Why You Need a Business Plan
You have that great idea that you are certain will bring in money.
Or, perhaps you have a passion and you want to make a living while pursuing it.
You might be an expert in some area and you want to roll that into a money-making project.
You have your dream, created your vision board, developed the skills/products necessary to seduce clients, and you even have the positive mindset to stay the course through the long hours it takes to fulfill your dream. Your new website has launched , business cards and brochures printed, and you are heavily engaged in networking and posted on all of your social media platforms.
You are doing all of these actions; however, there is still only a small amount of money flowing into your wallet. What are you doing incorrectly? The answer is sometimes simple. You need a business plan however, you failed to one that lists all of the steps you may need to take to overcome all of those pesky obstacles you might have to confront.
I have a client who was a flourishing potter, a successful professor, and a successful therapist. She sold book proposals to New York publishers and I gave dozens of exciting talks and workshops internally; however, she had never been able to break through her financial glass ceiling until we sat down for six hours while I forced her to write out her first business plan for the following year. It was simplistic. She created a three-column list which included her activities, the amount of time she spent on each one of them, and money earned from each activity.
Once we had it written on paper, we saw that some of her projects took hundreds of hours but only netted a few thousand dollars, while others took far less time and earned more. With everything on paper, we could prioritize. She began to work less on the $25/hr projects (total yearly revenue divided by total hours spent) and more on the $100/hr projects.
But she had to be very detailed. For example, she can write a book proposal in a hundred hours that would earn $100,000. That is $1000/hr, right? Wrong, because she still has to write the darn book and she claims to be a slow writer! With research and rewrites, a 1000 hours are involved before she hands in the manuscript. Now she is making $100/hr; however, there are three rounds of editorial changes and sales copy to write, webinars to be created to promote the book, marketing strategies and interviews.
When we totaled all this up, she understood that writing books earns her approximately $25/hr, even with a six-figure advance! She revised her two-page business plan we figured out how to invest her time more wisely in areas that could double or triple her income. Now we could begin to project what expenses she would have and what risks she had to take, and then she can share her plan with experts who could show her how to optimize her vision.
This is Business 101, taught to every MBA student in their first week of class. This is the keynote chapter in all entrepreneurial textbooks. To make money with a new idea/direction or increase your current income, you need to create a business plan. Don't skimp--it may take 10 to 15 pages (big businesses create 40 to 100 page plans).
Your business plan is a narrative describing what you intend to achieve and how you intend to achieve your goals. It is designed to share with others to get the advice and assistance necessary to realize your vision.
Following are some primary things to include (read a business textbook to expand on the key points):
Briefly divulge your product or service.
Describe the problem needing to be solved, or the need people want to have filled.
Illustrate how your service/product will solve that problem or fill that need.
Pinpoint your target market or the niche you will be focusing on. Don’t make the blunder of thinking that your product/service is for everyone. At least in the beginning, you will be more successful filling a small niche rather than providing something that everyone allegedly wants or needs.
Research your competitors completely. Study what makes them a success and unique, then define how your product/service will compete by offering something distinctive, better, etc.
Create a detailed 10 to 20 point detailed marketing strategy. How will you locate potential customers? What will your sales process be?
How will you put your product/service to test before delivering it? Before investing large amounts of time or money, you should discover if people want what you have to offer.
How will you assess customer satisfaction (surveys, follow-up calls)? How will you manage customer complaints? How will you service customers after their first purchase (upselling)?
Who will you need to employ or subcontract with to fulfill your marketing and sales plan? Who will manage the infrastructure--your websites, artwork, money laundering (just joking around to make sure you are paying attention!)?
Make a financial projection plan. How long will you take to earn X amount of money using the strategies you outlined above? Be realistic and moderate and also consult other experts in your field to see how many weeks/months/years it can take to reach individual goals. Identify how you will fund your start-up expenses and make a detailed list of those costs.
Talk your business plan over with at least three experts and determine how much you will need to invest in consulting fees. Clear, succinct communication, without any hype, is critical at this stage of development before launching your product/service.
Not having a written, detailed business plan is one of the major reasons that so many businesses fail in the first two to five years. Other reasons for failure:
lack of persistence
ambiguity in communicating to others
failure to delegate work to people possessing more expertise than you have
potential customer base is too small
the cost of attaining a customer is too expensive to reach your expected income
poor advice from others
running out of cash
poor service skills
poor product development
being inflexible or too idealistic
and a 100 other unexpected events.
I hope that you now understand why you need a business plan. If this seems overwhelming, just keep building and expanding. Most successful entrepreneurs learn how to do this in their 20s or 30s; however, it is never too late to begin.
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