Business planning: From idea to reality
Take the time now to build a strong foundation by preparing a business plan for success.
Planning for success
Why do some startups take off while others fail to achieve their potential? According to Jeff Sloan, entrepreneur and cofounder of StartupNation.com, the reason often isn’t that they lack a compelling product, potential customers, hard work, or even money. “They fail because of a lack of planning. It seldom takes long. Many new businesses really don’t get off the ground in the first place because they haven’t thought through all the details.”
Business plan basics
The heart of the planning process is your business plan. This is a blueprint for turning your idea into a functioning, profitable reality. It can be brief, but it should describe the essential components of your company; tell your story to potential lenders, investors, or partners; and provide a clear roadmap to help you stay on track. Keep in mind that it’s a living document, so some of the details will evolve over time. There are no absolute rules, but a fully built-out business plan typically includes the following:
Executive summary. Briefly describe your company, management, objectives, and financial plan. Include a description of what your business is, the services it provides, and how it makes money. Also include your competitive analysis, marketing strategy, operating procedures, and any information about future employees. You’ll find more about these on the following pages.
Financial details. Estimates of your future income and expenses are essential, whether for potential lenders or just for your own planning. List all funding sources, estimate future revenues, and include projections of future cash flow. Estimate and track these details monthly for the first year or two, then quarterly.
Supporting documents. If you’ll be approaching lenders or investors, be sure to include any other relevant documentation, such as tax returns, personal financial statements, contracts, proposed lease agreements, insurance documents, licenses, and copies of letters of intent from suppliers.
Taking the plunge: Make a life plan
Will you run your business, or will it run you? Veteran entrepreneurs describe the startup experience as exhilarating and exhausting, empowering and all-consuming — sometimes at the same time. Even if your venture isn’t a roller-coaster ride, it’s going to be a big part of your life. Sloan advises that while you’re working on the details of your business plan, you should also make a life plan to help prepare for your new reality. Your plan should help you think realistically about how the startup adventure will affect your life, and how you’ll cope with those impacts. While it doesn’t need to be a formal document, it’s a good idea to write up the key points and keep them handy as a reminder. Here are a few considerations:
Involve your network. Keep your family, friends, and partners in the loop. They’ll form your support system, and their lives will be affected too.
Set goals. What kind of life do you want to have as a business owner? Personal milestones can help you keep an eye on your long-term priorities.
Set boundaries. It’s also important to recognize limits, such as how many hours or days a week you’re willing to put in, or what family responsibilities are mandatory.
Pay yourself. While “sweat equity” has its value, remember why you’re in business in the first place. When money is tight, one entrepreneur suggests cutting yourself a check anyway and stashing it in a drawer.
Take time out. Time management is an especially critical skill for small-business owners. No matter how busy things get, remember that a little regular down time can actually boost your productivity overall.
Are you ready for business?
Business owners are optimistic by nature, but sometimes it’s important to step back and be your own critic.