Recipe for Trouble:The Business Plan

Everyone knows that new business fail at a fairly high rate. Most people assume that the reason is there is not enough money. While that might be true in some cases, there are other things that can cause a new business to fail, even if they have plenty of money.

It would seem like common sense that the first thing that one would do when starting a new business would be to develop a business plan. Some businesses are forced to do this by the bank if they wish to borrow any money. However, some businesses start with a really great idea that attracts lots of investors. So, this new business has a great idea, the money to get it started and the ball starts rolling and everything is great…for a while.

As the business continues to develop, they bring more people into the business. Sometime these people are employees, but many times, particularly with a new business, these people are working on a contract basis or even with just a verbal agreement. They may have understood the general idea behind the business, but they are lacking in knowledge of the detail. But the money is there and the idea is great, so they are “in.”

As time goes on, something insidious begins to happen. More people are coming in and things appear to be going well, but it becomes increasingly difficult to keep everyone on the same page. It also becomes apparent that the deliverables for many of the people that are “working” is not well defined or maybe not even defined at all. Money is going out the door at an alarming rate and yet the ultimate goal of the business seems even farther away. If this situation continues, many times the great idea will never happen, investors will lose their money, and the business will go under.

It is absolutely essential to take the time to do a complete business plan and to actually use that business plan in your business! Make sure that everyone that works with you is aware of the plan and where you are trying to go. The business plan should outline what you need and at one time. Using that timeline, it is easy to establish the deliverables you need from people as you bring them on board.

Doing the business plan also makes it easier to determine potential pitfalls and to avoid them. By having a business plan in writing you also have a document that you can use as a planning tool with the people you bring on for specific tasks. If there is something in the plan that will not work as envisioned, it will be easier to make adjustments BEFORE everything gets off track. By sharing the business plan, you bring everyone on board with the same goals and expectations. Without a business plan, it is very easy to get caught up in the moment, lose track of where you were trying to go and generally experience a loss of confidence from your investors and the people that are working in the business. When people lose confidence, they tend to move on, which could spell disaster for you and your business.

Taking the time to do the business plan will pay for itself many times over. The plan will help your business get off to great start and stay on track and will decreases your chances of making one of many fatal mistakes that can happen in a new business.

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