What is the first thing you do when you have a business idea? Ask any accomplished entrepreneur and they will tell you that the first thing a person should do when they have a business idea is to make a business plan. The importance of a business plan cannot be emphasized enough. Most of the times when you have a business idea it may be more a thought than an actual idea.
The fact of the matter is that while you may think of it as a winning formula in your head it’s only really when it is imprinted on the paper and laid out in the form of a business plan that its workability is seen. There are many reasons why business plan is an inseparable part of your business’s foundation.
Why are entrepreneurs told to write a business plan as the first thing they should do with their idea? It’s simply because it is a critical tool that sets the stage and foundation on which the business empire is built on. When you make a business plan you are establishing a number of the critical issues that concern a business once and for all. Some of the issues that are settled in a business plan are outlined below.
- Who is in charge of running the business?
- Detailed research on the business’s target market
- The requirements of funding
- The projected statements of profit and loss
However it is important to note that despite its depth and detailed construction a business plan in the end remains a plan made before the business is actually started and it is almost impossible to have answered each and every question. The above paragraphs highlight the importance of a business plan. However, for a business plan to really be able to make a mark and work there needs to be a few hacks that need to be carried out.
If you ask the leading entrepreneurs they will tell you that there is a need for a number of different techniques and or hacks that you should carry out for your business plan to be effective. You need to remember that the success of a business depends on its foundations and the foundations of a business have a formally constructed, effective business plan in its roots.
Hack #1: Know Your Purpose
When you make a business plan the most important thing to note is the purpose of the business plan. Why are you making the business plan and what do you want to do with it? This will determine how effective or ineffective your business plan turns out to be. The primary purpose of a business plan is typically too highlighted to lenders, investors and other stakeholders or potential stakeholders of the business about the direction the business intends to take in on its way to making a profit.
Yet that is not what really helps the businesses. A business plan is not only created to highlight the potential of the business to outsiders, it acts as a map for the people in charge of the company to follow when running the company. First things first, why would an employee want to get out of bed and want to work for the company and what exactly does the company add to the existing economic landscape or market. These are two questions that need to be kept in mind when developing the core values and purpose of the business.
Thinking about the purpose of your business plan before actually making one need to be carried out carefully. The management of the business or the entrepreneur needs to be articulate about the core values since they will define the culture that the business adopts and the will act as a decision making guide for all future decisions.
Hack #2: Create a Vision
Before you set about achieving something it is important that you know what is it that you want to achieve. The key to success in a business is having a clear mind as to what you want your business to do and how long do you expect them to accomplish a particular goal that you have set. Another important thing here is that while it is good to have a vision etc, it is never recommended for you to have one specific strategy.
It is best advised that you come up with at least a few strategies that go hand in hand with the vision you want the business to achieve and lay those strategies down tentatively in your business plan.
Hack #3: Be Clear About Your Business Model
A business plan that is effective and has a chance of being implemented will typically include financial projections and statistical evidence to back up the claims. The fact that there is an inflow and outflow of money shown on your business plan doesn’t necessarily highlight that this is exactly how things will go. For that you will have to lay down a detailed business model. The business model will not only show the cash inflows and outflows but a good one will also look at other aspects.
The “what if” scenarios are important in the running of a business, making a business plan is not a burden to get off with as soon as possible. It is document that lays down your functioning. Hence for it to be effective you need to look at what if scenarios speculate and solve issues that could arise in this regard.
Hack #4: Identify the Name of Your Company and the Legal Structure
Technically these can’t be categorized as hacks since these are things you would have to do in any case. However, the hack is the order in which you do these things. The name of your company may be the first few things you think about but what about the legal structure? The legal structure of the company will dictate how a number of your business decisions are made. For example the options of financing and how you can achieve the intended amount of finance you want.
Hack #5: Try Your Business Idea out
This is tricky and probably something that will dictate the success and failure of your business plan. You may have a business model, a business idea and a organization structure in your mind. You may even have a number of different investors willing ti invest in your idea. But the important thing in making the best business plan is that you put the business idea to work to some extent. Maybe have a survey done, go online and search for the people who may make use of the product or service you want to offer, how do they react etc. This is an important part and must be done when the business plan is under construction. So that any misadventures could be highlighted and modified on your business plan to ensure that your eventual business plan goes ahead without a glitch.
The importance of a business plan has already been outlined and so are the hacks that could be used to make a business plan work. Yet what must be remembered is that no matter how good your business plan is you need to be smart, hard working and honest in its implementation for it to work and your business to be a roaring success.