Last time, we wrote about “What to do when your business is failing“, and we discussed tactics such as:
- Volunteers and Interns
- Product Line
- and Marketing Your Product.
Those are excellent areas to improve your existing business, but planning can help prevent a mid-business crisis. Surely, you’ve probably heard of a business plan, and you’ve possibly made one, but what does a business plan attempt to do?
The main goal of a business plan is to see what the future holds, and to verify if your business idea is even viable. If your business plan fails on paper, then you may have just saved yourself a ton of heartache.
Starting With A Business Plan
Business plans can be as detailed as you want them to be. The more detailed they are, the more helpful they’ll probably be. One quick note: don’t become a victim of analysis paralysis. Planning without ever acting is just a waste of time.
If you have the chance, I would suggest making a business plan for a fantastic market, an OK market, and a subpar market so you always have a plan that you can turn to. This will take a good amount of time, but it can serve as a road map when the economy tanks.
The biggest problem that most entrepreneurs have with business plans is getting the necessary information, and assembling it into a proper format. What I’ve done is gathered some excellent resources from across the web for you to use. Here they are:
- SCORE’s Main Business Planning Site
- Entrepreneur – An Introduction To Business Plans
- Entrepreneur – Elements of a Business Plan
- Entrepreneur – Types of Business Plans
- Entrepreneur – Finding the Right Business Plan for You
- SCORE – Conducting a Marketing Analysis Webinar
- SCORE – Determining Your Business Legal Structure
That’s enough information to digest for the next month. I know it seems daunting, but it will be worth it. Spend the time now so your business succeeds, rather than worrying later because you don’t know what to do next.
A Real Life Lacrosse Example
A few months ago, a Lacrosse store opened up near me. While you may not know, I happen to know that my immediate area is nowhere near the Lacrosse capital of the world. Maybe the proprietor of this business knew something I didn’t. Maybe the proprietor was cornering the untapped Lacrosse market in this area. I found these things hard to believe considering my knowledge of the area, so I gave the store a 1 year life span.
Assuming that the proprietor was properly capitalized then he should be able to make it a year right? Well, this was about 3 months ago, their sign is down and the store is empty. Why did this store fail? There could be any number of reasons, but I would be ignoring everything I’ve learned in statistics class if I didn’t naturally assume that it was a lack of planning.
Your Market Is Everything
I have a feeling that a couple of things contributed to the demise of this store. The top things:
- The market wasn’t properly researched.
- He was under-capitalized.
- He over estimated sales.
These are 3 extremely common reasons for business failure. Let’s talk about the market for now. Your immediate area will determine the success of your business. Depending on competitors and the demographics of the area, your business will either succeed or fail. You don’t start an RV store in an area that has a 30 mile radius of low disposable income.
The main question, then, is: how do I figure out the market around me? There are many services available that provide this information. One that I’ve played around with a lot is called Prizm by Claritas. It will give you a breakdown of their market segments based on a zip code that you give them. This is just the beginning of researching your market, but it’s a huge step in the right direction!
Planning for success is the most intelligent step you can take as an entrepreneur, or aspiring entrepreneur. Success most often doesn’t happen by accident. Success happens because of intelligent decisions, hard work, and perseverance. Are you planning for your business, what has your experience been with business plans? Let us know in the comments!