You sitting on a couch, watching T.V., driving, taking bath, when about to sleep on bed, when you not doing anything at all, when you read about a businessman! What happens?
An entrepreneur just thinks about his/ her new business idea all excited!
My friend Tanuj was the same. Crazy, dreamy entrepreneur! Had his mind just involved into his new business. Always thought it is killer, nothing can be like it, started thinking he’s going to a millionaire soon!
He started making theories, reading, collected fund from his friends and family, rented an office and started his business. He ran his startup but had to close it down in couple of months. He even hired 5 -6 employees. I used to think it’s all goody goody with him, but one night he calls me up all shattered and sad. His first word was “I’m confused, messed up, broke and have lost everything“. I was shocked. But the case was completely different. He was stuck in between; he had no plan for execution; he was just going with flow. As it’s said “Strategy without execution and planning is just hallucination“. He was in his own world.
You know why? He didn’t make a business plan! One of the biggest reason businesses fail is because they don’t have a proper business plan in place. If there is no plans in front of you then what will you execute?
Ok! Ask yourself. If you have to make a cup of coffee what do you do? Do you just do anything with flow? Or you choose specific ingredients, mix things up and heat it. “You follow a plan and execute it “. If you put more sugar will the coffee taste good? Never!
That’s just coffee! This is business your start-up where you invest – time, money, energy, mind your heart and soul! This is your dream! How can you start without a plan?
A normal startup’s 95% of the time is spent on the theory of strategy, while at best 5% is spent on execution. But in the real world, we should do the exact opposite. 5% or maybe 10% to be spent on strategy, while 95% on executing the strategy.
Why you shouldn’t avoid a business plan? The reasons are obvious, we know it but we don’t use it.
Top 3 Ways Business Plan Helps To Make Your Start-up:
- To Raise Funds: Whether you go for seed fund or you take help from family. You will have to show them a clear vision. No one will just give you money just because you have the idea or you think it will work. You have to make a plan on how will you scale it up, where do you see it in few years etc. A study by Babson College found that start-ups with a business plan raised twice as much capital as those without a business plan within the first 12 months.
- To Have Killer Products: In the plan you measure the performance you need to identify, the key questions to answer, like “What features do customers really want?” “Will customers buy our product and how much will they pay?” and “How can we attract customers in a way that’s cost effective and scalable?” These are all things you’ll address during the business planning process. Just because you think you have good product but its’ expensive, or nothing different than your competitors no customer will be interested in your product.
- To Get A Good Team: No business works with just a founder or co-founder. You have to hire talents. If you have a business plan it will attract talent that will give them an entire overview. Plus, the written record of your goals coupled with a track record of delivering against those goals sends a message loud and clear: ”You understand your business and can deliver the results you promise“. Also after they are hired they know they have a goal to achieve, they have to work hard because the boss that’s you, knows it all as nothing is in the air flying haywire.
So before deciding to skip your business planning, consider all the implications and decide whether you want a tasty coffee or a tasteless coffee which in the end will go in the dustbin.
Wondering what Tanuj doing now? I’ll tell you! OMG you won’t believe he got up again, learnt from his mistake of not making a business plan and now he is running a very successful logistics start-up been 3+ years, with heavy turn-over and also have been awarded various startup awards . A true entrepreneur isn’t it?