Why jumping into business without a plan is like skydiving without a parachute.
You’ve added this to your bucket list. You have told all your friends. You’ve paid a pricey sum to get all the gear, book the adventure and now you are standing out on the wing looking at the view, there’s only one problem….no plan, no parachute…are you really ready to skydive into your next business venture?
Every optimistic entrepreneur needs a healthy dose of reality now and then. According to the Statistics Canada 34% of start-up businesses in Alberta fail. This statistic is not intended to discourage, but rather to encourage business owners to plan before they jump, to make sure your business will turn a profit and give you the lifestyle you’ve been dreaming about. A thoughtful, well-conceived business plan will increase your chances of success.
If you are looking for financing to get your business started the bank will generally ask you to produce a business plan….but it’s more than just a tool to access dollars to fund your dream. A business plan is a tool for understanding how your business is put together from start to finish, it’s a living document to be referenced, updated, tweaked time and time again. You can use it to monitor progress, hold yourself accountable and control the business’s fate. Writing out your business plan allows to ensure that your idea is viable, will it make money? Will it meet your expectations? Who do you need on your team to ensure you are successful? During the business planning process you review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan.
Let’s face it, your product or service may be great, you may be energetic, passionate and self-disciplined, but these characteristics alone will not guarantee success, not without the knowledge of how much operating your business on a monthly basis will cost you and will your pricing strategy be enough to cover those expenses and still put money in your own pocket.
Here’s eight essential questions that need to answer in the plan:
1) How much money do you need to start your business?
2) How much operating capital do you need?
3) How long can you survive without turning a profit?
4) How will you tell people about your new business?
5) Do you have systems in place to manage your finances competently?
6) Have you identified your customers?
7) What makes your product/service different or better that what’s already on the market?
Before you spend thousands of dollars in buying equipment to set up your business, signing a commercial lease, and preparing the fireworks for the grand opening, invest time discussing and writing a solid business plan- it’s time well spent. In fact, the more time spent, the better prepared you’ll be. It is pleasure as a business coach with the Rural Alberta Business Centre to work through the steps of the plan with our clients. I’d really like to help you put that parachute on before you jump into business.