When you start a business, it’s an exciting time. You are passionate about your big idea. You can see it clearly in your head. You know what you want to do. You just need to get on with it. Sound familiar?

Yet one of the main reasons so many new businesses fail isn’t necessarily because the idea was flawed. One of the biggest reasons they fail is actually because they didn’t have a clear plan. The plan is what moves you from ideas to action.Those that have a plan have had the discipline and foresight to really think through their ideas and how they are going to work.

So 5 important questions to ask yourself as you write your plan?

1. For what purpose are you writing your plan?

Sounds obvious but is it? The way you write your plan will vary depending on whether the aim is to attract outside funding, to provide a focus & direction for growth or simply to get you started.

It’s amazing that many business owners simply don’t have a plan, or if they do, they did it once and then filed it away. Yet if you make your plan the record of WHY you are in business, the goals you have and HOW you are going to achieve them, it becomes so much more meaningful.

Make your plan a living document so it that becomes an invaluable tool. A tool that you evolve and adapt as your business grows and as conditions around you change. It is your roadmap that sets out the direction you are going and how you are going to get there.

And keep it short, who needs some consultant type lengthy tome that sits on a bookshelf to gather dust. Stick to the main points and make it relevant to how you will be running your business.

2. What are your goals?

Set yourself and your business clear goals. The acronym SMART is a useful tool to get things going

• Specific: The more specific the goal the better. How much money do you want to make each week/month? What level of sales do you need to generate that sort of income? How big does this business need to be to afford you the lifestyle you want to achieve?
• Measurable: If it can’t be measured, it can’t be managed. In context of the business plan, it could be to establish a business with revenue of $ 1m within 3 years. You can then break that down to shorter term goals and construct a marketing & sales plan to get you there
• Attainable: The goals you set need to reflect the capabilities and competencies that you have in your business. There’s no point in setting goals that are not attainable You want them to be a challenge, as it encourages us out of our comfort zones, but not impossible
• Relevant: How does it fit with your vision for your life and business? You want goals that are relevant to the life you want to lead and the values/belief systems that govern how you behave.
• Timely: All goals need to have timelines attached to them as otherwise they don’t happen. It creates a focus and sense of urgency.

3. Which market will you focus on and which niche to dominate?

The most fundamental question is WHO are you marketing to, and WHAT is their number one problem or frustration. You don’t want to just see who turns up. That’s like trying to practice archery with a blindfold on. Better to have researched the market, so you are clear on whom you want to focus your efforts on.

So often by narrowing your scope you expand your appeal. Most companies have limitations in their resources and for small businesses this can be a real challenge when competing in large markets. For a small business you don’t often have the budgets to compete on the same level with the big boys and so need to be realistic about where to compete. The importance of targeting to your success cannot be overstated enough.

The most successful clients of ours are those who have found a highly specialised niche in their broad ‘market’ and have then adapted & developed their product/service to specifically meet the needs of that market.

4. On what basis are you going to compete?

You start with WHO you focus on, WHAT you provide or HOW you provide it. HOW are you going to solve their problem in a way that is better or different from everyone else?

The choices you make in response to your own unique situation and the market environment you will be operating in. The question is how best will you build and sustain a competitive advantage. Being all things to all people is not a recipe for success so how do you avoid getting stuck in the middle and carving out a compelling position. You could choose to be different and uncover a missed opportunity or simply to be better on a dimension hugely valued by your market. You could choose to do either but for a particularly well defined niche. Or maybe there are options to lead on cost.

Each has very different implications for your business and it is these that need to be worked out at an early stage to decide which will work best for you.

5. How are you going to make money?

Way too many business owners do not actually clarify how the business /revenue model is going to work and indeed whether it is able to generate the level of return they need to fulfill their life goals.

You have all these great ideas but have you ever asked whether people want to pay for it? Are you clear as to what capital you will need to keep you going at the start? Have you got enough funding to cover the business until the cash starts to flow in?

The business model you outline in your plan is the core to whether the business is going to be viable or not.It’s not just about the products or services that you are going to sell. It is about the configuration of value. It’s about your cost structure, revenue streams, channels, operations and resources.The business model needs to identify how value will be created and gives it a structure as to how that will be converted to revenue.

1. Whether you are raising money, borrowing it, or financing a new business yourself, you should force yourself to put into writing a detailed business plan for what you have in mind. Without one, you most likely will be unsuccessful at obtaining money. With one you can guide yourself and your management team through the entire start-up process in an organized and successful manner. That being said, having a written business plan is a must.

