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Why a business plan?
A well-written business plan is the only real link between fantasy
and reality. If you want to build a business out of your idea,
the place to start is by writing a business plan. Here's what you
need to know.
Let's talk about business plans
It's often the act of writing, rather than a concern with
style, that prevents us from writing business plans--we simply
can't get started or keep it going. Yet, here are dozen reasons
why a finished plan is a very useful tool to use with the following
people and for a variety of purposes:
Associates: to establish agreement, direction
and purpose…
Bankers & other financial resources: to provide
loans for equipment and materials…
Business brokers: to use as a brochure when selling
your business…
Employees: to align their efforts with yours
and promote your vision of your company's potential…
Investors (angels, institutions, or VC): to convince
them to supply cash for growth. The better job you do on your
plan and the more prepared you are to answer their tough questions,
the more control you'll keep…
Friends
& Family: to convince them that you really do know
what you are doing and have matured beyond their past memories
of you. This is a bonafide business proposition and not a request
for a hand-out...
Small Business Administration: A business plan
is a must with an SBA loan application…
Senior Executives: to convince them to approve
and allocate company resources. Get buy-in from your management
team…
Stock or partnership offerings: to use as the
basis for preparing a prospectus or offering circular to sell
shares or partnership units to raise money…
Suppliers: to establish credit for inventory…
Talented people: Any smart prospective key employee
wouldn't touch a start-up without reading a good business plan
first. Persuade them to join you…
Yourself: to collect your thoughts, analyze your
business, set goals, and make decisions. Use it as your "brochure" to
promote your business concept so you don't have to explain it
over and over.
They laughed at my ideas. . . until I showed them my business
plan
It's hard to take a business seriously when nothing is written
down about its structure, future direction, or its position in
the marketplace. That's why a business plan may be the most important
document you'll ever write.
Simply put, a business plan is a written document detailing the
operational and financial aspects of your company. Like a road
map, it helps you determine where you are, where you want to be,
and how you're going to get there. If it's well written, your business
plan will keep you in touch with your goals, potential risks, and
likely rewards. Moreover, it may be the crucial factor in convincing
investors or company management to give you the financing you'll
need to realize your dream.
Whether you're seeking a loan, looking for an investor, soliciting
management, or simply using the business plan to manage your business
growth, the ideas outlined in this chapter provide some useful
tips. Just because your vision is obvious to you, it will usually
take considerable effort, explanation, and selling to convince
others to support you.
Why write a business plan?
The first and most important benefit of a business plan is that
it gives you a path to follow. A plan sets the stage to make
the future what you want it to be. A business plan transforms
your fantasy into a reality. It enables you to realize what is
really involved in building a successful company. Others will
see that you have your head screwed on right and that you're
not being unrealistic. It also takes your non-linear thinking
and coordinates it into a logical progression of concepts following
one after another.
A plan makes it easy to let your banker in on the action. By reading
or hearing the details of your plan, he or she will have real insight
into your situation if the bank is to lend you money. Likewise,
potential investors can review your plan to gain a better understanding
of your business and to determine if the investment is worth the
risk.
A plan can be a communications tool when you need to familiarize
sales people, suppliers, and others with your operations and goals.
A plan can help you develop as a manager. It can give you practice
in thinking about competitive conditions, promotional opportunities,
and situations that are advantageous to your business. Such practice
over a period of time can increase your ability to make wise decisions.
A good business plan saves you money and time by focusing your
activities, giving you more control over your finances, marketing,
and business objectives.
