Every successful company starts with a strong business plan
Five tips to help your new business succeed
Creating and continually revising a business plan is crucial to building a company that thrives. A proper plan is the blueprint that guides your business and gives it the best opportunity to grow.
When the time comes to look for financing, a well-documented plan will also demonstrate to potential funders that you have the knowledge, expertise, and planning skills required to earn their financial support.
To make your business plan as strong as possible, consider the following five tips:
1) Build your business plan with your customers in mind
You've got a great idea for a business, and you've planned for rent, salaries and other expenses. But do you know if there really is a demand for your company's product or service?
It's important to look at your business from your customer's perspective:
- Who specifically will place orders when you open for business and why? Start by naming your top five customers.
- Beyond the top five, who else are you going to sell to? Make sure you define the exact demographic you'll be targeting.
- You'll likely be entering a competitive marketplace. Why will consumers leave the competition for you, and what's your competitive advantage?
Identifying and focusing on the demands of your target market is a crucial first step in the business planning process. Without research and insight into your potential customers' needs, your business plan will be missing a critical component.
2) Design your marketing plan wisely
Planning to reach your target market using social media, digital ads and newspaper is great, but do you know if your target market is using those channels?
Allocating your marketing energy and budget where your target market is most active is critical. Some of this may be trial and error, but try to steer your marketing dollars where they're resulting in measurable returns.
Creating a marketing plan that is relevant to your target audience and to your industry is an important component of a strong business plan, as is including the research or data on which your decisions are based.
3) Know your costs intimately
While it may sound somewhat obvious, there's a difference between "guesstimating" your overhead and cost of sales, and truly knowing what they are.
For example, while you may estimate that your commercial space will cost about $2,000 per month, when it comes time to negotiate a lease, the costs may be more than you expect. Location, a tight rental market as we are currently experiencing in the Lower Mainland and hydro, insurance and common area costs can all add up.
It's important to include as many details on costs as possible when you create your plan. The more information you gather in advance, the fewer surprises you're likely to face down the road.
If you're seeking commercial space a commercial leasing broker will be helpful in your research and can even start negotiating the details of the lease agreement.
4) Include best and worst-case scenarios in financial projections
Including historical and projected financial information is crucial to a strong business plan.
As a business owner you're likely optimistic about future opportunities. But what if everything doesn't go according to plan? You can be forced to cut back on staffing, inject personal money into the business, or offer heavy discounts to drive sales if disaster strikes.
In this type of scenario, will you still be able to afford your overhead or will your business struggle? It's important to be optimistic, but you have to be prepared for the worst.
Lenders will want to know that even in the worst case scenario their loans will be repaid in full from surplus cash flow.
5) Amend your business plan as needed and seek expert advice
And finally, life throws opportunities at you that you might not expect. This is also true in business.
As you encounter both opportunities and challenges, you're going to have to adapt quickly. New revenue streams may present themselves and suppliers will start competing for your business. Making sure your business plan is always up-to-date helps ensure you stay on track to reach your goals.
Experience and specialized knowledge can also go a long way to helping your business reach its full potential. A long-term relationship with a business advisor who knows your business can help your plans stay on track.