Why a business plan pays

by | Oct 12, 2020

Photo: Y-Boychenko /depositphoto.com

How putting your idea on paper can legitimize you and your concept

 

Every one of us has had a light bulb moment – an amazing business idea that will change the world for the better, earning us fame and fortune.

Sadly, the vast majority of these never leave our heads, and of those that do see the light of day, only a tiny percentage develop into successful enterprises.

This probably isn’t surprising considering the huge number of obstacles ready to trip us up at every turn – some we are able to control relatively easily, others we don’t even see coming.

What is true is that the entrepreneurial journey is fast-paced, time is scarce and we are operating in a rapidly-changing environment.

But this doesn’t mean it needs to be scary or daunting – we never get in our car and drive aimlessly, hoping we will find our way to our destination, so why would we with our new venture?

I had never been a big fan of making a business plan, but I realized that writing everything down meant I could give myself a clear direction to follow rather than getting confused and lost among all the possibilities I faced at every turn.

It is also one of the best ways to legitimize a product, and you as the entrepreneur behind it, in the eyes of potential partners and investors.

Here are some reasons why a route map is essential to the success of your business:

     

    1. Build your Business on paper first

     

    When we start developing our business idea, we are at the mercy of so many factors, many of which are out of our control – including the economy, global pandemics, the rise of new technologies, consumer trends and even fortune, being in the right place at the right time.

    But that doesn’t mean we should just proceed blind.

    Even if you aren’t sure of the route you want to go down, there are many things that can be mapped before you actually jump into the madness called entrepreneurship.

    Having a personal “how-to-guide” can provide a focus and a template, giving clarity over the direction you want to move in.

    But more importantly, it will force you to think about the difficult questions and issues that will be essential if your business is to get off the ground and survive.

    • I know my product is great, but why should anyone else care, and how can I convince them they need it?
    • I believe in my idea passionately but am totally broke. Where do I get money from to build a prototype and get it to market?
    • Where can I find a great supplier who understands my vision and is able to produce the quality product I have designed?
    • When I count up the hours I put in, plus the cost of creating the product, shipment, packaging, storage and marketing – can I actually make any money?

    At the start of the journey, your mind can just seem like a big mess of thoughts and ideas – this process should give you a direction of travel you can move towards more confidently.

     

    2. Set your Goals and commit to them

    There are many benefits to having a business plan – and perhaps one of the greatest is purely psychological.

    With your goals written down in front of you, not only have you given yourself a target to aim for, but it all seems far more real and achievable than it was when it was just an idea in your head.

    You have also set yourself on a journey, and instead of having many ideas of which direction you should take, you have outlined the single “best” path for you.

    This is an essential part of the process, where we set goals and compel ourselves to act upon them, according to the Goal Setting Theory by Gary P. Latham and Edwin A. Locke.

    Of course, life isn’t a perfect science, and if it were as simple as following our laid-out route to greatness, we would all be millionaires.

    Many things will change and alter your vision as you journey on your chosen path.

    But I cannot overemphasize the importance of planning things out from the start – seeing this roadmap in front of me gave me focus and a way of achieving my dream that I could buy into.

    If nothing else, it should stop you getting overwhelmed and anxious – and instead of being sat at a junction, unsure of which turn to take, the road to success should seem clearer.

     

     

    1. Time is of the essence

    A road map is also crucial because most of us only have a finite amount of time to work on our project, as we juggle a full-time job, studying, family life or all three while putting our dream into motion.

    And committing to this one route means you won’t get distracted and waste valuable time reflecting on other possibilities.

    Of course, everything won’t be perfect and this initial plan alone won’t be your golden ticket.

    But what it does do is enable you to see dead-ends and potential road-blocks much earlier, making far better use of your limited time.

    Running into these problems isn’t necessarily a bad thing as they allow us to adapt and modify our vision along our journey.

     

    2. Get honest feedback

     

    If a member of your target group doesn’t get excited about your idea, how can you expect anyone else to?

    If this happens, it’s perhaps the clearest sign it’s time to go back to the drawing board.

    Your target audience should be eager and open to learning about any new products, so if you can convince them it’s something they really need in their lives, then you know you are on to something.

    This is why feedback is important – and it’s always easier if you can show them something written on paper rather than just telling them about it.

    But it’s not the time for burying your head in the sand or getting feel-good smiles and comments from friends who don’t want to hurt your feelings.

    The truth can hurt. But it can also make your product remarkable.

    So don’t shy away from it. By asking what they didn’t like about your product, you can use the feedback to take your creation to the next level.

