Many entrepreneurs out there just “wing it” when they start their business. No business plan, just some good ideas and maybe some awesome co-founders. Some make it work, but most don’t. Studies show that at least 50% of startups don’t make it to their 5th birthday. Overall, 90% of startups are said to fail.
Without further ado…
Why You Need a Business Plan:
1. You Need to Organize What’s In Your Head
Tons of ideas swirl around in that big brain of yours. As smart as you are, it won’t all make sense until you write it down in an organized fashion. You’ll save some ideas for later. Some ideas are incomplete and need work. None of them will happen unless you figure out how they fit together and how to execute them.
2. You Need to Do A Feasibility Evaluation
If you’ve shared your idea with friends and family you’ve probably gotten compliments, or maybe you’ve been met with massive skepticism. Either way, you can do the research to prove them right or wrong. Is Nana right? Will your business never get off the ground? Or have you done your research to prove that your business has a valuable place in the world? You need to put in the leg work to figure out who is going to buy what you’re selling, how they’ll hear about it, how you’ll make it all happen, and where you’re going to come up with the resources to do it all.
3. You Need to Create Realistic Goals
I think that realistic goals make the world go round. Research and running the numbers for your business plan will help you immensely in creating these goals. If you don’t have numbers about your market, your costs, your time or output, how will you know what you can achieve?
4. It Creates Built-In Accountability
When you run the numbers for your business plan, those numbers can serve as a benchmark. Are your costs out of control? Do you need to put more hours in? Is your marketing not reaching the right ears? If you or any of your employees have wavered off track from your business plan and what you’re shooting to achieve, you can assign accountability and fix it more easily.
5. It Will Increase Your Odds
By writing out your business plan, you increase your odds of actually going into business by 2.5 times. That doesn’t necessarily increase your odds of success once you go into business, but your business can’t succeed if you never start it!
6. It’s Responsible Entrepreneurship
Your family, friends, spouse, landlord, potential customers and future employees would greatly appreciate it if you had a complete business plan. If you haven’t taken the time to go through and figure out how your business will be successful, it would be a good idea to not drag others’ livelihood into it as well.
I’m not trying to scare you off, I just want to encourage you to create a business plan instead of just winging it. Doing so could greatly improve your odds of success. Your business plan doesn’t have to be a 40-page document riddled with spreadsheets and jargon. Plans change, plans can be scribbled on a whiteboard, on a napkin, on 45 napkins. It just needs to be a PLAN.
Just to be clear…a business plan probably won’t fix a bad business idea, but it could spare you the pain and cost of starting a bad business.
Tune in later this week for how to put together a business plan!