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Why Is a Business Plan the Most Important Step in Starting Your Business?

The American polymath, Benjamin Franklin, once said… “If you fail to plan, then you’re planning to fail,” and he was right.

But how do you draw up a successful business plan? And why is it the most critical step in starting a new online or bricks-and-mortar enterprise? This article aims to answer these vital questions and others so that you can prepare better. But first, let’s look at the failure rates of new businesses and what you can learn from them.

Learn from the Mistakes of Others

It’s true; every new business venture carries an element of risk, and the failure rates are high. However, much of this collapse is due to poor planning and or execution. According to the Bureau of Labor Statistics (BLS), the US failure rates look like this [1]:

  • 20% of all small businesses fail within the first year
  • 30% fail within the second year
  • 50% fail after 5 years
  • 70% fail in their 10th year.

It’s also true that entrepreneurial types are naturally confident and relish a challenge. They’re not afraid to fail and will learn from their mistakes if they do. Even so, no one wants their business to flop, and proper planning reduces those threats.

Now let’s look at what the mistakes of others can teach you.

Avoid these Common Pitfalls

All new business owners work from a plan, but they don’t all prepare well. That’s their downfall. Poor financial foresight or underfunding are the most common reasons for early failure. Employing and holding onto incompetent staff will also drag a new startup under, so will costly, unsuccessful marketing initiatives.

And never underestimate the significance of the right business name and logo. What you call your company can have a major influence on both growth and perception.

What Makes the Perfect Startup Blueprint?

OK, the “perfect” business blueprint doesn’t exist, as there will always be unforeseen events. Still, there is such a thing as a poor plan, and you CAN avoid that.

The way to prevent early failure is to create a clear written description of your business model. It must tell you what you hope to achieve, how you expect to get there, and the predicted results. And that all begins with your plan.

9 Key Concepts of a Successful Business Plan

Every business plan is different, but they all share the same or similar vital concepts. Treat it as a work-in-progress that you can adapt as necessary. You can use the traditional (most detailed) or lean startup (abbreviated structure) approach. The point is to make a start, as nothing can happen until you take this crucial first step.

The 9 key concepts of a successful business plan are as follows:

  1. Executive summary to encapsulate the longer report
  2. Your company overview and its goals
  3. The products and or services of your venture
  4. Market opportunities that will help your company grow
  5. Sales and marketing strategies and potential
  6. Competitive analysis to assess competitor’s strengths/weaknesses
  7. Operations planning
  8. Your management team and roles
  9. Financial analysis to assess viability, stability, profitability

But what if you know what you want yet have trouble putting your thoughts and ideas down on paper? It’s a common problem among the inexperienced.

Step Back… but Not Too Far

Many green entrepreneurs major in minor details and overcomplicate strategies. If this is you, consider adopting one or more of these three options:

  1. Get a trusted team member to help draft your plan
  2. Hire a professional third-party consultant
  3. Use business plan software

#1 Get a Trusted Team Member to Help Draft Your Blueprint

Two minds can often prove better than one. Consider asking a trusted, committed team member to help draft your plan. It helps to bounce ideas off others as they may pick up on things you miss and vice versa. But as the owner, you must stay involved and make all the final decisions.

#2 Hire a Professional Third-party Consultant

The best business plan writers are professionals in their field. These are people who know what it takes to develop a successful blueprint. They can create a plan that makes perfect sense and will impress investors or lenders. Look at them as part of your investment and use them from the outset or to help revitalize a failing plan.

What to Look for in a Consultant

All professional business plan writers have credible websites to support their services. It should be their full-time job and not a sideline that makes them a little extra cash. An experienced business planner has many satisfied clients and the feedback to prove it.

#3 Use Business Plan Software

Software apps can be a great help, but they’re not all equal. Look for a product or service that offers what you need. For example, some programs include step-by-step instructions or wizards to help devise your plan. They may also create reports that compare the financials with your goals and much more.

Expert Reviews Matter

Expert reviews matter because they help you make better-informed decisions.

The reputable review platform, EduReviewer, is an excellent place to start. Its trusted team of experts gives detailed reviews of the best business plan software. They look at critical factors like the effectiveness of the user interface and ease of use. Edu Reviewer also scrutinizes pricing, plans, overall value, guarantees, and more.

Listen to the Experts

More startups are seeing success today because of the way they plan. Prosperous entrepreneurs listen to experts, stick with the winners, and learn from failures.

The American investor and fund manager Bill Gross understands why some businesses succeed and others fail. After extensive research, he shares his findings with the world.

 Closing Thoughts

Your new and exciting business venture starts with an idea that later transfers to your plan. Try to stay focused and positive as you prepare. Be mindful of where you are now and where you want to be. Check that your information is correct, and remember to add reliable facts and statistics.

Finally, review your conclusion and get ready to execute.

Good luck!

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