How many times have you heard a lecturer say that the place to begin a business is with a business plan? What comes to our minds when we hear or read this is a picture of a think formal document. How necessary is this. Some recent research casts doubt.
Peter Economy, who co-authored Lessons From The Edge: Success Secrets for Starting and Growing a Business asked 75 successful entrepreneurs that started out with home based businesses about their business plans. Almost every one said that in hindsight they would not have created a business plan. They indicated that it’s better to dive right in than to plan out every little thing, and said that the only time they needed a formal business plan was when they needed to get outside financing.
David E. Gumpert, author of How to Really Create a Successful Business Plan, and Burn Your Business Plan! concluded from his survey of 42 private investors that half of them had invested in companies without seeing a business plan. Almost 2/3 of them said that an overall evaluation of the business was more critical than a business plan. It seems that business plans are a remnant of the pre-Internet era, ensconced in business school programs and countless textbooks.
Despite these findings business plans are valuable as a means for doing the work that needs to be done if you are a novice to business. Many free tools are available for creating business plans, such as are available on sites like Women’s Economic Ventures , http://www.bplans.com/, http://www.abcbizloans.com and Enloop.com. Learning all you can about a business and your market however, is always a critical exercise. You should be able to answer the following questions before you start any business:
- What exactly is the nature of your business? For example, are you selling gourmet chocolates? Are you renting construction equipment? And so on.
- Who is going to buy your product or service?
- Why should people buy what you are selling?
- How is your product or service different than what is already in the marketplace? How will you reach your target customer group?
- What tasks do you need to do first to get started? Can you organize your tasks in order of priority, first, second, third, and so on. How will you set the price you will charge?
- What will your costs revenue be?
Putting your answers to these questions in writing is helpful, but it doesn’t have to be a complicated 50-page business plan. As we say in our eBook Why Aren’t You Your Own Boss?, the key is to always move forward toward your goal, and to refuse to allow obstacles (like being paralyzed by a formal business plan) get in the way. Every day define at least one goal to accomplish tomorrow, write it in a notebook, and then when you get it done, cross it off your list.
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