Three Characteristics of a Successful Business Plan
Of course, having a great product is the first step. But you won’t get anywhere if you don’t work on this.
Many early-stage entrepreneurs have no idea what is a business plan until someone asks them for it. Yet, businesses who create a business plan are 20% more likely to succeed than their counterparts who don’t. We’ve also found that creating a business plan makes you more confident when presenting your project.
While working on it, you’ll have to take a harsh look at every aspect of your business. As a result, you’ll be able to answer people’s questions quickly because you’ve already asked yourself these questions. So why are people so reluctant to take the time to write theirs?
Early on in the development of your business, it’s really easy to just focus on creating your product or service and think that the rest will figure itself out. Sadly, this leads to issues that could have been easily avoided if they had been dealt with earlier on.
“By failing to prepare, you are preparing to fail.”
― Benjamin Franklin
While there are a variety of opinions about how to build a business plan, I’ve found that there are four important characteristics every business plan should have.
1. Specific
When creating your business plan, you need to be specific. Many times, you’ll have to think about what your business will look like in several years. It’s crucial that you make all your information as precise as you can. This includes setting deadlines for your goals. Procrastination is human, and you’re much more likely to take actions if you’ve set a strict date for yourself and others to see.
It also makes it easier to know if you’re meeting your goals once you’ve set specific Key Performance Results (KPIs). The same goes for identifying your customer base: it pays off to be specific when trying to figure out to whom you’re selling. Just saying that you’re targetting “women” or “teenagers” won’t help you; what’s useful is knowing what women between the age of 25–40 or teenagers who love video games want in a product. Once you know this, you’ll be able to identify how to best sell them your product.
2. Realistic
This is of the utmost importance. You have to be 100% realistic and honest when working on your business plan. If you’re not entirely convinced that you can increase your sales by 50% in the next 6 months, DON’T tell your investors/banker/partner/employees that you’ll reach that goal.
It’s very tempting to toot your own horn and give the best-case scenario for everything, but it’ll only hurt you in the end. You’re better off saying you can increase your sales by 20%, and surpassing yourself than missing a target you set too high. This is the same when comparing yourself to competitors and measuring how you stack up. There’s just no point in lying or stretching the truth in your business plan: sooner or later the truth will come out.
3. Flexible
So you’ve worked hard on drafting a business plan that was both specific and realistic. Great. Now you have to make it flexible: your business plan is a “living” document that should evolve along with your business.
A certain portion of your plan is educated guess-work. As you realize that your assumptions are right or wrong, you should be able to adjust your plan if needed. If you see that the business model you’re defined isn’t working as well as you thought, don’t get stuck on that one just because you said so in your business plan.
You should be able to test another business model when needed — just update your business plan accordingly. In business, flexibility is key. There’s no shame in admitting that you’re wrong or that you made a mistake, as long as you’re willing to work and find a new solution to fix it.
Creating a business plan can be tough, but you don’t have to do it alone. At Bridge for Billions, we’ve helped over 750 entrepreneurs crafting their own validated business plan — thanks to a top-notch methodology.
