Start your business with a strong plan

Five tips to help your new business succeed

If you’ve ever dreamed of starting your own business, you know that can be a very compelling idea. But one of the first things you need to help you get started – and then keep going – is a solid business plan. Here’s how to get started.

Creating and continually updating your business plan is crucial if you want your business to thrive. A solid business plan provides a blueprint to guide how to construct and operate your business, giving it the best opportunity to grow.

There are also financial benefits to creating a strong plan. When the time comes to look for financing, a well-documented business plan can show potential funders that you have the knowledge, expertise, and planning skills required to earn their trust and financial support.

To make your business plan as strong as possible, here are five tips to guide your thinking:

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? Without paying customers or clients, there is no business.

It's important to look at your business from their perspective:

• Who specifically will place orders when you open for business? And why? Start by identifying your top five customers.
• Beyond the top five, who else are you going to market to? Make sure you define the exact demographic you'll be targeting.
• You'll likely be entering a competitive marketplace. Why will buyers leave the competition for you? 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 audience’s 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 local newspapers are standard ideas, but do you know if your target market is using those channels?

Allocating your marketing efforts 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. So too is including the research and 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 $10,000 per month, when it comes time to negotiate a lease, the costs may be more than you expect.

Location, a competitive rental market, electricity, insurance, and common area costs can add up quickly.

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 sorting your costs 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 things don'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 should big problems arise.

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 must also be realistic.

Lenders will want to know that even in worst case scenarios their loans will be repaid.

5. Adjust your business plan as needed and seek expert advice

Life throws opportunities – and challenges – at you that you might not expect. The same is true in business.

As you encounter both, you're going to have to adapt quickly. New revenue streams may open up and suppliers will compete 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 banking advisor who knows your business can help your plans stay on track.