2. If you are raising money for your business, you should first carefully think about who potentially will be providing the funds to start the business. For example, if you are hoping to borrow from a bank, your plan should clearly address the risks involved in the business with emphasis on the new business’s ability to pay back any loans obtained. If you are soliciting funds from investors or venture capitalists, your plan should emphasize the business’s growth potential and it’s subsequent return on invested capital. At every step of the way, you should be conscious of writing FOR and TO the targeted reader of your business plan.

3. Making a detailed outline of what you have in mind is probably the most important thing you can do before you actually start writing your plan. Take your time and give your outline a lot of thought. Organize your thoughts in simple phrases or sentences and number and letter each phrase or sentence. Break down big topics into smaller, detailed lists of specific things that must be researched or said. Composing a detailed outline can be tedious, but don’t slack off on this crucial part of the process. Writing from a carefully written outline will give your business plan a definite beginning, middle, and end.

4. A business plan will achieve its objectives only if it is credible. Credibility is established by the people who will be involved in the venture and how various verifiable facts and statistics are used to support the proposed business idea. The industry or market niche in which the business will compete must be extensively researched. So too must the targeted customers of the business be analyzed and discussed. Much effort should be expended to thoroughly research these subjects by using information found in libraries, on the Internet, and from companies with pertinent databases for sale.

Another source of credible information can be obtained by interviewing industry experts, suppliers, competitors, and even potential customers themselves. The depth of knowledge and insight that can be conveyed in the business plan as a result of thorough research will go far to solidify the needed aura of credibility. Remember to keep track of where you sourced your information so that it can be properly footnoted in your business plan. Footnotes add to credibility.

5. Be organized from the start. You will be surprised at how much information you can collect in a very short period of time. It is imperative that you collect and organize your information in a manner that conforms with your outline. Set up labeled files at the onset. Have a separate, secure place to store them. Plan up front how you will collect and organize information gathered from the Internet on your computer. And don’t just copy information from the Internet.

Keep track of the addresses from where the information came, in the likely event that you may want to revisit some sites for clarification or additional information. It sounds old fashioned, but keep paper and pen on your person and on your nightstand at all times. Write down every fleeting thought that comes into your head. In the busy pursuit of information, it’s easy to forget an idea that popped into your head the day before or in the middle of the night.

6. The body of the business plan must contain the usual descriptive elements such as a clear statement of the business, the planned marketing strategies, a thorough analysis of the competition, a description of operational procedures, an honest list of perceived risks, and other written sections pertinent to the business idea. But what will set your business plan apart from others will be the insertion of a “compelling reason” why your business idea is unique. To just say “this business is different and therefore it will be successful” probably will be ignored or discounted by a sophisticated reader.

But if you build a story through the presentation of your researched facts and take the reader to a logical point where the uniqueness or cleverness of you business idea becomes apparent, he will be more than receptive to your idea when you state the “compelling reason” why your business idea is truly unique and will work. You will have drawn him in and captured his imagination. The “compelling reason” will make him receptive to all the other positive attributes your business idea represents.

7. The financial statements you include in your business plan should span three years with Year 1 broken down into 12 months and Years 2 & 3 broken down into quarters. They should contain both profit and loss and cash flow statements. Two important elements you should include in the financial section of your business plan is a clear statement of the assumptions that underlay your projected numbers and the obvious use of a conservative approach in projecting those numbers. Be thoughtful in your assumptions. Make them easy for your reader to understand. Base them on facts gleaned from your research that appear elsewhere in your business plan. Always take the lower side of any range of figures.

The important thing is for the numbers to work ie payoff the loans or give a reasonable return on investment. Bankers and investors are not impressed by big, optimistic numbers. They see them all the time. They are usually persuaded by that “compelling reason” why the business has a good chance of succeeding and reassured that the projected numbers are achievable because they are obviously conservative. Let their imaginations take your financial projections to higher, exciting levels on their own time.

8. Your business plan should contain detailed resumes of the principal people who will be involved in and/or running the new business. The resume section is often the second place venture capitalists go when they pick up a business plan. They first read the executive summary to get a general idea of what the business is all about, and then they go to the resume section to see who the players are. If they don’t see competent, proven people with direct, related industry experience, they often discard the business plan right then and there. So be thoughtful on who you bring into the business and carefully design their resumes to highlight past experience and accomplishments that directly relate to your proposed business idea.

9. The Executive Summary should appear as the first section of your business plan and should be the last section you write. It is a synopsis of the business idea you have already carefully organized and written. It should give a broad overview of what the idea is, and should, in a page or two, give the reader a clear understanding of what the proposed business specifically does, into what industry it falls, what broad economic climate and competitive conditions exist within that industry, and what general elements of the business idea give the proposed business a chance of being successful.

