Many entrepreneurs underestimate the need to research their market, the competition, and practical issues like pricing suppliers or gauging channel markups. Doing the research needed to complete the business plan was a challenge for the majority of our survey respondents, with 52% of the total sample ranking it “very” or “extremely” challenging. Aside from whatever information potential investors or partners want to see in a business plan, you need this information in order to set realistic goals and manage your cash flow.
Even for people who know their own business well, the process of planning can force you to think through some critical issues that you’ve always just made assumptions about in the past. Among respondents who reported receiving financing for their business as a result of the planning process, 27% said that getting the research needed was “extremely challenging.” This is a significant point, given that these particular entrepreneurs were already in business – they were seeking financing for existing businesses.
We offer you a number of resources here on bplans to help research your business issues, from industry reports to the right questions to ask when buying a business to legal information on incorporating your business. Doing the research doesn’t have to be difficult or expensive, but it can take some time, so get started now.
Creating a marketing plan for their business was also demanding, according to the entrepreneurs we surveyed. Of those planning for a business they want to start (start-ups), 44% said creating a marketing plan was “very” or “extremely” challenging. Surprisingly, 49% of those writing a plan for an existing business they owned also found the marketing planning process to be “very” or “extremely” challenging.
What is it about marketing that is so challenging? And why does it get more difficult when you’re already in business?
We think our friend John Jantsch, author of Duct Tape Marketing, said it best: “The typical small business in America is started by someone who knows how to do something… Hardly ever does this know-how include being able to market a business that does those things.” Luckily, he also offers a common-sense definition of marketing that can bridge that gap: “Marketing is getting people who have a specific need or problem to know, like, and trust you.” Marketing really is that simple – provided you know some of the easy, inexpensive, and effective ways to implement that idea.
In addition to a special version of Marketing Plan Pro powered by Duct Tape Marketing, John Jantsch’s award-winning guide for small-business marketing, you can find plenty of FREE marketing resources online at Mplans.com, including ROI calculators, marketing planning how-to articles, and more. As Jantsch says, every small-business owner is in the business of marketing, so you might as well do it on purpose!
As expected, developing the financial components of a business plan was exacting. Only 9% of all our survey participants – 16 people – described forecasting their financials as “not at all challenging,” and these were mostly business-planning consultants or instructors.
Chances are, if you’re reading this article, you’re already dealing with financial forecasts, or soon will be. For entrepreneurs who consider themselves “idea people” or hands-on workers, not accountants, the financials can seem daunting. But take a step back and you’ll see that numbers and graphs are just concrete ways of measuring what you’re doing, how much effort is going into the business and what you (and your employees or investors) are getting back out of it – as well as how your business will weather any unforeseen problems that come up (yes, we’re talking cash flow).
This is important stuff that should be guided by your business strategies, and not by the deal-of-the-week. Every dollar you spend on one thing is a dollar you didn’t spend on something else. That’s strategy. That’s focus. That’s your business. Don’t you want to know where it’s going?
For a thorough discussion of the financial components of a business plan, you can find the full text of Tim Berry’s Hurdle: the Book on Business Planning, online. The articles on Bplans discuss everything from estimating start-up costs to obtaining financing, as well as a free gallery of complete sample business plans. For those just getting into the nitty-gritty of their business’ financials, check out our plain-English business glossary.
The survey described in this article was conducted online by the Professional Education Institute in September, 2008. Sample size was 670, and consisted of users of Palo Alto Software, Inc. products. Survey responses are confidential.
|Did you find this article interesting and helpful? Check out more articles, tips, blogs and special offers we will be adding during Global Entrepreneurship Week to help you take your business back to the fundamentals|