The Importance Of Planning In Entrepreneurship
Benjamin Franklin once said, “If you fail to plan, you plan to fail.” Planning is an important part of many aspects of our lives, and is especially true in business. Success often doesn’t simply happen by chance, but requires a willingness to plan and put in the work. This particularly rings true for entrepreneurs, as creating a business plan can help them determine the skills necessary to succeed. They can help you identify potential strengths and weaknesses, determine the strategies you are going to implement and communicate your ideas effectively. Once you understand the importance of planning in entrepreneurship, you’re better suited to create your plan. Let’s get started!
Key Elements Of A Business Plan
According to Entrepreneur, there are three main elements of a business plan:
- The business concept, where you discuss the industry, your business structure, your products or services, and your plans for a successful business.
- The marketplace section, where you analyze potential customers in your target market: who and where they are, what makes them buy products and services, etc… Additionally, you discuss your competitors and how you’ll beat them.
- The financial section consists of your income and cash flow statement, balance sheet, break-even analyses, etc… You may need to use a good spreadsheet software program and accounting software for help.
To break this down further, plans should include seven key components:
- Executive summary
- Business description
- Marketing strategies
- Competitive analysis
- Design and development plan
- Operations and management plan
- Financial factors
Additionally, a cover, title page, and table of contents should be included.
Who Needs A Business Plan
- Startups: The most common businesses that are writing up plans are those that are just starting and are seeking new funds. Many successful companies started by putting pen to paper and writing out a plan that convinced investors to give them the resources they needed to get them underway.
- Established firms seeking help: Well-established enterprises may also draft up plans to acquire funding for growth, though they may seek larger amounts of money from investors who are willing to provide for them. Furthermore, they may feel that they need a written plan to manage a business that is already growing quickly.
Types Of Plans
According to Investopedia, there are two main types of business plans:
- Traditional business plans are the most common. It consists of more detail in each section, is normally longer, and requires a lot more work.
- Lean startup business plans use an abbreviated structure that highlights key matters. They aren’t as common, as they are short (they can be as short as one page) and have very little detail. Companies using this plan should be able to provide more information if investors or lenders ask for it.
Regardless of which plan you choose, both options can be a great way to help companies pinpoint their objectives and stay on track. This can help businesses to manage themselves when they are first starting and to grow after they’ve gotten up and running. Additionally, they can also create an opportunity for potential customers and clients to work with and invest in the business.
Marketing Plans
Every business needs a good handle on their industry and target audience to market effectively. A market analysis outlines who their competitors are and how they factor into the industry, as well as their strengths and weaknesses. Additionally, it describes the expected customer demand for the company’s products and services, as well as how easy or difficult it might be to grab market share from incumbents. A marketing strategy discusses how the firm will maintain its customer base and its plans for reaching buyers. It also outlines a clear distribution channel. Furthermore, it discusses advertising and marketing campaign plans and how they will exist through certain types of media.
Planning Is Key
Though the success or failure of your business may depend on some factors outside of your control, planning and foresight can help you prepare for and avoid difficult or even disastrous situations. When running your business in your specific niche, use the gifts and abilities you have been given to create a business plan that is best suited to you and your company. The entrepreneur who plans will be more likely to face the difficulties of running a business with more confidence and ease. You can’t make things happen without actually making a plan and following through with it. For example, handling your money responsibly is crucial for entrepreneurial success. Saving and careful spending with your current resources will equip you to handle larger responsibilities as your business grows bigger in the future. Such thoughtfulness demonstrates wise leadership and a determination to run your business in an orderly fashion. This will prepare you to thrive in the professional world, as well as other aspects of life.
