A business plan is the road map for the success of your business. It should get you from your starting point to your goal: from a basic business idea to a growing, successful business. A business plan also paints a clear picture of the barriers along the way and points out detours.
Why does an entrepreneur need a business plan? First and foremost, the Small Business Administration reports that small businesses increase their chance of survival by 50 percent by preparing a business plan. Writing a business plan forces a person to think logically about their business strategy and business model. At the end of the process, the entrepreneur has a realistic idea about whether the business concept will work.
In a recent column, Rhonda Abrams wrote:
In a highly regarded study that followed would-be entrepreneurs over a three year period, Professors William Gartner of Clemson University and Jainwen Liao of the Illinois Institute of Technology showed that individuals who intended to start a business were SIX TIMES more likely to actually launch a business if they completed a business plan. So, sure, if you just want to sit around the coffee house, shooting the breeze about your can’t-lose business concept, you don’t need a plan. But if you really want to start making money, you’re a heck of a lot better off by actually getting to work on your business plan.
Now that you know writing a business plan will increase your chance for success, let’s take a look at the multiple reasons why you write a plan.
- To analyze your competition. Creating the plan will enable you to analyze your competition, in the form of direct and indirect competition. It is critical that a business owner understand their competitive advantage(s).
- To analyze your customer. A business plan is going to help determine through research why customers buy when they buy. An in-depth customer analysis is essential not only to a business plan but to a successful business.
- To research your target market. Throughout the process of writing the business plan, you will be able to pinpoint the trends in your industry, the threats to your industry, whether the market is growing or shrinking, the size of the target market for your product / service and more. You will gain a much deeper understanding of the marketplace that you are choosing to enter.
- To seek investment. A formal business plan is the basis for any and all financing proposals. The business plan should answer investor questions such as: Does the company have an exit strategy? On what are the financial projections based? Is there a need for the product / service the company is providing?
- To determine financing needs. A business plan can help determine how much, if any, financing an entrepreneur will need to seek to make the concept work. The plan will also show what the capital will be used for and how the numbers work.
- To sell your business. A business plan is an essential part of selling a business. It helps buyers understand what the business is, who your customers are, what it may be worth and why they might want to buy it.
- To Set Goals and Grow Your Business. A business plan is a living document that should be revised and updated often. It should be a document that you use to measure performance and goals and to establish strategy and allocate resources.
A business plan is essential for new and existing businesses. When carefully prepared, a business plan is the blueprint that helps translate your ideas into the actions that build your business.
If you need assistance creating your own road map, please contact the Greenville Office of the Clemson Small Business Development Center at:
55 East Camperdown Way
Greenville, SC 29601
By Appointment Only