Why do professional sports teams, with the best athletes in the world, spend time developing a game plan for each game played, yet many small businesses invest their life savings to live their dream with no plan? It shouldn’t come as a surprise to anyone that 20% of all small businesses fail in their first year.
You’ve heard it said many times, “If you fail to plan, you are planning to fail.” This quote is attributed to Benjamin Franklin, one of our Founding Fathers. Every business, whether start-up or existing, needs a plan. Creating a plan helps you define your business, your products and/or services, your customers as well as your competitors. Your plan outlines help you to identify your financial needs and your cash requirement for the first six months.
Your plan becomes a reality check on the sales and financial assumptions made including expense budgets, staffing, advertising and promotions, product pricing including overhead allocations and cost of goods sold. Having a plan allows you to test assumptions to understand the financial impact not only in the first year but also in years two and three.
As a start-up business, you invest your money, and when you do, you absolutely need a look into the future based upon your assumptions to determine if you’ve made a good investment. Your plan serves that purpose and allows you to measure actual performance against the plan.
Perhaps you’ve heard the quote “When you come to a fork in the road, take it.” That quote is attributed to Yogi Berra, a Hall of Fame catcher for the New York Yankees. Yogi was well known for his wit. When applying this quote to business planning, Yogi is telling you to make a decision and do something. As a business owner, isn’t it better to make an informed decision rather than just choosing an option without regard to possible outcomes? If we make better decisions by reviewing available data, why would anyone invest their money into a venture that is built upon assumptions?
Creating a plan may seem tedious and boring. At the Coastal Entrepreneurship and Innovation Institute, our goal is simple. We want to help you build a successful business and there is never a cost for our services. If you would like some help, contact The Coastal Entrepreneur and Innovation Institute at firstname.lastname@example.org. We will work together to build your plan.