Down to business

Whether you plan to sell your business in the next year or you are building value for the future, a business plan will help you determine where to focus your (and your company’s) energy and resources and set expectations for results in specific time frames. Small companies are usually busy and have difficulty making the time to think through plans, but they are the ones least able to absorb the impact of one or two large mistakes that occur from a lack in planning.

Writing and using a business plan that is detailed for one year and includes general projections for another three to five years will help you:

1. Develop your ideas and consensus about how the business will be conducted and what your strategies are. What business are you in and not in? Who are your customers?

2. Examine the business. Approach this examination from marketing/finance/operations perspectives in your company before you move ahead with specific action plans. Does making that investment pay off in terms of return vs. spending in this other area? Are we missing potential sales and/or recruiting opportunities?

3. Compare what was planned vs. what actually happened over time. With that information, you figure out what’s working well and what isn’t, determine plans for moving forward and develop budgets to support those plans. What are your sales goals for the quarter? Did you achieve them? What can you do to meet your goals next quarter?

4. Raise money. Lenders, bankers and investors will usually require you to have a formal, written business plan before they will take you seriously for a funding request. Recall Zig Ziglar’s quote: “If you fail to plan, you plan to fail.” A banker takes that seriously. Investors reading a business plan are looking for credit factors like character, cash flow, collateral and (equity) contribution.

The business plan should be enthusiastic but businesslike. It should be well-thought out and organized and easy to follow (graphics, clear writing, no errors in spelling or grammar). Use a three-ring binder so you can continually update and change it.

How do you get started? If you have an ongoing business, begin with historical numbers. These will provide facts that support projections for the next year(s). Starting a new business from scratch is a bit more challenging, but there are resources outlining best practices in the industry. Begin with your offerings. What are you selling? To whom? Is the market large enough to build a sustainable business? What will it cost to deliver the services? What are your prices? How much capital will you need to run the business until sales support the business?

Be sure to gather input from both professionals and informal advisers to avoid missing something you might not have considered. It’s much less expensive to make a mistake or oversight on paper than in reality.

To the right is an outline of the sections of a business plan.

Contact Alison Hoffman at harvest@giemedia.com