It is estimated that as many as 80% of businesses fail within the first 18 months of their ambitious existence. That means that only 1 in 5 make it – and that’s an inspiring stat for all the ambitious entrepreneurs out there who will realize their business dreams.
While there are obviously a number of factors at play that dictate how well your business will do, there are a couple of tried and tested steps that can help you crack that top 20%. And one of them is to ensure that you start out with a clear business plan.
Now, as outdated as that may seem, the era of micro-entrepreneurship claims countless victims with the illusion that success is only a click away. If anything, the comparative simplicity of starting your start-up has made aspiring businessmen cut corners. And one that often gets cut or outsourced is the creation of a sound business plan.
So what is a business plan all about and how can it benefit your business as you start the long road to success? Keep reading to discover the benefits of having a clear business plan and the effect that this kind of approach can have on your business.
It’s Easier to Impress Investors
Unless you’re an experienced entrepreneur, or fortunate enough to have substantial capital to turn your business vision into a reality, you’re going to need the investment and support of someone with the means to get you off the ground.
And in order to impress potential investors, you’re going to need a roadmap or plan to prove that they’ll get their money back with interest. To even be considered you’re going to need to a concise breakdown of what you’re planning on bringing to the market – and that’s really all a business is.
A business plan is an outline of an opportunity to create a profitable business in a chosen market. It is the evidence that supports your argument, and will be your foot in the door when you need to convince investors to take a chance on you. Go in without it and you’re likely to get dismissed as nothing more than a dreamer.
You Have a Roadmap
As much as your business plan will help you when you’re looking for external support, it is also a crucial point of reference for you as your business expands or grows.
Every business faces challenges and whether it’s unexpected success or a lack of failure, you need an anchor – a point of origin that keeps you focused and distraction free. The business plan is that roadmap, and it will help you retain the single-minded focus you need to succeed.
Making Provisions for Variation
The best thing about a solid business plan is that it forces you to plan ahead and make provisions for the unexpected. In order to forecast your performance you need to take three clear approaches to calculating your success – best case, most likely, and what happens if things don’t quite go according to plan.
In order to figure out these three streams of success, you are forced to do thorough market research, and all the data you gather will serve you well as you start your business up. A clear business plan will also help you move seamlessly between plans A, B and C to adjust to market fluctuation, because you will have already done the work before you open your doors.
Doing the thinking upfront takes the sting out of unexpected developments and will help you keep calm when that first month of sales – or lack thereof – makes you sweat.
Master the Elevator Pitch
Arguably the strongest benefit of having a clear business plan is that it ensures you know and understand your own business inside out. It’s a cliché, but in order to become a master of the elevator pitch you need the confidence and information to summarize and sell your product, service, or idea in a single sentence.
A business plan is how you gain an infallible understanding of what it is you plan to achieve and the exact steps you will take to make that goal real. The process of planning, testing, doing research, and adjusting your approach will all put you in a good position to impress people when you present your thinking.
Think of it as an exercise in concentration. Can you sell your idea without a computer or an endless array of stats? If not, it might be time to go back to the business plan. Take the time to build your understanding and that success you crave is closer to being yours.
About the Author
I am a regular writer for Forbes, Inc., Huffington Post, Entrepreneur Media (among others), as well as CEO and Chairman of Alumnify Inc. Proud alum from 500 Startups and The University of San Diego. Follow me on Twitter @ajalumnify