Talking business with Coco Soodek: Why you need a business plan
In this video from our "Talking business" series, our expert discusses the role a business plan can play in the success of your business.
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I'm Coco Soodek. I want to talk to you about your business plan and how it is an absolutely invaluable tool for the success of your business.
You're busy. I get it. And you got a lot of things you got to do, but you don't have to spend four days writing your business plan. You don't have to throw everything aside just to get it done. You do it when you've got the time and the brain space, and you can do it when nothing else is happening.
Draw it out on a piece of paper. Write what you're selling, who you're selling it to, who's helping you do it, and how much money you need to get further. That's it. That can be your business plan. And every once in a while, maybe every week, you come back to that and you add a little bit more detail. And that not only will be your plan but also will chart your course for where you're going to take your business.
[Text on screen] Can I share a business plan with investors and bankers?
Investors and bankers want to see if you're a viable business, and you show that you're viable with your business plan. When you give them a business plan, they look at it to see if you've got a real business that makes sense, if you've thought through all of the variables and the risks that could impact your business success, if you've got a track record that they want to invest in, and if your numbers add up.
[Text on screen] I don't currently need financing. Do I still need a business plan?
The most important reason why you create a business plan is because you've got to get the ideas in your head out onto the paper so that you've got something that you can share with people and something that you can look back on.
The thing that people don't really focus on is you might need a business plan to give to a big customer. If you're going to land the big kahuna — if you're going to land a big client — that big client may want to see whether you're for real. They might want to see whether you've really thought through everything, whether you're viable. And one of the ways you demonstrate viability is by giving them your plan — your business plan — and showing them that you really do have a well-thought-out business.
[Text on screen] Can my plan help me track my financials?
You actually create your financial statements, or at least your initial financial statements, from parts of your business plan, particularly your projections. Your accountant or your CFO, they will look at your business plan to determine whether your financial statements accurately reflect what you're doing in your business, and also to evaluate how you're doing based on these goals that you've got in your business plan.
[Text on screen] What can a plan tell about my customers and my competition?
One of the big parts of writing your business plan is market research. And when you do that, you will learn who your target customers are. You'll learn who they are and what problem they're coming to you to solve, why they make the buying decisions they do, and how you reach them. Once you figure out your customers, that's going to tell also who your competitors are, because it's going to be the same people who are serving that market and selling that product and service.
So that's the moment when you start looking at those companies, and you see how they got started, what they've done, what they do, what works for them, and what hasn't. And you can learn an enormous amount from looking at the experiences of your competitors.
[Text on screen] Does my business plan need to be long and complex?
So many people get lost in this idea that they have to create a giant plan and then start executing on it immediately. That's not actually how it works. The problem is nobody really teaches how to create a business plan. They just assume we all know, and we don't.
That's why the Business Plan Center is such an important tool because the Business Plan Center will connect with information and with tools to help you get started or revise your current business plan so that you can achieve your new goals.