how long it will take to be a profitable entity. By going through the exercise of listing all the expenses (rent, utilities, technology, salaries, etc), you calculate how much revenue needs to be generated for the company to be profitable on a monthly and annual basis. If your business is offering an amazing service but won’t be able to pay the bills for the first year, the business plan can be the reality check you need to realize that you might need more cash to get started.
Clear strategy. Analysis of the competition. Marketing plan. Business goals, objectives, and milestones. Revenue and expense projections. Just five of the many ways a business plan gives you a competitive advantage.