Tuesday, December 9, 2014

Business planning

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     with real life examples from small businesses.

     Every small business needs to construct a business plan. You deserve the benefits that a business plan can give you.

     The business plan forces you to face your future. It becomes a sounding board for you as you move forward. It can help you stay on track toward the successful operation you have in mind. It can help you put all the day-to-day distractions into a longer range perspective.

     All of these are valuable. So how do you prepare your very own business plan?

     You can find many business plan outlines by doing a Google search. Some are free, others are come-ons to get you to buy into additional services. 

     Business plans, no matter the cost and no matter who does them, basically boil down to one thing. Business planning is all about the market.

     Your business sells products/services. You target a market and the market responds. Defining that market is where you begin.

     Who are your target clients/customers? How will you attract them? How will you price your products/services? How much will they spend? Why will they keep coming back? 

     When you've answered all the market questions that are relevant, you're ready for the next step. Turn everything into numbers.

     A business plan is much more than words. When you turn your wordy answers into numbers, reality sets in. Numbers bring brutal honesty to the process.

     This is not to disparage intuition. You can feel in your gut a market developing. You want to serve and exploit the possibilities. But translating your intuition into hard numbers can put a better face on your business plan. And save you from some disasters.

     Only if the numbers work do you proceed to put your plan into operation. If the numbers identify a glitch, then this must be solved before proceeding. 

     For example, you might identify a market segment that works on paper, but it is not big enough to justify going entirely in that direction with your business. It might be a sideline or an additional source of revenue to your business but not much of a business in itself. If this emerges on paper with the numbers, then you don't want to head off in that direction. Sidelines can be important in any business, and they might develop into full businesses in the future, but it's a watch and wait proposition. 

     My father ran a large dairy farm. He did all his planning in his head and he was very successful. But as I was growing up, I sometimes saw him sitting bent over a piece of paper--doing the numbers. It was a lesson that has stuck with me. 


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