The Business Plan – A Direction for Your Business
Think of all the businesses you buy products or services from. How do you decide which businesses to do business with? What questions do you ask? What concerns and issues do you have? What factors do you use to analyze and make decisions? Do they vary based on the level of “investment” or cash you plan to spend? Is timing a factor? What about the people running the business? Do you ask for references? Do you hire or use only established businesses?
Answering the questions you like to have answers to when dealing with someone else’s business will help you in defining and writing the business plan to have the answers for your audience. It is time to capture questions (and your answers) that you would ask of someone else if they came to you as a supplier, business partner, investor, or customer.
By putting yourself in the buyers position – whether the “buyer” is a customer for your product or service, a potential investor or supplier, or potential employees – when you see your business from other perspectives, you are able to “fill in the blanks” for those constituencies. These questions and answers are key to understanding how to define and communicate with the target audience of your business plan. The level of detail in your business plan and the processes you follow to write it are a result of who you expect to read the plan and what you want to convey. This is especially important if you want to use OPM (other people’s money) to fund your business.
There is a saying that goes something like this “If you don’t have a destination in mind, then whatever path you take is fine.” Or to put it another way, if you want to drive to DC and you stay on I-40, you won’t get there. Choosing the path you are going to take for your life, your business, and your business plan depends upon where you want to go and how you want to get there. Do you want to have a route mapped out and a specific destination and schedule? Do you want to start driving and select your route randomly and accept whatever destination you reach?
There have been highly successful businesses that haven’t had a formal or written plan. Arguably they have had “informal” plans and guidelines as to what business they take and who they do business with. Whether they have had no plan or an informal plan, I just have to ask: How much more successful would they have been if they had had a plan?
The type and scope of plan you want or need for your business depends upon what you want to do with your business. If you want to stay a micro enterprise (solo practitioner to fewer than 50 employees) or you want to be a “small” business (fewer than 500 employees [that is the government’s definition of small business size]), then a basic business plan with simple financial projections may be all you need. A basic business plan is also good for owners funding everything themselves, not looking for outside (debt or equity) financing, and expecting operations to generate revenues to grow the business.
You can also be a micro enterprise, small business, or plan to be larger and recognize that you can’t fund the business initially or at a rate that will enable you to grow the business as quickly as you’d like. Perhaps you have a product or service that needs to “go to market” right now, or you miss the opportunity. Then the level of detail in your plan and the financial projections need to be more sophisticated and in-depth.
The point is that no one type, level, or style of plan is the answer for every business. You can read books on business plans, buy software, and “fill-in-the-blanks” with guesses and estimates. However, you have to understand that a “fill-in-the-blank” plan without sound analysis, data, and detail behind it, probably won’t work if you are seeking loans, major contracts, or investors.
The plan isn’t an end, it is a means to structure and guide what you DO. The plan communicates to potential stakeholders that you have thought things through. The plan may not encompass every aspect of your business, nor will all things happen as planned or expected. The plan provides a measure, a yardstick, a benchmark for your business and facilitates your ability to know where you are, where you want to go, and what you need to do to get there.
Copyright © 2007 Lea A. Strickland, F.O.C.U.S. Resource, Inc.