Many business owners start with a particular idea in which they see an attractive opportunity to generate profit, or maybe they envision the realization of a life-long dream. Perhaps they also imagine the flexibility of not being subject to a “boss” or not having to abide by the rigor of a fixed schedule. Regardless of their reason to start a business, the business founder must realize that it is not only having the idea that matters; it must be implemented effectively. To do this, it is necessary to develop a Business Plan and a Marketing Plan.
Think for a moment about the Lewis Carroll classic Alice in Wonderland. When Alice found Cheshire, the cat, they engaged into the following exchange:
“Would you tell me, please, which way I ought to go from here?” asked Alice.
“That depends a good deal on where you want to get to,” said the cat.
“I don’t much care where …” said Alice.
“Then it doesn’t matter which way you go,” Cheshire interrupted.
“… so long as I get somewhere,” Alice explained.
“Oh, you’re sure to do that,” said the cat, “if you only walk long enough.”
The moral of this conversation is that business owners who do not properly establish their business objectives in a business plan will not likely achieve the milestones needed for its success. As Cheshire suggests: The path to follow depends on the objective to be met. If the business owner fails to develop a business plan with specific measurable objectives, to be attained in a specific timeframe, then it will be difficult, if not impossible, to manage the business progress. This will likely increase the potential for failure, adding this business to the large number of businesses that comprise the statistics of failed businesses.
A well-developed Business plan is a vehicle to examine the business from various perspectives, including the vision and mission, industry, market, risks and vulnerabilities, operational aspects, budget and financial forecast. The Marketing Plan will allow the implementation of a marketing strategy to identify, select and communicate effectively with customers (current or prospective). Both plans must be used in tandem to heighten the probability of success. A Marketing Plan without a Business Plan is like a wheel without direction.
One of the most important benefits of having an adequate business and marketing plan is that the business will have sound working tools to assist in its development and growth. The advantages of these tools include:
- Communication vehicles to facilitate the acquisition of business financing and the recruitment of strategic partners and/or employees.
- If a business needs financing, the bank (or financial institution) will likely request a business plan as part of the loan application process.
- Prior to investing, the majority of investors and/or senior business associates will request to review of the company’s business plan and marketing plan.
- Often, as part of business development efforts and key employee recruitment, the business must impress a strategic partner or prospective employee. The business senior management must communicate its business strategy succinctly and precisely, in order to efficiently demonstrate its potential. A business plan and a marketing plan will facilitate this communication.
- Tools to identify and mitigate vulnerabilities and implement solutions.
- The business plan will help identify risks and vulnerabilities in the business model. If the business or new idea is not feasible, the business owner must know it sooner than later. This will save time, money and effort, and it will also mitigate any potential losses.
- The business plan will help evaluate the regulatory and compliance environment of the business and will allow the business owner to take the necessary action plan to navigate this environment successfully.
- Tools to manage the business, develop strategy, and measure performance
- Once the business plan is finalized, the marketing plan will assist the business in performing more detailed marketing, promotion and sales research and analysis. The marketing plan must define the strategy the business will use to capture and retain customers and optimize its marketing budget.
- The business plan and the marketing plan provide a solid foundation to enable the management of the business. The content of both plans will establish the operational infrastructure for the entire company.
- In addition, performance measures defined in the plans will help keep the business on track.
For entrepreneurs who have already developed a business plan, the process of revising this document offers a fundamental opportunity to investigate and find answers to important questions. Even a successful entrepreneur, satisfied with his or her achievements, may wonder at times why “the competition” enjoys more customers, although the businesses are very similar in nature. Perhaps the business owner wants to expand or modify the business model and is not sure how to go about it.
Regardless of whether the businessperson wishes to launch a brand new business, or whether he or she is busy with a current business, patience is key! The entrepreneur must invest the necessary time to develop a business plan. The business planning process makes it much easier to identify areas for improvement, where expenses must be adjusted, and what strategies will be the most productive. The worst-case scenario will reveal that an idea is not viable and will actually save the business money and effort. The best-case scenario will yield a plan to implement the idea effectively and will maximize the profit potential. At this point, the business owner must develop the strategy to market the idea.
In the next series of articles on business planning, I will break down the components of a business plan and discuss what should be evaluated for each plan component.
* This article is based on material from the book “Does Your Compass Work? Practical Legal Guide for Florida Businesses,” Copyright © 2008-2015 Yasmin Tirado-Chiodini. All Rights Reserved. This article is provided under a Creative Commons License.