When setting up a business, those murky new waters can be tough to navigate. Think wisely and write up a business plan to help you succeed. Here’s a few tips on how…
The importance of a well structured business plan has been much disputed amongst social scientists and entrepreneurs alike over the years. Some prefer to dive in head-first when it comes to starting up a business. Others prefer to sit back and put pen to paper, drafting a structured business plan. Whilst some research shows that a business plan has no direct effect upon any subsequent success of the business, other studies have highlighted the need for organisation.
William Bygrave, an entrepreneurial researcher and professor at Babson College in the US, studied several of his graduates in 2006 to compare the success of those with a business plan compared to those without.
Bygrave reported that start ups with a formal plan had no greater success than those without. However, he didn’t denounce business plans altogether. The findings of the study showed that graduates who had taken a business plan writing course were twice as likely to start up a business compared to those who didn’t take the course, highlighting an organised mind to be a key factor in the business psyche.
Another William, this time William B. Gartner, believes a business plan to be the key to success. Being the entrepreneurship professor at Clemson University, he knows his business-y stuff. Looking at data from the Panal Study of Entrepreneurial Dynamics, a national generalizable survey of more than 800 people in the process of starting businesses, he and his colleagues found that once you’ve written a business plan, “You’re two and a half times more likely to get into business”. He continues “That’s powerful”.
Whether or not your business plan involves the putting of pen to paper, or simply committing your strategy to memory, both of our above Williams agree that some form of organisation is required to go forward into the business of business. So, following on from our Wills’ advice, let’s look at a few tips for forming a useful business plan…
- Keep it short and sweet
Your business plan will give an outline of your business, your short term and long term aims, and the market in which it will fall. You should keep it brief and to the point, so as not to have loads of jottings to go through later down the line. Be sure to be precise in what you want from the business, and how you’re going to make those goals a reality.
- Know your market
Doing your research can really help you get an idea of how well your business can fit into the current market. Keep an eye on the blog for a detailed article on conducting market research.
- Money, money, money…
Your business plan can help you no end when applying for financial aid. Most start-ups need a little help along the way, and this requires some strategic thinking and planning to prove to the powers that be that your business is truly worth a shot. Be sure to have a realistic plan for any funding you might need. Having an estimated figure for the costs, sales and revenue of your business is essential when setting out, so you can plan for all outcomes, be it great success or financial flop (contingency plans are recommended!). Every penny really does count.
- Give your plan some breathing room
Like all good plans, your business plan must have room for movement. Start ups are subject to much chopping and changing, and although you should try and make your financial figures as accurate as they possibly can be when trying to foresee your very own business future, you should always be prepared for obstacles to spring from nowhere and delay your progress. Stay flexible, whilst sticking true to your opening goals, and you should be heading in the right direction.
You can find some more great advice (and some free templates) to help you on your way to your business plan from The Prince’s Trust.