When you start a business, you need a business plan

A business plan helps you explore, define, and connect when you start a business. You’re deciding what type of business you’ll run, who your target market will be, and how sections of your business will work. Here’s how to use a business plan to get your business off the ground.

1.Come up with a business idea and evaluate it

What’s the deal with your business idea? Do you even need to pursue it? Is it going to sell enough to cover costs? Anyone else doing something like this?  

You’ll be able to answer these questions with your business plan. Using it, you can make educated guesses about everything in your business. Financial planning includes estimating sales, costs of goods sold, expenses, and cash flow. In addition, you’ll set up your strategy, tactics, milestones, and success metrics.

The best way to make sure you’re prepared and minimize risks is to evaluate your idea by developing a plan. You don’t need everything perfect. Your idea should, however, be valuable and sustainable if you know enough about it. Isn’t it a good idea to write these down before you take the risk? 

It’s best to keep things short and simple. Start with a lean business plan, which is just bullet-point lists and projections. Keep it to yourself and your team members, don’t show it to anyone else. 

In the end, you want to be able to answer the big questions. Do you really think this is a good idea? Does it work? Do you think you can do it?  

2.Tell your brand’s story

A business plan doesn’t just help you evaluate your idea. Additionally, it ensures your company’s core business operations are clearly outlined so people can recognize, like, and trust you. Your branding, value proposition, and company mission make up this.

It’s all about how your business looks and feels. What your brand stands for is defined by your mission statement. Your value proposition tells your customers how your products and services help them.

It’s usually a shortcut to failure to please everyone. You’ll be able to streamline your focus on the right people if you make these upfront. You create a brand position that resonates with a specific audience through effective market research. 

3.Identify your gaps in skills

You can’t know everything about running a successful business, just like you can’t serve everyone. Whether you have industry expertise, management skills, or specialized skills, you’re perfect for the job. There may be other areas where you’re not ready, like accounting, customer service, or marketing.

You can explore operational areas that you’re unfamiliar with and see what skill gaps you need to fill by creating a business plan. Your marketing plan, financial forecasts, sales channels, etc., will be outlined, even if you don’t have any experience. During this exercise, you can also mention specific roles or areas of operation you need to outsource.

Onboarding professionals will be directly linked to your startup strategy and milestones. This will help you figure out when to hire more people. Also, it shows investors you’re thinking ahead and know where you’re weak. 

4.Find a mentor

Your business plan can be your gateway to working with mentors, counselors, and business development organizations. One of the best examples is the U.S. There are more than 1,000 Small Business Development Centers that offer workshops, counseling, and mentorship. As part of the relationship, they really appreciate business owners having a business plan.

In addition to these formal relationships, there are informal relationships that can develop into mentorships over time. You might meet another business owner, someone you’re pitching to, an employee, or a random person at a networking event. 

A business plan can be a great tool for explaining a business to someone who might be able to help. Keep a lean, streamlined version of your plan, or even just your executive summary.  

5.Find suppliers and partner with them

To manage sourcing, suppliers, contractors, and inventory, business owners use forecasts and financial statements. You’ll plan sales and expenses in advance, review actual results, and make adjustments. 

Analyzing your projected sales and costs regularly will help you make better buying decisions. Stocking up on too much stuff can drain your cash. Sales and production can suffer if you don’t have enough. 

Having a good understanding of your finances will make dealing with suppliers and vendors a lot easier. If you’re prepared, you’ll be able to discuss growth plans, negotiate pricing, and change inventory. An alliance proposal can even be based on your business plan.

Making sure you’re fully prepared to have these conversations is the importance of a business plan. You’re not scrambling when your cash flow goes down or you take on too much inventory. Instead, you’re preparing and looking ahead with your plan. 

Funding your business with a plan

Most existing businesses need funding to survive. An early investment can help get a business off the ground. A business may take years to reach a point where it needs to grow faster. Here are some ways you can use your business plan to get funding and impress investors.  

6.Get your funding in order

Over the years, I’ve seen a lot of attempts to raise investment fail because entrepreneurs and owners didn’t know how much they needed. It’s always good to tell investors how much you need and what you’re going to do with it. The bank expects you to apply for a certain amount of loan. 

To get a loan or make a pitch, you’ll have to figure out how much money you need. It’s easy to estimate that total with your business plan. Plus, it’ll show why you need the money, how you’ll use it, and how it helps your business. 

You start by making educated guesses about sales, costs, expenses, and cash flow. You won’t need investment or loans if your projections show you can make it without other people’s money. It’s likely that if the projects show a deficit, you need money to fund them. 

7.Loan application support 

When you apply for a loan, your business plan is your best support. Small Business Administration loans and most commercial bank loans require a business plan. In your business plan, you should include sales, costs, expenses, and cash flow statements. Again, it should explain why you need funding, how you’ll spend it, and how you’ll pay it back. 

Business plans don’t have to be long anymore. It’s usually enough to get a loan with a lean business plan. You’ll get those essential numbers, plus short summaries of strategy, tactics, milestones, and metrics. 

8.Give investors a pitch guide

I’ve seen founders fail pitches because they couldn’t answer common questions. Ask questions like:

  • How much do you plan to spend on marketing? 
  • Can you tell me how much your gross margin is?
  • How do you figure out the headcount?

You could lose your chance at funding if you do this. Without a plan to back up your pitch, investors can tell. 