     

    3. Get scrutiny from experts

     

    Entering a business plan competition is perhaps the most surefire way to gauge how well your proposals stand up to scrutiny.

    Here, it will be analyzed by well-equipped and experienced business leaders.

    The prospect of having your life’s work torn to shreds by these big guns may seem daunting – but a detailed and constructive evaluation of your idea from these experts can improve your business idea a lot.

    These are valuable industry insights you will not get elsewhere but could save you lots of time and money and the prospect of aimlessly wandering down the wrong path.

    Even if they don’t give you feedback, you can privately ask the jury for their opinion.

    Once you have got past the fear of a negative critique, you will realize most of these people are very passionate about business and more than willing to help ambitious entrepreneurs grow and develop their idea.

    These influential people can also help move your idea to the next level by introducing you to the right people.

    Never underestimate the power of networking – you are a personal brand, and becoming known in these circles doesn’t just give you credibility and legitimacy. It can also inspire these big hitters to work with you or invest in your personality.

    But just suppose you actually win one of these competitions – it means a bunch of people, who know what they are talking about, actually believe in you.

    And if they are willing to make this public by giving you an award with their name attached to it, the sky is surely the limit?


    My business journey BLACK BOX


    Marked by extreme emotions, becoming an entrepreneur is like a rollercoaster ride

    Marked by extreme emotions, becoming an entrepreneur is like a rollercoaster ride

    One thing is for sure; it is an exciting ride that can be scary and exhilarating in equal measure.

    From the moment I started to develop my idea by formulating a business plan, my journey was marked by a series of extreme emotions.

    The safest option is perhaps the easiest and least stressful – but how successful will you be if you don’t stand out by taking risks?

     

    Creativity

     

    My initial idea was to provide tea from China that my customers would use to help them meditate.

    The target audience were millennials, those that lived fast-paced lives and wanted to unwind but found this difficult by conventional means.

    However, as I started to write a business plan for a competition, my mind started to wander in new and exciting directions.

    I became bold and decided I would combine the ancient Chinese art of tea meditation with the most modern technology my target audience would have – a phone app.

    At this point, I moved away from being just one of a whole host of tea sellers out there, and started fantasizing about doing something that had never been done before and revolutionizing the meditation industry.

    A technique used to achieve peace and calm in China for hundreds of years, and 21st-century millennials, reached through a phone app, are not the most obvious bedfellows.

    This is perhaps both a positive and negative of the business plan approach – the sky can seem the limit, but you also then worry you are overcomplicating what should be simple aspects of your business.

     

    The fear

     

    In life, not just in business, I have always tended to overthink things, which can cause me anxiety.

    To try and overcome this, I have an extra list where I ask myself, what is the worst thing that could happen to me if my fears came true?

    Most of the time, I realize my concern is not a big deal, but will write down the possible outcomes anyway.

    I find this the best way to keep anxiety at bay. Just by having the list, my mind is at ease, with it acting as a reference point to calm me whenever self-doubt arises again.

    What if I fail? What if I lose all my money? What if my partner leaves the business?

    These are some of the questions I have asked myself.

    This may seem a negative approach, but it proved an extremely positive process for me.

    By brainstorming to gain peace of mind, I took myself down paths that may have seemed risky, unconventional, or just plain crazy to most people.

    Of course, there were still many moments of anxiety and self-doubt as the formulation of my business plan laid bare all the unanswered questions.

    These included some fundamentals – such as, who actually are my target group, and do I know them as well as I should? And crucially, will they be willing to pay the premium price I need to make my product as good as I want it to be?

    But having this road mapped out in front of me, as well as the dangers and how to navigate past them, things became much clearer.

     

    Little wins

     

    On your business journey, little things can make big differences in terms of giving you a confidence boost or a nudge in the right direction.

    I entered as many business plan contests as I could, run by the German Chamber of Commerce and Industry, my university, and several other institutions.

    After a lot of effort, eventually, I won one, which gave me huge belief through reading my story in the local newspaper and hearing my voice on the radio.

    It also acted as a magnet to draw some of the stakeholders I wanted to work with towards me.

    Studies (such as Fisher 2016) suggest such endorsements can help legitimize how we view our business and have a spill-over effect.

    Both in terms of giving us the confidence to approach the next group of stakeholders, we need for additional resources such as funding and mentorship, and also giving us gravitas in their eyes.

    It may have been a small competition, but this was a major milestone for me as it was the first sign it wasn’t just me who believed in what I was doing.

    Others did, too, people who knew what they were talking about, which made me realize I did have a platform to build on.

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