We all want success – the quicker, the better. Yet, success rarely comes to those without a plan. Instead, success favours those who understand and evaluate the factors which can affect their chances of success. This is especially true for establishing and running a successful business. But that isn't always the case.
Whether it's investing in stocks or hiring a new employee, the world of business is filled with gut feelings and intuitive decision-making. Making decisions this way is commonly preferred because it is quick and easy. The quicker, the better, right? Well, not quite. Relying solely on intuition lowers the chances of success as important considerations can be easily missed or overlooked.
The intuitive way of starting a new business is to jump and try to figure it out along the way. The better, more informed way to start a business involves writing a business plan.
When starting a new business venture, whether it is a completely new business or expanding an existing one, it is recommended to prepare a business plan. In short, the business plan explains how the business will make money and operate. Whether you write it out yourself or work with someone, the value of a business plan is not so much the final plan but rather the exercise of evaluating all crucial elements of your business, present and future.
It's like cooking. Before you make that family meal, you want to make sure you have all the ingredients and equipment before you start. Writing a business plan is like reading a recipe before cooking – it won't guarantee you won't burn the chicken (nothing will), but at least you have a general idea of what you are about to do, thereby increasing your chances of success.
Like recipes, business plans can vary depending on the underlying business idea; however, there are parts of a business plan that most entrepreneurs need to consider. Some (but not all) of those include:
- Target Market: Determining who the business will be primarily trying to sell to will help guide business decisions. A common mistake is having this be too general, such as saying the business will sell to both men and women, young and old (that is everyone!).
- Location: It is important to detail where the business will be located and why. A typical rationale for a specific location is to be accessible to target customers and/or reduce costs through lower land prices or closer to key supply chain operators.
- Competition: There will always be another business vying for customers' dollars. Even if there don't seem to be any competitors, it is important to understand the difference between competitors and substitutes. For example, a substitute for an Asian restaurant can be a grocery store, where potential customers could buy and cook food for themselves. A competitor would be another restaurant. If there are many competitors, it may be better to evaluate direct competitors – those with similar offerings (i.e., Asian restaurants nearby).
- Staffing: If the business doesn't hire anyone, then the owner is self-employed. If it were to become a business (at least for immigration purposes), it will need to hire employees. It's important to think about who these employees are, what they will do, how they will be recruited, and when they will be needed.
- Value Proposition: Saving the best and most important for last, the value proposition explains what value it brings to customers. If a business cannot fill a customer's need or help relieve a pain point for them, then it is not a good business. For example, neither selling ice cream in the artic nor having a tanning salon in a desert address any customers' needs and thus are not advisable businesses to pursue. Those are two extreme examples, but there are many businesses that are theoretically possible but not likely to succeed without clearly identifying their value proposition beforehand.
This process may take more time than the intuitive approach but engaging in business planning can increase your chance of success. In his book, Profit First, Mike Michalowicz discusses how many entrepreneurs avoid evaluating their expenses, resulting in their businesses failing to profit. Similarly, a survey from the African Development Bank found that 82% of respondents who wrote a business plan claimed that their venture was profitable, compared with only 71% of those who did not write a business plan. By forcing yourself to evaluate all elements of your business, you are improving your chances that no critical components are being overlooked. It also helps develop the skill to evaluate your business strategy in the future.
For those entrepreneurs looking to expand into Canada, having a business plan is not only recommended but often required for immigration applications. At Sobirovs, we not only have in-house lawyers to guide you through your immigration journey but also dedicated writers (like myself) who can help you write your business plan – helping you uncover factors to consider in the future to improve the chances of a successful business immigration venture. To discuss your business immigration options, including the business plan, you can speak with a member of our team during a 60-minute, personalized strategy meeting. Schedule your consultation today!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
