Entrepreneurs are fantastic business people because they’re big dreamers. They can see a problem, a need, or a chance for improvement and turn it into a novel product or service with ease. Even so, these “idea people” often have one negative trait in common: they aren’t very interested in thorough planning.
Planning for your business is important because big ideas are only a jumping-off point. After you’ve pitched to investors and launched your startup, you won’t last long without a strategy.
If you’re determined to see your venture through to success, read on for four reasons every startup should make a plan before taking any action.
You Won’t Always Be Able to Lean on Motivation
More than half of startups fail within a short four years. While there are countless behind this daunting statistic, one factor is that motivation tends to fall dramatically after launch.
When the dreaming phase transitions into the grind of getting your first few customers, it’s easy to get discouraged and want to give up. Having a business plan you can stick with is the best medicine against demotivation because you’ll be able to see past the present moment and into a brighter future.
You Have to Strategize to Make a Profit
Do you know how much your products and services truly cost? Not just the raw materials, but also the time spent making them, marketing them, and selling them.
If you don’t have a solid understanding of your operating costs, you’re setting yourself up for financial failure. Your pricing structure needs to be based on a combination of what people are willing to pay for similar offers and the amount your business needs to turn a profit. Being a startup means constantly planning and strategizing to not only cover your costs but to maximize profits as well.
You’ll Need a Plan for Compensation
Even if you launch a startup alone, you’ll have to hire employees eventually as your business continues to grow. This means you’ll no longer be able to just pay yourself based on profits. You’ll have people counting on you for consistent wages, no matter how much money you’ve made.
Before you take the leap and expand your team, figure out how much your business can afford to spend on wages and then hire accordingly. You’ll also need to track the necessary information for taxes, workers’ compensation, and benefits. Whether you have 1 or 100 employees, using tools like startup-focused accounting software and this paystub maker for startups can help you plan and stay on top of these requirements.
You Have to Know the Rules to Break Them
Many entrepreneurial minds steer clear of the planning process because it feels so restrictive. If you do it right, though, your strategy won’t pigeonhole you into a single path.
Your business plan should serve more as a decision-making guideline. If your circumstances change or new opportunities arise, your strategy can (and should) shift to accommodate it.
Your Business Is Important—Treat It as Such
When you’re in the early stages of launching a startup, it’s tempting to ride the inventor’s high and take things as they come. Doing this will only set you behind in the long run, though. Your business is important to you, so give it the attention it deserves and make sure to allocate plenty of time for detailed strategizing.
For more advice on growing a business, keep reading through the other articles on our site.