Do you have an idea to evolve your business or maybe even starting something brand new? Turning your vision into a reality requires developing a business plan. Here’s how to get started.
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Many people are waiting for all the stars to align before taking the next leap in their business or starting an entirely new company. Because of that hesitation, they never get around to fulfilling their dreams. But by getting rolling on developing your business plan, you can turn your dream into a reality faster.
In 2022, industries will continue to shift in new ways, and now may be the perfect time to take your project to the next level. To get started, it’s important to know what is involved in venturing into new territory or starting a business, and that’s where a business plan comes in.
Why is developing a business plan so important?
A business plan is a formal document that provides the roadmap for your company. It can help you navigate through tough decisions and can help you manage any challenges that may come your way. It will also help you stay focused on your end goal as you grow your business. And if you are starting a completely new venture, it’s essential to have one in place before applying for funding or securing partners.
To create a great business plan — whether for your startup, scaling business or mature enterprise — you’ll want to start with these steps:
Step One: Define your business goals
The first step in creating your business plan is determining the direction of your business (if you’re evolving into new territory) or what kind of company you want to start — along with your overall goals. For example, will you run a physical store, or do you prefer an online business? Do you want to sell a specific product or focus on services? Maybe you already have a hobby that you want to turn into a business, or you have an idea of an innovation you can bring to the market?
Once you define your ultimate goals, you’ll be able to start thinking about how you want to achieve those goals.
Step Two: Evaluate your business skills and knowledge
Many new business owners find it helpful to take classes in business to better grasp the intricacies of running a business. Online universities offer convenient solutions for those seeking to learn more about leadership, strategy, operations and general management.
If there are some areas of running a business that you aren’t well-versed in, you’ll want to leverage outside help or software that fills in the gaps. For example, if you’ve never managed payroll, software or apps can help. Many of these services provide same-day direct deposit, automation for payroll and payroll taxes, and time tracking.
Step Three: Define the structure of your business
Next, you’ll want to clearly define the best business structure for your venture. Incorporating rather than operating as a sole proprietorship does have its benefits. For example, if you form an LLC, you could be eligible for certain tax incentives, tax credits and business incentives.
You will need a clear idea of what products you will sell at the time of the company launch and how your offering will evolve with time to keep up with industry trends and client demands. You will also need to know if you will be selling directly to consumers, acting as a wholesaler, or offering a B2B service for other businesses.
Step Four: Get your financials in order
An important part of creating a business plan is planning out the financing aspect. What cost structure will allow you to create your product or service and have it reach your final consumer? This would include all the physical production costs, supply chain, marketing, and personnel costs for your company structure.
Once you have all of the above information, you can bring it all together. Make financial projections of what your sales and profits would look like over the first few years and what startup costs and cash flow you need to finance to start the business.
Access to funding will be crucial in getting your venture up and running. Invoice factoring can help build working capital.
Step Five: Research the market
The final step in creating a business plan is to research the competition. This will help you to avoid starting an unnecessary or unprofitable venture. Think of ways that make your company unique from other similar companies who are also competing for clients in this space. Answering the following questions will help guide your research:
- What is different about your products and services that only you can provide?
- Based on your product, costs, customer target, and competition, what would be the optimal price points for each of your products or services?
- How are you going to reach your consumers and let them know about your products?
There are many resources online today that can help you establish a solid business plan. And once you have it on paper, you will see that it makes your vision come to life and gives you a base document that you can work with to approach investors or potential stakeholders in your business.