This is the third article on business planning in our four-part series discussing building a formal business plan.
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In the past two articles, we discussed gathering information for a business plan and the importance of writing a formal business plan. We also discussed how to customize your business plan to fit the different types of an audience you may be presenting to and why that is important.
In this article on business planning, we will be discussing your biggest decision up to this point.
You will now need to review all the feedback you may have from the people you presented your ideas to and see what needs to be changed. After reviewing the changes needed, you must then decide if the venture is still feasible and if you still want to proceed with the plan.
Many articles on business plans only focus on writing the first version of the business plan. I mention business plan changes explicitly because I found it very helpful to ask for feedback from the investors and incorporate some of their suggestions into the plan.
That feedback could be the slight difference that changes the course of your business model and helps you make that important decision.
More importantly, would-be investors like it if you listen to their feedback. Making updates to your business plan based on their feedback allows you to go back to them and say "Look, I listened. Now that I've embraced your feedback, will you consider investing?"
Don't proceed with the business if all of the feedback persuades you that success is unlikely. If you choose not to follow through with this plan you are not alone. I dare say that 80-90% of plans never come out of the planning stages due to the realization that some things are not possible or the funding is not there.
Don't let this discourage you. I tried several different things before finally getting my first operating venture to come to life.
If you do decide to proceed, then you need to add some information to your business plan based on new learnings. For example, in one of my business plans we had several different prices for types of equipment. Initially, I left these in our presentations to show the broad spectrum of equipment that could be used and hinted at the types I would prefer.
As we went through the business planning process and learned from our meetings, we started to get some capital investments lined up and could better gauge the financials of the company.
At that point, to make the business plan more precise, we narrowed the search to the exact equipment we would be purchasing and contacted the suppliers to obtain firm pricing as opposed to the estimates that we had originally provided in our first iterations on the business plan. Having specific prices made the overall plan more credible and we had a better sense on the potential profitability of the venture.
Every step you take in the startup process should be updated in the business plan. For example, locking in a location if the business is not web based and getting a lease established may be the next step for many entrepreneurs after their initial business planning exercises. Once you have a specific location in mind, add that to the business plan.
Your business plan should be a living document that is referred to often and updated frequently. With that in mind, you can begin to follow and execute your business plan, keeping your investors in the loop and developing your startup company.
Even after you have initial investors, there will be times when you need to present the business plan to outsiders. This presentation may not need to be tailored as much and we will discuss that audience and how you need to prepare for them in part four of this series on business planning.