Business planning and coaching can seem unnecessary to the business startup entrepreneur who simply wants to get his or her business idea off the ground and into the marketplace as quickly as possible. However, nothing could be further from the truth. Entrepreneurs who skip the business planning stage find themselves floundering in their first year of operation, unable to grow their business because they don’t have a roadmap for success.
What is a business plan?
A business plan should act as a road map that helps you navigate your business toward profitability. Like all maps, business plans are most valuable when they are specific to your objectives and location. Think of a business plan as something that addresses who, what, where, when, and why. A good one will also include how and provide details on expected revenue streams and key financial information such as balance sheets, cash flow statements, and profit-and-loss projections. Writing a formal business plan is often overwhelming for many entrepreneurs; that’s why some outsource it to professional services or hire an experienced entrepreneur with strong leadership skills to be their business coach or mentor.
Reasons why you need a business plan
It’s easy to get caught up in our own heads, especially when you’re an entrepreneur and don’t have someone looking over your shoulder. As a business coach and mentor in Florida, I talk with my clients about it all the time: entrepreneurs need to take action instead of thinking that great ideas will execute on their own. Take all your amazing ideas and put them into action by writing down your business plan! Still wondering why you need a business plan? Here are six reasons:
1. To help you with critical decisions
The best business coaches and mentors are invaluable for entrepreneurs. Many start-ups fail not because of a lack of sales, money, or resources but because of poor decisions that result from inexperienced leadership. A good business coach can help you develop skills to avoid these pitfalls and execute your plan correctly from day one. They’ll also be there to provide encouragement when things get tough and act as an objective voice during critical decisions, so you don’t make bad calls based on stress or inexperience.
2. To avoid the big mistakes
One of the biggest mistakes an entrepreneur can make is assuming that their idea is airtight, only to realize after investing thousands of dollars and months of work into a venture that it just isn’t solving their customer’s problem. A business plan won’t guarantee your success, but at least you’ll have thought about all potential angles and not have any regrets later on down the road.
3. To prove the viability of the business
You need a well-thought-out business plan to show investors, lenders, and partners that your business is a viable investment. A good plan shows that you have considered all aspects of starting and running your company—market potential, customer profiles, competition, financing requirements, industry trends, and much more. A good business plan also helps answer some big questions:
- Is there a demand for your product or service?
- Who is your market?
- What makes you different from competitors?
- How will you make money?
- How will you spend it?
- Will you succeed based on past experience?
- How will you measure success at each stage of growth?
All these answers are included in a great business plan.
4. To set better objectives and benchmarks
At first, entrepreneurs may try to create their business plans on their own, but it doesn’t take long for them to realize they’re missing key information. This is where most entrepreneurs need help – someone who can help set better objectives and benchmarks. When starting out, it’s important to define all that you want your business plan to achieve. In short: what are your goals? Answering these questions sets your path and gives you a roadmap. It also allows you to identify gaps between where you currently are and where you want to be.
5. To provide a guide for service providers
A well-written plan is helpful to you and provides structure and direction for anyone who works with you. A coach can read your business plan and better understand what you’re doing, how you’re approaching your vision, and how they can help. It’s also helpful when they use it as a template to track milestones.
6. To Manage risk
A business plan manages risks by allowing you to prepare for them. Potential investors don’t want to give you money without assurance that you know what you’re doing and that your business idea is viable. A business plan is essentially an investor’s checklist for success—one they want to see before deciding whether they want to invest their money. For some, it will be more than just that; others are simply looking for an educated opinion on how well your idea could succeed and how competitive your industry is at large.
If you’re serious about starting a business, don’t skip the business planning stage. A good business coach and mentor can help you develop a realistic plan that takes into account your unique strengths and weaknesses, as well as the competitive landscape in your industry. Implementing a solid business plan is the best way to ensure success as an entrepreneur. What are you waiting for? Get started today!