Writing a business plan is a very important step in writing a business. One of the most valuable benefits is as follows:
A draft business plan will tell you if your business is even worth spending your time on.
That\’s right! Countless people around the world start businesses every year, and 90% of them fail. Are you confident enough that you\’re not in that 90% of people? If you answer yes, then you\’re still going to need a business plan, and if you answer no, then you need a business plan even moreso.
Part of being an entrepreneur is being realistic and respecting the financials. 90% of businesses fail because their owners don\’t respect the financial aspects of running a business. Let\’s look at two examples.
Jamie starts a business selling musical instruments and he is confident because he is knowledgeable in musical instruments and he is confident in the business strategy because other musical instrument stores in his county have been in business for the past 15 years. What Jamie doesn\’t know is that those other musical instrument stores net income for the last 3 years was less than $30,000.
Raymond starts a business making wooden furniture because he enjoys woodworking and has made some money selling wooden furniture before. What Raymond doesn\’t realize is that the percentage of people in his community that are looking for wooden furniture is very small, and the most he can hope to make in gross income is about $40,000 per year. After all of the his expenses, including insurance, his net income is likely to be about $20,000 per year.
Both Jamie and Raymond close after one year of business because they decide that their business would only be worthwhile if their net income was $85,000 per year, because that is the amount that they need to make to qualify for a mortgage or put their kids through university.
The second best use for a business plan is to obtain a business loan or grant. Lenders will only consider lending to business owners that have a business plan, and rightly so. Only so much progress can be made with verbal discussions and emails. The most important progress is made through producing documentation, and the business plan is the documentation that can kickstart your business by helping obtain a business loan if required.
The pen is mightier than the sword. Jordan Peterson argues that every university student should be reminded that having the ability and the freedom to write is powerful in itself. Use your power and write a business plan if you are considering starting a business. It\’s the only logical first step!
Here are 2 business plan templates / tools that are recommended by professionals.
The RBC Business Plan Template
https://www.rbcroyalbank.com/business/doc/Business_plan_template.docx
Futurepreneurs Business Plan Writer Tool
https://www.futurpreneur.ca/en/resources/start-up-business-planning/tips-tools/business-plan-writer/