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WRITING A BUSINESS PLAN
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Writing A Business Plan ... I’ll Get To It Later
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Most small businesses are launched without ever creating a formal, written business plan. Unfortunately, most small businesses fail within their first 2 years of operation! Often, in hindsight, numerous factors can easily be identified as one of the many reasons why a particular business venture has failed (e.g. insufficient resources, poor management, unforeseen market conditions, etc…).
Almost all failed business ventures, however, share one common factor contributing to that company’s demise: INADEQUATE PLANNING.
I Don’t Have Time to WRITE a Business Plan.
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If you’re like most small business owners, you probably recognize that time is your most valuable resource. Honoring daily commitments to customers, suppliers, employees, family, friends, in-laws, etc… requires you to perform a juggling / balancing act that may leave you with little time to ponder your “long-term” goals.
Thus, while you’re speeding down the freeway (or sitting in traffic), conducting a meeting on your mobile phone while driving your teenager across town for his/her soccer match, “drafting a formal business plan” somehow slides to the bottom of your “To-Do” list.
Drafting A WRITTEN Business Plan Is CRITICAL To Your Success.
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Until recently, a well-written business plan and a “possibly feasible” business idea was everything you needed to woo investors into pumping hundreds of thousands of dollars into your “idea.” Now that the business-funding frenzy has ended, investors hold their wallets closer to their breast pockets. No longer is investment capital freely thrown at every business plan that was printed with a color-laser printer.
A formal, WRITTEN business plan, thus, is more important than ever. Although a mandatory, pre-requisite to obtaining funding, a written business plan can assist you in countless other ways as well. For example:
*Raising Capital.
A professionally drafted Business Plan is critical if you wish to convince investors that your business / idea is a worthwhile investment.
*Looking Forward.
The process of drafting a business plan will prompt you to think about matters that may have otherwise remained unforeseen.
*Estimating Startup Costs.
With the proper guidance (or the use of an effective business plan template) budgeting for the launch of a new business (or a new product or service in an existing business) can dramatically increase the likelihood of a successful business venture.
*Assessing Profitability.
A well-written business plan can provide a fairly accurate assessment as to whether your desired business venture will be profitable to you and or your investors. For example, if you are currently earning $50,000 per year in your current position, and your profitability assessment estimates that your share of company profits will be only $20,000 at the end of year two, you may want to re-evaluate your business model.
*Targeting Your Market.
The market that your business will target as its primary purchaser of products and services will dictate many other aspects of your business. For example: A clothing retailer targeting senior citizens will market his/her clothing very differently than one whose target market to the parents of boys and girls under 5 years of age. In addition to the different marketing strategies, the business targeting the “children” market must ensure compliance with a multitude of state and Federal statutes governing the sale, marketing, and manufacture of clothing to minors.
**To further complicate matters, you must consider the issues you will face if you will plan on offering your products or services on the Internet?
**What state’s laws should you observe: The state where you are located?
**The state where you are incorporated?
**The state where the buyer lives?
**…And what about sales tax!!!
Assessing Your Competitors
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Competition within an industry can both hurt and help your business. For example, as a competitor invests funds in an advertising campaign, he or she is increasing your consumers’ awareness of your particular industry, service, or product. The extraordinary expense involved in creating consumer awareness for a new product or service is often the death Nell of the company that was “first-to-market.”
However, once a general awareness amongst consumers has been created, companies fight to obtain BRAND awareness in order to differentiate their specific products or services from those of competitors.’ Ethical competitors that practice healthy competition may welcome you into the industry. Unscrupulous competitors, on the other hand, may engage in unethical practices in an attempt to prevent you from entering the industry all together.
*Start by Asking:
**What are my competitors’ strengths?
**What do they lack?
**How can my product or service BETTER.
Anticipating Potential Problems Unforeseen events can have dramatic effects upon a new business. Investing your time in just ‘plain old’ thinking…just imagining possible events and circumstances… can provide you with insights that may prompt you to take preventative measures today to minimize damage should an unforeseen event occur.
General Motors, for example, had launched a marketing campaign in South America for its “Chevy Nova.” Unfortunately, GM had failed to consider the Spanish translation for “No Va” which means “No Go.” After this costly oversight was discovered, GM soon renamed the Nova and launched a second marketing campaign.
How to Write a Business Plan
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Many professional writers and journalists follow a simple philosophy: Write it down and keep writing! Judge the quality of your writing and edit your work later. While the temptation to press the backspace key and correct a misspelled word during this “creative” phase may be strong…DON’T DO IT! You’ll be amazed at how much you can create if you refrain from editing your writing during the “creative” phase of the writing process.
Also, please attempt this “create now—edit later” process for writing in private. It is IMPOSSIBLE to write freely, without inhibition, while a colleague is peering over your shoulder, judging your misspellings, assessing the ‘stupidity’ of your ‘silly’ ideas and silently (or even worse…verbally), criticizing your grammar choices.
When you’ve run out of creative energy…set your work aside and save the editing and the spell-checking for tomorrow!
Conclusion
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Once you begin the Business Planning process, you’ll find that your Written Business Plan will soon become an integral part of your daily operations.
--Best of luck in all your business ventures!
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