Business Planning

To Plan or Not to Plan:

business meetingMany leaders in the entrepreneurial world say that business plans are old school and a thing of the past. The need to put together a formal glossy-covered spiral-bound document is passé.   There is some truth to this theory, but not because planning isn’t important to the success of small business. The truth is that many entrepreneurs focus on the final document when in reality the power is not in the plan itself, but in the planning process.

Rather than being confined by the traditional outline of a business plan, the planning process is more like a portrait of your business model that communicates how you make money. There are nine building blocks that make up the business model canvas. The process starts with defining your target market and how you deliver value to these customer segments. The focus is on how you generate revenue. Then the canvas addresses what you need to have or do in order to meet the needs of your customers. From key resources to critical activities, this impacts your cost structure, and your bottom line.

Starting a business?

Being able to communicate your business concept is the primary reason planning is critical. And it starts with being a reality check for the entrepreneur. Before you quit your day job and dig deep in your pockets (or someone else’s), the first step is to test the feasibility of the business idea. You should be able to put the following writing:

Description of the business concept – What are you selling? What are the trends in the industry? How will you generate revenue?

Target market and customer profile – Who will buy it? How many potential customers are in your target market?

Competition – Who else does it? And what’s your competitive advantage?

Marketing – How will you sell it? What’s you pricing strategy? How will you deliver your product (or service) to your customers? How will you promote your business?

Management & Operations – Who are members of the key management team? What processes are necessary to produce and deliver your product or service? What equipment, staff and other resources do you need to start and run your business?

Financial Projections – How much will you generate in sales dollars on a monthly basis? What are your projected cost of goods and operating expenses? How much cash do you need to get started – including one-time costs and working capital? How much money do you have to invest in the business – and how much more do you need?

Once you have proven the concept, the plan becomes a communication tool to present to potential lenders, investors, or partners. It’s a forward looking document that demonstrates your understanding of the business and how you will successfully manage it over the next three years. And after you open the doors, the plan can evolve into an operating guide and a tool to measure your success at reaching goals you set for your business.

There are many tools available to help organize the information into a written plan. From outlines and samples to books and software, choose the tool that works best for you.

Live Plan is a great online business planning resource.   It starts with developing a “pitch” that highlights the most important parts of your business on a single page. Next, Live Plan’s step-by-step process makes it easy to get your plan completed quickly with professional results. You can find more than 500 sample plans to review. Check out Live Plan to see if it’s the right tool for you to get your plan on paper. www.liveplan.com

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