[Think Like An Entrepreneur Thursday] Ep. 20 Business Plans, Do You Need One?

When starting a business, I get asked all the time if you need a business plan.  I can tell you the answer is definitely yes. However, there is an answer of ‘it depends’ depending on how big that business plan should be.  

Here are some key metrics that you need to have down before you start any business.

It's important to understand that any plan you put together is a moving document.  When you begin, you’re going to make some predictions and projections.  No matter how much you think you know up front, there are going to be some things you miss. You will need to go back and change as you build.  Always go back and see where you’re on track and where you might be missing the mark.

Now, for business plans, the depth of the business plan will depend on what you need.  If you’re going in front of investors or banks, you need to be detailed.  The more outside money that’s required, the more detail you’re going to need.

Even if you start with little money, it doesn’t mean you don't need a plan.  

First, you need to know your business model.  You need to know what your product or service is, the customers you help, and how you’re going to make money.  I realize this sounds silly, but many people step into businesses with no clear path of how they’re going to make money.

Second, you need to understand the financials.  You’ll need to know operating costs, starting costs, and what you can expect from growth.  A general rule of thumb is to double the costs, and double the time, and you’re right on track.  You need to understand what’s required up front, and how long it’s going to be until you see profit.

Even if you’re putting little down, you want to know what this business is going to do in the long-term.

Third, you must have a marketing plan.  People do not build a business and it randomly builds.  You need to understand before you get into business that there is a market for this, who is in that market, and how you’re going to get in front of that market.  Before you get started, plan out how you’re going to get in front of them and the message you’re going to put out there.

Fourth, understand your competition and your unique selling proposition.  You will more than likely have competitors, so you have to understand what makes you stand out and what makes you great.  Also detail how you’re going to tie that in with your marketing.

Have any business plan questions?  Please post them below!