Plenty of people are advocating that you skip writing a business plan for your new corporation. If you’re considering whether a business plan is really necessary, examine comments of Sean Hackney.
Hackney is the co-founder of Lion Energy Drink. That’s the Sun Valley, California, company that grew from a $62,000 investment into the Number 2 energy drink at bars and nightclubs. Hackney says that writing a business plan was essential for his corporation. He notes that committing his ideas onto paper was necessary for proper execution.
William B. Gartner, professor or entrepreneurship at Clemson University, echoes the significance of a written business plan. His study of 800 people in the process of creating businesses found that plan writing increased the likelihood of finally starting.
Gartner notes that those with written business plans were two and a half times more likely to actually launch their companies. That is, they more easily went from business idea to functioning corporation.
In addition, Gartner’s study indicates that entrepreneurs with business plans conducted more market research. They also created cash flow projections that permitted them to get started with required funding.
However, this doesn’t mean you need to stress over consideration of every possible detail before moving forward. William Bygrave, profession emeritus at Babson College in Massachusetts is a longtime researcher of entrepreneurs. He explains that a brief business plan is best because you can instantly explain any of the factors contained in it.
The key element in a 20 to 40-page business plan is how the company obtains its first customers. Not only do these sales provide revenue to sustain operations. They also validate the business concept. The initial customers are valuable sources of information that permit you to obtain feedback for refining your business plan.
So your business plan may not have the perfect long-range marketing plan. But you do require a plan for obtaining your first customers. Address personal and professional contacts that you can reach for trying your company’s product or service.
Then, your business plan needs to define a mechanism for obtaining follow up on each sale. The procedure can involve phone calls or personal letters of thanks. Use this process to request comments in exchange for something extra from your corporation, such as a future discount or referral fee. As a result, your plan permits you to implement better planning as your business grows.