Eight Tips For Planning Your Business

Here are eight tips to help you create a meaningful business plan:

1. Champion your own business planning process. You can hire others to write your plan, but that won’t help you learn about your business. Don’t give away the privilege; take on as much of the planning as you can.

2. Craft your business plan to be a communication tool. The primary reason to do a business plan is to learn as much as you can about your business. Once done, it becomes an essential document to communicate with bankers, partners and investors.

3. Do your own market research. This means actually speaking with potential customers, suppliers and the big, bad competitors. It might also include grappling with statistics and trying to make sense of a lot of scattered bits of information. You will benefit by learning more about your business.

4. Be curious and coachable! It takes a certain confidence in oneself to brave the chaotic waters of starting a business, but overconfidence is the kiss of death. Business owners, particularly newbies, are unlikely to go wrong by spending more time listening than talking.

5. Forecast fewer sales. You might believe you are going to get rich quickly, and I hope you do. But statistics tell us that most small business owners do not get rich quickly. Project your sales much lower than you think they might be and you will probably be closer to the mark.

6. Plan for higher costs. The most common reason businesses fail is a shortage of cash. Unforeseen costs and higher than anticipated expenses are often the cause. Project your expenses higher than you think they will be. Don’t worry about forecasting your expenses too high. If you happen to be wrong and your expenses are actually lower, you will have some extra spending money.

7. Make sure your words match your numbers. Your business plan will include descriptive and financial elements. If you say that your business is busier in the summer months, your sales forecast should also show higher sales during those months.

8. Engage a trusted advisor. This is necessary in order for you to process your thoughts. As you research your business idea, you will be flooded with new information and different ways of viewing your business. During this time it will be helpful to get feedback from a trusted, supportive listener who will tell you when you’re off-track.

If your business is tiny and you’re not risking any more than you can afford to lose, you can probably get away with doing your business plan in your head or on a napkin. If you’re planning to put any significant amount of your hard-earned equity on the line, or if you’re planning to borrow money from others, you will need a business plan.

Dan Boudreau is author of Business Plan or BUST! and hosts the RiskBuster Blog at www.riskbuster.com/blog.