Start a business? A business plan is essential

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Amir Ben Yohanan says it’s safe to say that no one wants to fly in a plane after the front windows have been painted black, but businesses are being started daily by budding entrepreneurs who might as well be flying that plane.

Even the greatest of ideas needs a plan. The most incredible ideas may need the best possible plan to become a reality and change the world. A business plan is not an option for a new business, but a requirement.

What is a business plan

Your business plan is a blueprint against which you and others can measure the success of the business. It represents your vision and conveys it to those who might invest in you, lend you money, advise you, or even work for you. It’s not set in stone as your business will change as better methods or markets present themselves, but it’s where you start until a new plan comes to fruition.

Your business plan will typically describe the market, problem, or market segment that you have identified as an opportunity, and how you propose to turn that opportunity into a business. It will include biographies of all key personnel, proposed funding sources and how you intend to market the business. Finally, the financial forecast, including costs and revenues, will be the main thing that you and others can use as a guide, even months later.

There are two forms of business plans; a full plan and a light plan. Amir Ben-Yohanan explains both of which deserve a lot of time and attention to make sure they are complete and give a complete picture of the company.

The United States Small Business Administration (SBA) lists the components of a comprehensive business plan as follows:

  1. Summary
  2. Company Description
  3. Market analysis
  4. Organization and management
  5. Service and product range
  6. Marketing and Sales
  7. Request for financing
  8. Financial projections
  9. Annex

The biggest benefit of the diet

As you can see, business plans can include a huge amount of information and are neither quick nor easy to write. That’s what makes them valuable. They make you think and analyze the market, your expectations, the amount of money you need and many other trading questions. You will likely encounter elements that end up being completely redesigned during your plan.

A contractor should be involved in creating the plan, if not writing the entire plan. People ask someone to “write my business plan” on freelance sites on the internet and want to do it for $250. This alone indicates that the companies might not have a long life ahead of them.

Use your financial projections

Amir Ben-Yohanan notes that the financial projections are at the end of your business plan because they are the essential part of it. Everything else in the plan leads to the ultimate financial viability of the business. You started this to create wealth for yourself and your family and serve the community for decades to come.

Known as a “pro forma,” the financial plan incorporates your start-up capital, projected start-up costs, sales, employee needs, fixed costs like rent and variable costs and executes it all on two to three years. There’s a lot of guesswork involved in determining reasonable sales expectations for a business that may not yet exist, but that’s the point. You create an idea, adapt as you go, and use your projections and budget as a guide through the process.

In keeping with its importance, creating the form can be the hardest part of a business plan, and it can easily be said that many entrepreneurs are not financial whiz. Hiring someone with a background in accounting or finance to help prepare it is great.

For those who don’t have the budget to hire someone or don’t have access to a finance professional, plug-and-play spreadsheets are abundant online. Please don’t pay for one when they are free across many business community websites.

Review, review, review

Once it’s written, it’s not filed. You need to come back to your plan often. Equally important is finding business mentors, getting them to read, and letting them rip it. Your plan is guaranteed to make incorrect assumptions, overlook some things, and might miss some market opportunities staring you in the face.

It’s not just a plan; it’s a chance to learn, check your ego and build something.

Get free help

The United States is built on small business and there are many excellent free organizations to help those who wish to develop their own project. The Small Business Development Center is a division of the SBA and an excellent free resource. Moreover, the ASBL SCORE is a partner of the SBA and has a network of retired executives who wish to help you.

You don’t take off in an airplane with darkened windows, and your business doesn’t take off without a business plan. You have a great idea and you are ready to go. Put it on paper, learn from it, and show people your vision.

Amir Ben-Yohanan is the founder of West of Hudson Group, Inc. and is currently President, Chief Executive Officer and Chief Financial Officer of Clubhouse Media Group, Inc., and Chief Executive Officer of West of Hudson Group, Inc. (a subsidiary of Clubhouse Media Group, Inc.).

Posted May 6, 2022


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