There are two approaches you can take to determine if your business idea will succeed or fail:
Approach #1: Take action on your business idea by investing hundreds, if not thousands, of dollars in equipment, inventory, website design, rent, etc. and wait 6-9 months to determine if your business idea produces income above and beyond its expenses.
– OR –
Approach #2: Spend a few days crafting a detailed business plan prior to taking action on your business idea in order to forecast whether or not your business will succeed.
Hopefully, after completion of your business plan, it will show you that your idea has the potential to generate positive net income, and now that you have a plan, you can take action. The first approach (the wrong approach) prioritizes taking action ahead of planning. The correct order is: 1. Idea 2. PLAN 3. Action
It’s (supposedly) common knowledge that you should create a business plan before investing money into a business idea, but I cannot tell you how many entrepreneurs fail to perform this crucial planning step. It doesn’t matter what type of business you are jumping into…real estate, Amazon FBA, Shopify store or opening a bakery. All of these ideas require a business plan BEFORE you make investments in inventory, a website, or even business cards. If executed properly, a business plan can act as a crystal ball and allow you to peak into the future of your business. If after completing your business plan you determine you should not pursue your business idea; don’t worry – that is exactly what the business plan is for. A negative outcome doesn’t mean you should not pursue entrepreneurship, it just means you need to tweak your idea or perhaps take action on a different idea you may have.
So where can you get a business plan template and guidance for free?
Wells Fargo has recently partnered with Business Centric Services Group, Inc. to create a free “Business Plan Tool” which can be found here. (You do not need to be a Wells Fargo customer to access it.) Alternatively, you can access a free business plan from the nonprofit, Service Corps of Retired Executives (SCORE) which can be accessed here.
Which approach will you take? I hope that after reading this article, you will take the second approach and get started on developing your business plan.
About the author: Navi Maraj is a Certified Public Accountant in the State of Florida and is the President of FileYourBusiness.com, Inc. FileYourBusiness.com is a website dedicated to educating entrepreneurs about legal entity types and their respective tax treatment. Additionally, Florida entrepreneurs can utilize FileYourBusiness.com to form their business.
Disclaimer: The content of this article is not to be considered legal or tax advice and is provided for informational purposes only.