Getting Your Business Organized
(And Keeping It That Way)
Itís a sad fact that most business start ups do not survive more than a few years. The figures vary, but one thing is certain Ė the odds are against success. There are a lot of reasons for this high rate of failure, but one of the most common is lack of organization and planning. Without a good plan, itís hard to anticipate the challenges of operating a small business.
Business planning isnít hard, but it has a way of shining the cold light of reality on the entrepreneursí dream. Sometimes ideas donít look as good on paper as they do in the imagination. That can be disappointing, and itís probably one of the reasons so few small business start ups actually start with a comprehensive plan. But realistic analysis is also the number one reason for writing a formal plan.
What is a Business Plan?
A business plan can be anywhere from a few pages long to many hundreds, depending on the complexity of the concept. Although there is no standard template a typical business plan will contain at least the following parts:
Why is Planning Important?
The most important reason for writing a business plan is to demonstrate that a business concept will be profitable. Intuition alone is not enough. Writing a good plan has a way of bringing expensive details to light when they might otherwise be missed. For example, if start up funds donít allow a prime store location it may be necessary to put extra effort and cost into telling people where the store is. That means that the marketing part of the business plan needs special attention. Without writing a good plan, the importance of specialized marketing might be unknown until itís too late.
Business plans can also save partners a lot of grief. One of the biggest causes of disputes between partners is disagreement over how a business should respond to unanticipated challenges. When everything is plainly written, understood and agreed upon there will be fewer surprises that might cause tension and distrust. The surprises that will inevitably remain will be much easier to overcome if the purpose and direction of the company is formally agreed upon beforehand.
One of the most commonly given reasons for writing a good business plan involves the ability to forecast cash flow and meet financial obligations. Every business owner wants to know how much to budget for loan or credit card purchases, and when to plan for new equipment, employees or buildings. Business plans give owners a way to predict these things and create plans to take advantage of them.
Another very important reason for good business planning involves getting funding. This should be an important reason for writing a plan even if the prospective business owner does not plan on getting loans, attracting investors or selling stock. Why? Because someday the business might fall on hard times, and without a well written and regularly updated business plan documenting the businessí ability to plan, analyze and project things like sales, earnings and profit a loan might be out of the question.
Writing Your Business Plan
Writing a business plan involves more than describing a business idea Ė the plan must make a convincing argument for profitability, also. That means researching things like customer base, disposable income, demographics, and advertising costs. Fixed costs must be determined, variable costs estimated, and budgets developed. There are so many things to consider that it is best to think of it as a process instead of a task.
Luckily, there are many sources of help. The best place to start is with a good how to book. A well stocked used bookstore probably has a wide selection to choose from. There are so many business planning guides that the choices can be confusing. Ask other entrepreneurs what books they have found helpful.
Quality software such as Plan Write, Business Plan Pro, and Jian BizPlanBuilder are easy to use and relatively inexpensive, (between $100 and $200). Many web sites now sport business planning templates and tutorials. Generally, these consist of templates and guides that help structure the process of developing a business plan.
While these are all good places to start, nothing beats human help. Finding someone who has written successful business plans can save a lot of time and aggravation. There are plenty of amateurs and professionals who can help with a business plan, but it would be wise to resist the temptation of simply hiring someone to write your business plan for you. After all, a business plan is an expression of an entrepreneurs dream. Other people can assist with technical writing or constructing financials, but the plan must contain the entrepreneurial passion of the business owner. Getting help is fine, but in the final analysis, itís the business owner who must write and implement the plan.
Entrepreneurs have the odds stacked against them, and it would be wonderful to be able to see pitfalls and dangers in time to avoid them. A good business plan is the closest thing entrepreneurs can come to having a crystal ball, and until crystal balls become available, well written business plans will continue to be essential.