Why You Need a Plan?
Simple, you make better decisions.
I am not saying that this PLAN needs to be anything fancy, but what it does need to do is flush out your idea and see if it will work. Heck, my first business plan was on the back of a paper placemat at the bar of the Lark Creek Inn in Larkspur - nothing fancy about that.
That plan was nothing fancy, but it did prove to me that my idea was never going to fly, unless I made some changes.
Let me explain. I was hoping to launch a service that sent people multiple reminders of all the corporate due dates. I am talking about estimated tax payments, 1099's, franchise tax payments, 571L's, sales tax, business license renewal, statement of information etc, etc, etc. So, on the back of that paper placemat, I put together my plan.
First, revenue (we all love revenue). I took a stab at how much I could charge my customers on an annual basis for this service. I came up with a number of $99/yr based on what my perceived competition was charging and how I felt the need to undercut them a bit to get business. So,
REVENUE: $99/client per year
Now on to expenses. Again, a blind stab at what my costs would be.
My time - $75,000/yr (half time since I would cut back on my day job)
Calendaring Software - $50/mo
Insurance, marketing/promotion, social media, licenses, office supplies, computer, internet service, cell phone - $500/mo
EXPENSES - $82,000/yr
So that meant that I would need 830 clients just to break even ($82,000/99 = 830) - ugh....
At this point, I knew my PLAN stunk and I needed to make some changes. And, change I did. I did not launch Due Date Reminder, but I knew that these services were still valuable. So instead we incorporated them into our Business Management Services. I see that as a win-win for all. I still get to keep clients aware of their due dates AND I don't fail at a business that really had no chance once I put pen to paper.
Next installment - the PAPER PLACEMAT business plan...