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Midwest Small Business Finance: Financing your business can be hard. We make it simple with low interest small business loans made easy. Call our nationally award-winning team today: (816) 468-4989.

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Small Business Planning: A Make or Break Decision

Small businesses fail for a lot of reasons, but one of the most overlooked issues involves planning – or the lack of it.

Many small business owners or entrepreneurs who want to launch a company skip this critical step. After all, they know what they want to do. They have the vision. They know where they want to go and how to get there.

Except when they don’t, which is most of the time.

Most successful businesses have gone through relatively formal business planning. It can take many forms; structured business plans can fall into “traditional” and “lean” categories. Some are up to dozens of pages with detailed market forecasts while others little more than outlines. But regardless of form, and especially if you want to share your vision with potential partners, funders or staff members, a business plan can be the difference between success and failure.

Real World Details

Even if you’re able to self-fund and only planning for a very small organization, a formal business plan can still be decisive. Say you have an idea that’s truly a world-beater. You’ve got a perfect location lined up and you know just what you’ll need in terms of equipment to get started.

Laying all that out in a formal plan can help you spot gaps. Maybe it’s marketing. You’re good at the idea part and a whiz at implementation, but what about getting the word out regarding your new business? Just because you build it does NOT mean they will come. Or that they will be prepared to pay the price you need in order to break-even or make a profit.

Researching a business plan will also help you avoid problems. Perhaps a market you planned to exploit is already dominated by a competitor. That can be surprisingly easy to miss if you don’t engage in some formal research, the kind you need to fill in the blanks of a good business plan.

Don’t believe that? Consider a company that thought it had seemingly cornered a market only to find – after they had invested hundreds of thousands of dollars – that at least three companies had a massive head start and far deeper pockets.

Assumptions You Don't Know You Make

Many of these problems are the result of assumptions. Humans often focus so much on what they think they see that only a hard, even forced study can reveal to them a clearer picture, the kind of clear picture you need for a successful business venture.

Writing a business plan can help. Done right, it involves a series of steps that will lead you to avoid overlooking something that causes failure later.

There is a lot of good information available out there to help. MSBF has created this “Strategic Planning and Goal Setting” document (PDF) that is a good overview of business planning. The federal Small Business Administration also has a wealth of information, including this section on business planning. Other in-depth information is available, including through outstanding sources such as the Kauffman Foundation and KCSourceLink.

Whatever route you take, the key is to follow through. Otherwise, unless you are very lucky, it’s likely to be a make or break decision for your business.

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