Starting a business can be a daunting adventure if you don’t put a proper plan in place. Most entrepreneurs start their businesses without putting in place proper plans to succeed. It’s no wonder that one out of every five businesses collapses within 5 years! If there’s one thing you should take very seriously, it’s your business plan. This is your “plan for success”.
Every business starts with a thought. A thought or idea can only become a reality when the expected actions are taken. When an idea is conceived, the logical corollary is to write it down, in black and white and on paper; otherwise, the idea will fade away when the enthusiasm that the thought initially brought disappears. Therefore, having a written business plan is relevant if your business is going to stand the test of time.
Now, what is a Business Plan?
One definition, according to entrepreneur.com, is that a business plan is a “written description of the future of your business; a document that indicates what you intend to do and how you intend to do it. If you notice a paragraph on the back of an envelope describing your business strategy, you have already begun a written plan, or at least the first draft of a plan. The business plan itself consists of a narrative and several financial worksheets.
The act of planning itself helps you think things through in a systematic and comprehensive way. Study and research your niche market if you are unsure of the facts, and look at your ideas critically. It may take some time now, but it helps to avoid costly and disastrous mistakes in the future.
In this article, I want to take a very brief look at the steps involved in planning a business:
1. Identify your passion: Knowing what you like to do, even without making money, is the starting point for starting any business. Most people enter a business they know nothing about, and stop after a few months. Some get tired of their business simply because they are no longer happy with the activities involved in running the business. According to Sabrina Parsons, (CEO of Palo Alto Software) “Know yourself and work on a job that satisfies your strengths. This knowledge will make you happier.
The reason why many companies fail in their first five years is that entrepreneurs no longer find satisfaction in managing their business. Therefore, they tend to move forward in the pursuit of happiness.
You should look inward evaluating yourself and identifying with what is good. If what you are good at makes you happy, think about how you can monetize it and turn it into a business. You do it by sharing your passion with others. However, passion alone is not enough to start a business. You need to plan, set goals and, above all, know yourself.
2. Conduct an intense market study: As mentioned above, passion alone is not enough to determine the type of business you should be involved in. You need to be sure if there are people who are really interested in paying for what you have to offer. Apart from that, you need to identify the category of people who can pay the prices of your products or services, and in what amount.
You also need to determine how to attract your potential customers. How do you intend to reach your target customers? How do you plan to distribute your products to your target customers? How do you know the actual price potential customers are willing to pay for your products? These and many other things are what you should know before investing your money in starting any business.
3. Write a business plan: A business plan is a written document that describes your business idea. Your business plan will give you a sense of direction toward achieving your business goals and objectives. It describes what you want to do, when to do it, where to do it and how to do it. A written business plan can also be used as a guide to managing your successful business.
Writing your plans helps you anticipate the future of your business. Anticipating your business helps you identify and possibly avoid any challenges that could harm your business in the future.
4. Register your business: After you have written your business plan, you should register your business so that customers will take it seriously. Apart from that, registering your business makes your business have a life of its own. It separates you from your business. Any serious entrepreneur must have his or her business registered.
The most common type of business is that of a Sole Proprietor. You run your own business and keep accurate books of account (for tax purposes). You deduct your expenses and pay taxes on profits. This is the simplest type of business to open.