Far too many aspiring entrepreneurs jumpstart their businesses without taking the time to properly plan. Just as a builder uses a blueprint to ensure a new construction project will be structurally sound, a carefully researched and well-thought-out business plan allows you to determine whether your business concept will actually succeed and make money.
A solid business plan can not only serve as a roadmap to guide your company's progress, but it can also give you an opportunity to test the validity of your business model, research the market, understand your competition, and avoid potential pitfalls. And if you are applying for a loan or seeking investors, a business plan is a must-have to demonstrate that you've fully vetted your business' financial feasibility.
In the end, developing a solid business plan can be the difference between your nascent business's success or failure. While you should consult with your Family Business Lawyer™ before you open your doors to ensure your company has the proper legal, insurance, financial, and tax (LIFT) foundation needed to survive and thrive, here are 7 tips for creating a winning business plan.
1. Communicate Your Company's Purpose And Vision
Developing a plan to make money is important, but it's not the only—nor most crucial—factor. In addition to identifying how you are going to generate revenue, you also need to understand why your company exists (its purpose), and what you hope to accomplish (its vision) with your brand.
Your company's purpose and vision will serve as your organization's compass for making future decisions at all levels and provide a framework for how you market and run your operation. Once you've come up with your business' purpose and vision, you can more easily define what makes your business unique from competitors, and how you plan to deliver your product or service to the public.
2. Identify Your Competition
When creating your plan, it's vital that you understand who your competitors are and how your company is different—and better—than them. How do you plan to set yourself apart from other companies? Is there enough market share to support your business in your chosen market?
Keep in mind that your competition isn't always another business—it might be a completely new technology that renders your new business obsolete.
3. Outline Your Business Model
While your business plan is a broad overview of your company's purpose and how you plan to fulfill your goals, your business model focuses on the specific ways in which you plan to generate revenue. In other words, what are you going to sell, how much are you going to sell it for, and who is going to buy it? This is a critical part of your business plan if you're seeking financing or investors.
That said, outlining your business model is necessary even if you don't plan to raise startup capital. Indeed, the process of developing financial projections, including an estimate of start-up costs, a break-even analysis, a profit-and-loss forecast, and a cash-flow projection, will help you decide if your business is worth starting, or if you need to rethink your concept.
4. Be Realistic
Be conservative in all your financial estimates and projections. Being overly optimistic with projected sales and revenue is a common error among new business owners. One safe route to take is to go with half the amount you think is possible with your first estimate.
In the end, it's much better to underestimate and over-deliver than set expectations that can't be fulfilled.
5. Support Your Claims With Evidence
Have evidence to back up every claim you make in your business plan. For example, budgets, projected sales figures, and profit-and-loss statements can back up your financial projections, while website traffic data can back up your digital marketing plans.
Within your plan, include all the variables that can potentially impact your assumptions, and then explain how you intend to manage those variables.
6. Set Specific, Time-Based Goals For Your Business
Be specific with the goals you set for your company, and identify specific action benchmarks that you can track. Setting defined goals sharpens your focus and gives you a way to track your company's progress as you grow your operation.
7. Get Help From Outside Professionals
While you may be a whiz at delivering your core product or service, you likely aren't nearly as skilled at some of the more nitty-gritty aspects of your operation—crunching numbers, negotiating contracts, dealing with insurance, and preparing your taxes. This is where you should seek the guidance and support of outside professionals, including your Family Business Lawyer™.
When developing your business plan and starting your company, we can help ensure you don't overlook key areas of your operation that can negatively impact your chances for success, particularly those involving the legal, insurance, financial, and tax (LIFT) components of your business.
Don't Neglect Your Foundation
From keeping financials and creating solid agreements to managing taxes and buying insurance, these tasks may not be very glamorous, but ignoring them can seriously stunt your budding business—and even lead to financial ruin if you're sued or audited.
As your Family Business Lawyer™, we can ensure you have the foundational legal, insurance, tax, and financial (LIFT) systems in place, so you can focus your time and energy on growing your new business. Schedule a LIFT Start-Up Session with us before launching your new company, and then, as your operation grows, meet with us again to implement the full suite of systems offered in our LIFT Foundation System and Toolkit.
This article is a service of Karl L. Chen, Esq., Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business.
Call us today to schedule at 301-358-3981.