Business Owners 3 of 6
You’ve probably heard the line before that says, “Failing to plan is planning to fail.” No one starts a business with the intention of it falling apart, or getting stuck in first gear. But the reality is that what makes a business successful is not always having an original idea. It’s properly executing on a strategic business plan that fits a need of consumers – which of course, first requires having a plan.
For starters, there are two types of business plans; the one you develop to start your business and the one you develop to grow your business. When you start your business, the purpose of a strategic plan is to ensure that you’ve fully thought through your business venture. Once the business matures, the focus shifts to your strategy on how you will adapt and grow within changing environments.
So whether you’re just getting started or have owned a business for years, here are 8 key benefits of having a business plan, and why without a plan, your business is more likely to fail over time.
- Market research – helps you ensure your opportunity is big enough, that a need exists for your product/service and that you have a competitive edge. “What problems are you solving for your target audience?”
- Marketing plan – helps you document how you will market your business. “Who are your target customers? How will you reach them?”
- SWOT analysis – helps you focus on your weaknesses and the threats to your business, not just your strengths and opportunities. “Who and what are you up against? What unique strategy or solution will help you grow?”
- Value proposition and/or Mission Statement – forces you to articulate your reason for being or your core values that become the foundation to your decision-making.
- Acquiring capital – a well documented, clearly articulated plan is necessary for financing or securing investors. “How much money to do need? How will it be allocated to give you the proper return on investment you intend?”
- Legal structure – helps you check the boxes on how to properly structure your business, based on the type of business, the risks associated with your business, your tax preferences and accounting methods.
- Human resources – helps delegate tasks and consider what additional human capital is necessary as you grow. Your time is valuable. “What can your employees bring to the table that will allow you to focus on working on the business instead of just in the business?“
- Setting goals – helps document where you expect to be in 1 year, 3 years, 5 years, 10. It should also then define how you will gauge success. “What key metrics will you follow?”
It may sound like a lot of time and effort, but remember that big corporations do this too. Something as simple as Kleenex producing tissues happens through what I can only imagine is a very comprehensive business plan, managed by a very experienced board of directors. So here are our suggestions to help you get started.
- First, make the time to do this plan. Organize a retreat of key players to help shape the plan and provide strategic insight. You can use a business-planning template to get started.
- Second, find an accountability partner (employee, coach, peer) and assign responsibilities based on the plan. Who is going to do what, by when?
- Third, transfer the key metrics into a financial plan which can help you define where to budget, how to invest and when and where to use leverage.
Securities offered through LPL Financial, Member FINRA and SIPC. Investment advice offered through U.S. Financial Advisors, a registered investment advisor. U.S. Financial Advisors and Haas Financial Group are separate entities from LPL Financial.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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