Writing a Business Plan May Not Be Your Idea of Fun, But It Forces You to Build These 4 Crucial Habits
The average entrepreneur reacts to the term "business plan" with distaste, seeing it as a necessary evil when starting a business or seeking funding.
While the process of documenting your plan might not be enjoyable, the results you can get from it can be, as numerous studies have shown a direct correlation between a written business plan and a company's success. Equally as important, creating your business plan forces you to build many good habits.
Related: Business Plans: A Step-by-Step Guide
Your business plan forces you to set goals. You need to forecast what your sales will be this quarter, this year and in five years.
Creating goals is the first step to achieving them. And when you create them in your business plan, you are forced to support them. Specifically, you must explain how you will achieve those goals. Who must you hire? What type of marketing promotions must you implement? While you may not ultimately follow all the strategies outlined in your plan, you will assess multiple options and determine the best path to follow.
Goal setting clearly yields superior results than entrepreneurs who "fly by the seat of their pants." Getting in the habit of setting annual, quarterly and monthly goals will help your business grow.
The biggest fault of most entrepreneurs is that they lack focus. They start down one path, learn of a new idea and then pursue that new path. This is rarely a strategy for success. Rather, it typically results in multiple "partially built bridges." Importantly, 100 partially built bridges are worth nothing, while one fully built bridge could be all your business needs to be successful.
Your business plan forces you to focus. It does this most specifically in the "Milestones" section. In this section of your plan, you should document what your milestones are by month for the next three months and by quarter for the following four quarters.
Once you have these milestones documented, you'll gain the habit of judging all new ideas with regards to whether they'll more effectively allow you to attain your milestones. If they will, then pursue them. If not, table them so they don't distract you.
Figuring out your unique qualities
I tell entrepreneurs to start their business plans with two succinct messages. The first is a clear definition of your business. That is, what it is that you do. This is important since if readers can't clearly understand what kind of business you're in, they'll stop reading.
The next key message is to explain why you are uniquely qualified to succeed. The answer to this question varies. For instance, maybe your management team has incredible experience. Or you have patented intellectual property. Or you have unique relationships with customers or partners that your competitors don't. Or market trends have shifted and now require an approach upon which only your company can execute.
If your company is not uniquely qualified to succeed, then at the first sign of your success, you will have lots of competitors and nothing to keep customers from flocking to them. That's why in creating your business plan it's not only critical to think about why you are already uniquely qualified to succeed, but what can you do in the future to cement that position. For instance, should you seek patent protection? Would hiring this person allow you to gain an unfair advantage? And so on.
This is an important habit to form. You should always be thinking about why your company is unique and how to make it more unique, particularly if competitors are gaining on you.
Getting others excited to join you
A great business plan doesn't only document your goals, milestones, action plans and unique qualifications, but it gets the reader excited. The comparison I tend to use here is between an automobile's brochure and owner's manual.
While an owner's manual tells you every key detail about a car's features, it is boring and not something anyone reads for pleasure. Conversely, the car's brochure has cool pictures and sells the car's best features.
While your business plan needs detail, it should be more like the brochure then the owner's manual. It should get readers excited. You get them excited not by giving them boring industry statistics, but giving them statistics that prove why your company will be successful. You get them excited by showing how your management team has unique qualifications. And how your past successes make you likely to achieve future success.
When your business plan gets others excited, you can use it to raise funding, and gain customers, partners, board members and virtually anything else you need.
This is yet another important habit to form. You should constantly be getting others excited about your business, as this can prompt your long-term growth.
So, next time you sit down to work on your business plan, realize that in doing so you're building key habits that will allow you to grow a stronger, more profitable business.
Related Video: How to Write a One-Page Business Plan