Saturday, 12 September 2020

Should You Write A Business Plan Before Starting Your Business?

Should you write a business plan before starting your business? That's what we're going to discuss in this article, and I'm going to give you some guidelines and some insights on what you should do, versus writing a business plan. There you are. You have this idea of you want to start a business. And you're on the internet and everyone is like, write a business plan. Write a business plan. I want to tell you why you should not write a business plan before starting your business.

1. All You Have In Your Head Are A Set Of Assumptions

I would say it would be a little bit different if you're starting a business that you already have data, you already have the experience, you already know some numbers that are a little different. You can go ahead and write a business plan. But if you're entering into a brand new market, you have no experience, you'll know nothing about this business, do not write a business plan. What you should do is write down "a set of goals". What do you want to achieve? This is what you should write down, and then you should start your business in being it real data, and after about 60 to 90 days then you can sit down and begin to come up with a business plan that would be based upon real numbers. Until you start your business, until you get out in the mix, until you begin to run your business and have experiences with customers, you have no clue that what you're getting yourself into.

Years ago, Daymond John of Shark Ashton Kutcher and some other high-level investors put together seven million dollars, wrote a business plan, and try to launch this apparel brand. They assumed that the star power of Ashton Kutcher would be enough to make sales. It absolutely flopped. 

Here's another thing you should understand,

Just because you have money doesn't mean that if you put that money into a business that is going to work. 

2. You Must First Deploy Your business

"Nothing replaces experience". Not money, not star power, none of this. And this is why when you are starting your business when you're out there making a go that you first must deploy your business. You must start talking to customers. You should do direct response marketing. Put your product in front of people, and see if people buy or if they don't buy. If they don't buy, ask them directly, hey, I understand that you didn't like this, tell me what's wrong with this product? I know that's gonna be painful, but this is going to be the best Intel and information that you can get to start your business. Because when you put something out, people don't buy. It is the best practice to ask the people or why aren't you interested? Why aren't you buying? 

Here's the thing

If you go ahead and write out this crazy, wonderful, time-intensive business plan. You will be trying to go to the internet, you'll be trying to get data, and you will be feeding these assumptions into your plan, and you may become overconfident because there's what you have in your head, there's what you have on paper, and then there is the market place.

Here's an example of a business that took off unexpectantly because it was exposed to the marketplace.

I don't know if people are still doing rollerblades, but when I was a kid rollerblade were this became this really trendy thing. The rollerblade company hired this woman who put together this video of a bunch of hunkies, big muscular men doing tricks and stuff on rollerblades. Before this video, rollerblades were the product of hockey teams there was a used, it was a dedicated group, but when she created this video. Rollerblades went from something that hockey teams will use to a mainstream product. They started selling rollerblades, and Kmart Sears, JC Penney's. They started selling them everywhere and they literally took off and not only did rollerblades take off, but elbow pads, and helmets. The sales of these accessories also took off, and all he did was create a piece of marketing and exposed it to the marketplace and the market places are like, yeah, I like that. I like that a lot. And then the sales just skyrocketed for this company that made rollerblades. They had to expand, they had to hire new employees. It was an amazing thing. And this is just to illustrate to you here was a business that had been established for decades. They had been making these rollerblades, and all it took was some direct response marketing to accelerate their sales. And this is one of the things you have to understand, this business had been in business already, they were making a product, they had sales, they had contracts. But they did their first piece of direct response marketing and literally blew up overnight.

This is what you want to do. Because whatever you have a service or product, you want to put it in front of customers. 

3. You Should Interview Your Customers And Ask Them A Few Questions

After you start your business. You start getting customers, and this is one of the things that you should make as a normal practice of your business. After you serve your customer, you should interview your customer and ask them a few questions. Well, why did you buy it? Now, listen really carefully to why did they buy. "The language that they use".This is a really important thing about marketing. You have to use the language that your customers are using because it's familiar with them and makes sense and it jives with their sense of what's right and what's wrong. If you use language that the customer isn't using, they're not going to buy. So interview your customer, asked them why they bought? And each time you do this, one of the things that are going to emerge is a pattern. After you've interviewed 30 to 40 customers, you're going to see some trends. That trend is what you should key in, on, for your business plan. Because after about 90 days of being up and running, serving customers, making money, now you're in the position to sit down and write that a business plan because you have real numbers, you have real sales, and you've talked to real customers.

This is one of the things that so many of these business plan competitions missed because there are many people who are writing business plans to please a certain judge. And this is one of the craziest things with many of these business plan competitions, and all of these incubators. They're not trying to create businesses that generate profit. They're trying to create businesses that will get them to the next stage of the competition. There are companies that are being created right now, they are only being created to be acquired. They're not being created to be like the rollerblade company as a standalone profitable Enterprise. They created these companies to be acquired, and that's their exit plan.

4. You Don't Need To Set Up Your LLC Structure Just Yet

Depending upon your business model, like if you're starting some kind of service or service type business, you don't necessarily need to set up your Limited liability company structure just yet. You can wait 2 to 3 months and then set that up later. Because you want to make sure that you like doing this business. You want to make sure that this business is something that you enjoy. You enjoy the customers.

5. When You Start A Business You Want To Start A Business That Makes You Happy

Part of your happiness is enjoying working with the people that you provide your service or product with. When you start a business you'd only be spending a lot of time in that business, you're gonna be spending a lot of time with those customers, and you should make sure that you enjoy being with these people. It's a critical aspect, and this is why I say don't start your LLC first, don't get too committed, don't write the business plan, because you may have a business idea that's ruminating in your head, and you think it's a good idea, but until you put it into the marketplace and start dealing with customers, and having these experiences, you're not going to know. And this is why I'm saying don't set up LLC, unless you're gonna set up a holding company which is going to be a whole different ballgame, and you're gonna start multiple businesses. But in the beginning, you don't want to write a business plan, you don't want to spend hours, and hours, researching the marketplace, because this is one of the things that many many people do they can be a critical error, they will analyze the market from afar. They will not communicate or interact with the market, and they will create these business plans that are based upon assumptions. They're not based upon real numbers, they're not based upon sales, they're based upon talking the customers. And typically, this is one of the reasons that so many businesses fail. Because they don't have the proper data.

This is why you don't want to write a business plan. This is why you want to write some goals. Go out to the marketplace and begin participating in the marketplace, versus analyzing the marketplace. There are many analysts, there are many college professors who can talk about industries all day long and speak about very intelligently, but if they were to start a business in that industry, they would fail because they're dealing from a position of assumption in that from a position of practical real-world knowledge.

Alright, so that's all I got for you today. Hope you got some value out of it

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