It should contain summary figures on the return on investment or the loan payback. The Executive Summary is the first section the reader will examine so take your time with it, be concise and comprehensive, and consider it to be almost like an advertisement for your business idea. It should have a ton of optimism as opposed to the factual and objective tone you want the rest of your business plan sections to have. The Executive Summary is often the only shot you have at capturing the reader’s attention, so be thoughtful when writing it.

Remember, most venture capitalists and bankers have stacks of business plans filling their offices waiting to be read. Often junior members of the firm are given the task of doing the initial sort before a plan will reach the eyes of a decision making partner or officer. The person who first reads your Executive Summary thus has the power to reject your proposal but usually not the power to approve it. He only passes it on, and if the Executive Summary can catch his eye and make him read further, it’s done its job.

10. Subconscious impressions are very important to the success of a business plan document. How the document is organized, what type style is selected, the sparing use of italics or bold type, how varying paragraph indentations are used all make for either a positive or negative impression. Misspelled words are death as are serious violations of the proper use of grammar. Short concise sentences will communicate better than long rambling ones. Your objective is produce a professional looking and reading document that clearly communicates that you and your team are professionals and thus know what you are talking about.

Pass your draft business plan by people you respect and have them proof read it and critique it. Determine if they clearly understand the points described in it. If they don’t, go back to the drawing board and rewrite the sections in question. Take a lot of time on this final review and edit process. It is the last and probably most important step you can take for creating a successful business plan.

Everyone knows they need one. Everyone plans on writing one, eventually. But not everyone does it. Why? Because it’s so easy to put off and it’s such a chore. I’m talking about writing a Business Plan. Many business owners put more effort into planning their vacations than they put into planning their businesses. This is a shame because an entrepreneur with a plan is much more likely to succeed than one without a plan.

With just a little effort, you can plan the business of your dreams complete with desired level of income, time off, and emotional satisfaction. The key is your plan of success. Let’s take a look at some of the mistakes we tend to make with Business Plans and what you can do to overcome them.

Mistake #1 – Putting it off

It’s easy to hang up an “Open for Business” shingle and then dive right into the busy-ness of day to day operations of your business. Things are going well and you think “Someday I’ll get around to writing that plan” or “I don’t need that plan after all”, or even “Who says you need a business plan to be successful?” Years later when you want to buy a building or expand operations you find out that the bank or investors want a plan, but you don’t have one.

Don’t put it off. Having a plan helps you to solidify your future, anticipate problems, and plan for success. If you’re always running on adrenaline, putting out fires, and playing catch up, you probably need a business plan. So just do it. Block time on your schedule two to three hours a week and just get it done.

Mistake #2 – Not a big enough vision

Think BIG when creating your long term vision. This is your opportunity to design a business that far exceeds your current situation. I’ve seen far too many boring, limited, and going-no-where visions. Think in terms of the ideal and put yourself in the future. What would you most like to be doing in your business? The grunt work? The annoying stuff you’re doing now? Of course not. You are the face of your business. Your job is to meet the clients, close the big deals, and rake in the dough.

What kind of revenue do you want in your business? Think BIG again. And don’t say 20% better than now. What are the possibilities five to ten years from now?

Mistake #3 – Weak goals

A plan without detailed goals is like a ship without a rudder. The business becomes directionless without a purpose. You, as the business owner must have goals for every facet of your business. What I often see is a 5 year revenue goal, but no monthly and yearly goals to lead up to the finale. I see very few business plans with client goals, professional goals, and personal goals. How many new clients do you want each month? What are the revenue goals for your products or services? What information products do you want to produce in the future? Having goals in life is what drives successful people. What are your goals?

Mistake #4 – Not focusing on Marketing and Branding

It’s really easy to get into statistics, theory, and hyperbole in a business plan. I say “Show me the money!” What are you going to do to bring in the dough? Any business plan worth the paper it’s printed on should have a significant marketing and branding section. Take a look at your vision and decide what marketing actions you need to take to close the gap between where you are now and where you want to be in five to ten years.

If you want to stand out in the crowded marketplace, you’ll also need to create a strong brand and continue working on it going forward. Invest in yourself and get a professionally designed corporate identity complete with tagline, website, four-color business cards, and the like. No one wants to do business with someone who doesn’t look professional. So get rid of the dull boring business image and kick it up a notch.

Mistake #5 – Not working the plan

Why do you write a business plan if you are going to put it away in a drawer somewhere? You need to keep the plan visible. You need to review the plan on a weekly basis. You need to be asking yourself “What now?” at least weekly. You need to make sure you are getting results. No matter how brilliant the plan, you must take action to get results. You do this by reviewing your plan, checking the marketing activities for results, and asking “What bigger projects do I need to tackle to get closer to the big Vision?” Then you ask yourself if the direction needs to change. If so, it’s time to re-write your plan.