Business Planning: No Plan is a Plan to Fail

You’ve got a great idea for a business. But how do you know if it will work? The U.S. Census Bureau estimates that half of all businesses that have employees close within 5 years. How can you help your business succeed and thrive?

Planning is the key. Having no plan for your business is like taking a trip without airline tickets or hotel reservations.

You can begin with an informal plan. If you need financing, you will need to bring a formal plan to the bank. For help with formal or informal planning – including whether your business idea is practical -- there are many available business planning resources. [jump link to section below]

Then get a Business Counselor for in-depth help with your business plan. Two places offer business counselors, depending on the size of your North Carolina business size:

A good plan for the business will answer the following 10 questions:

1. What product or service am I selling?

It may be simple, like cupcakes, or complex, like consulting services to manufacturers. Avoid the temptation to try to provide everything your customers might request. Decide what you are going to sell and be the best at that product or service.

2. Who runs the company?

If you are a sole proprietor, then you are responsible for managing all of the business. If you are creating a partnership or a corporation, it is important to decide in advance what each partner and contributor will be doing.

3. Where am I going to sell my product/service?

This is known as your target market. Your target market depends on whether you are selling over the Internet or in person, or both. You may want to start small and build a loyal customer base over time.

4. Who are my customers and where are they located?

There is an enormous amount of demographic information available online to help you determine who your customers are and how you might reach them. If you are selling farming equipment, you need to know where the farmers live.

5. How am I going to market and advertise?

This depends on your target market and your customer base. If you are selling products over the Internet, you will likely want to advertise there.

6. Who is my competition?

You may have a great barbecue sauce recipe, but ask yourself how many sauces are already available on your local grocery store shelf? If you are going to compete with already established businesses, you need to figure out what will make your product or service stand out.

7. What licenses, permits and other documents will I need to operate legally?

This involves reviewing possible federal, state, county and city/town permits and licenses that cover your business or service. Call Business Link NC at 1-800-228-8443 to find out about business licenses, occupational licenses, environmental permits, and zoning requirements for your specific type of business.

8. How much will it cost to get started?

It is important not to underestimate startup costs. If you see estimates that a food truck will cost between $50,000 and $100,000, do not assume that you will be able to find a truck for the lower cost.

9. How long will it take to become profitable?

Business owners always overestimate how quickly the business will become profitable. In addition, at the startup phase, you will be channeling much of your gross income back into the business. Until you are making a net profit, determine how you will pay yourself and your employees.

10. What are my one-year and five-year goals?

When you drive a car, you look down the road, not just over the hood. The startup phase is exciting and dramatic, but it helps to have considered where you want the business to go in the future. Then you can focus on the goal.

Resources for Writing a Business Plan

Best Practices for Startups

  • Consult with an accountant for bookkeeping and tax purposes
  • Obtain insurance
  • Review contracts with legal counsel
  • Register for a state trademark and/or a Federal trademark or patents
  • Join trade associations and chamber of commerce organizations