Early in my career, I sought advice from a seasoned business owner.
“Do I really need a written plan?” I asked impatiently, being inexperienced. He scoffed, “Why spend six months writing a plan? To start a business NOW!”
That was great advice, exactly what I wanted to hear. So off I went, and I was a modest success despite myself. But in hindsight, I now realize I could have been spectacular rather than modest.
If you’re an organized sole-proprietor, I imagine you can do just fine without destroying half a forest to memorialize your every proprietary insight. However, if you plan to seek funding, hire employees, or otherwise engage in activities to facilitate growth – you’ll find you really need someplace other than your head as a repository for your entrepreneurial vision.
The need for a formal business plan within small to medium enterprises (SMEs) is often the $64,000 question. If you’re seeking venture capital or other external financings, let’s call it a $6.4 million pre-money consideration because, without a business plan, you are not likely to get your hands on other people’s money.
A Written Business Plan Gives You a 90% Better Chance of Succeeding.
Each year businesses of all types fail because the founding parties forgot to do the one thing that raises the probability of having business success exponentially; planning! Do you have enough capital to launch the business and survive until you reach breakeven? When does breakeven occur? How many things do you need to sell to achieve it? What needs to get done, and will it be done in-house or outsourced? These are but a few questions addressed in a well-thought-out business plan, providing a roadmap for your success.
And while projections are guesstimates, at the very least, crunching the numbers will give you a sense of what it will take to make a viable, sustainable business.
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