It’s also a myth that investors don’t read business plans. Investors often reject proposals based on just a summary, without reading the whole thing. When they like the proposal, the summary, and the pitch, they need the full business plan. 

I’ve never seen an investment made without investors reading the business plan in detail in 12 years with an angel investment group. Simply put, you need a business plan. By doing so, you’ll improve your pitch and make it easier to get funding.

9.Deal with funding once it’s received

It’s not just about getting funding, it’s about managing it. As part of your ongoing business planning process, you’ll lay out how you’ll use the funds. It doesn’t mean you have to stick to your strategy, but rather you are able to optimize how you leverage your money. 

Keeping track of results, including essential numbers and execution. Make sure you review those results regularly and revise as needed. Provide updates to your bankers or investors as needed. You won’t have to scramble to prepare your financial statements and strategy when asked.

Managing and growing your business with a business plan

Keeping your business plan up to date is the best and most common way to steer, manage, and grow it. It’s for you to run your business better. Plan your business like you would your car’s navigation system. 

It’s all about the long-term goals. Strategy, tactics, execution, and essential budgets are the route. When you’re driving, you’re tracking and looking at real-time info. By using them, you’ll know if you should adjust your route. 

Being aware of this helps you focus on what you need and don’t need in your business plan. Rather than writing a big business plan, you can write a one-page one. Business plans are a great tool for managing and growing your business.

10.Decide what strategy to use and how to execute it

Your business plan will help you clarify your strategy, determine your tactics, and track your progress. There’s no need to write elaborate text. Keep it short and sweet with bullet points that summarize and remind you what’s important. 

Keep your focus with this. Almost every business owner and entrepreneur wants to please their customers. In my business, I’ve always done that. 

However, we learn in the real world that small businesses are displaced. We can’t do what we don’t do. 

11.Measure business performance

In terms of strategy and tactics, this is directly related, but deserves its own focus. Defining milestones, key performance indicators, and success metrics isn’t the only thing you need a business plan for. As well as tracking and measuring this data on an ongoing basis, it’s a great tool. 

With these metrics in your plan, you’re always linking tactile performance back to your broader strategy. It makes performance reviews and revisions a lot easier. It also makes preparing your plan for a professional pitch much easier later on.

12.Think about what could happen

You can do a what-if analysis, also called a scenario analysis, to see what might happen. 

What if we opened another location? If we change the price, what happens? What if we hire another person? If we don’t reach our sales goals, what happens?

Business plans are great for scenario analysis. Save your current plan as the most likely one. Using your forecasts, come up with at least a worst-case and best-case scenario. Here’s where you outline specific strategies to take advantage of opportunities and prepare for crises. 

13.Revisions after a crisis

During a crisis, you can use your plan to develop an emergency response plan. When COVID changed everything almost overnight, business owners with well-established business plans were able to adapt faster. With their plan, they can keep track of strategy, tactics, metrics, milestones, and essential projections. 

By doing this, these owners could look quickly at educated guesses about revenue declines and adjust spending accordingly. To deal with the crisis, they adjusted timing, scheduling, and priorities based on milestones due, and performance against metrics. 

14.Decide when to start growing

Your business plan can also help you prepare for growth initiatives, like crisis planning. You can instead coordinate around changes in revenue, costs, expenses, and priorities instead of blindly guessing. 

You might want to launch a new website, a second location, or a new product at the right time. Taking any of these steps has the potential for big gains, as well as incredible risks if they’re not done right. Use your plan to better understand how introducing a website, location, product, or anything else will affect your business.

How long does it take to get traction? What’s the ROI that makes it successful? Are you able to invest right now?

Your business plan can answer all these questions, and take advantage of growth opportunities.

15.Adjust your plan based on results

Tracking your strategy, tactics, and execution with your business plan is the first step. Maintain an accurate view of your results by doing regular plan reviews. 

Keeping track of your plan and results will help you steer your business with course corrections as needed. A plan vs. actual analysis is perfect for this. 

If the results of a business plan review don’t match what you expected, you’ll always have to decide whether to change the plan or the execution. You have to decide if you should change the plan when results are better than expected. When you get bad news, you have to decide whether to change the plan or just improve execution.  

This way, you spend less time pulling together data and more time reviewing your plan. 

Business Plans you can use

Your business plan can be used for a lot more than this list. You can use a business plan to inform buyers before you sell your business. Business plans can also be helpful in divorce or estate executions. You can use it to develop a continuity plan when you pass a business on. 

Lastly, a business plan helps you determine the value of your business for things like sales, legal settlements, and taxation. Most of these use cases deal with selling, transitioning, or valuing a business. Similar to how having a business plan helps you get funding, it also eliminates the need to do extra work in these situations.

How do you make sure you use your plan? Make growth planning work for you 

Business planning is the key to getting what you want. It coordinates strategy, tactics, business activities, and teamwork, and focuses on results. There are probably even more specific use cases for your business than these fifteen.

There are many types of business plans, and you don’t always need one. One-page plans are great if you’re going to use them as internal management tools.

What’s the point of a business plan? It depends on where your business is at and what you need. 

You’ll use a business plan to deal with uncertainty and navigate early doubts and questions. You’ll use your business plan to explain your value to investors and lenders if you’re looking for funding. 

A detailed plan can help you start, manage, and grow your business. This is just a simple introduction to what a business plan is. We’ll explore and explain what a business plan is for each stage of a company.

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