Manage your Enterprise and Resources to Achieve Your Goals - Start With a Business Plan

What the Experts Say

Johnson and her husband were smart to start out with a detailed business plan, our experts say. Because of their research and extensive knowledge of their financial picture, they were able to determine pretty quickly that their fast-food business wasn't making money.

This allowed them to pull out of their original business and shift to a related company, the catering firm, in a matter of days. They avoided going through a second learning curve. There's little chance they could have maneuvered so flawlessly if they hadn't done their homework.

Many budding entrepreneurs wrongly think they need a business plan only if they're approaching a bank for a loan - and that's a tactical error, the experts say. Operating without one is like driving without a steering wheel. If you're lucky, you'll end up traveling in a straight line and landing in a lush field somewhere. But you're just as likely to veer off into a ditch.

But what is a business plan? And how do you know how to put one together if you've never seen one before?

A business plan defines your venture, identifies your goals, and serves as your company's resume. It helps you allocate resources properly; handle unforeseen complications; make good business decisions; outline how you will repay any money you borrow; and inform sales personnel, suppliers and others about your operations and goals. For more information, see the "Business Plan Basics" article under the Small Business Startup Guide at the U.S. Small Business Administration's website, www.sba.gov.

Our experts will help you get started with 10 basic steps.

Write Your Business Plan

1. Research what to put in it.

People often drag their feet when it comes to putting a business plan in writing. Maybe you've done this yourself. Part of the resistance comes from not knowing what it's supposed to contain. Once you get the answers, you'll have the confidence to tackle the task, our experts say.

Are you a do-it-yourself kind of person? You can research the process at the library, the way Johnson and her husband did, or online. OPEN: The Small Business Network SM from American Express walks you through the process on in a section titled "Creating An Effective Business Plan" in the Starting a Business section of its website at www.open.americanexpress.com. The tutorial describes what to put on the cover page and leads you all the way through to the final touches.  

Or would you prefer hands-on help in planning your venture and an outline for what your business plan should look like? Check your local phone book for listings for the SBA and its partner organizations SCORE, formerly the Service Corps of Retired Executives; the Small Business Development Centers; and the Women's Business Centers.

Another resource is the NAWBO book Taking An Idea To Market: How to Turn Your Vision Into a Successful Business Venture by Molly Tschida Brennan.

You can also boost your knowledge and confidence by taking an online entrepreneurship class conducted by My Own Business Inc. at www.myownbusiness.org.

The class is offered for free, or you can pay a fee and receive a certificate saying you passed the 12 sections, which include deciding on a business; the business plan; computer and communication tools; business organization; business insurance; location and leasing; accounting and cash flow; how to finance your business; e-commerce business; buying a business or franchise; opening and marketing; and expanding and handling problems.

2. Identify your end goals, or what you want to accomplish.

Start at the end instead of the beginning, says Patricia Greene with Babson College, which houses the top-rated entrepreneurship program in the world. Where do you want to end up with your business? What are you hoping to accomplish? Are you just looking for a "lifestyle" type of business that will let you work at home while you raise your children? Or are you determined to build an empire that will create jobs and position you as a major player in your industry?

"There's a controversy about whether you have to have an exit plan first," says Greene, president of the Dow Chair in Entrepreneurship at Babson. "There are different ways to start things depending on where you want to go. It's not always a smooth task if you want to change directions in the middle. If you do decide you want to grow and you started as 'lifestyle,' you're going to have to do some regrouping."

Johnson's original goal, for example, was to create a restaurant that could be duplicated, franchised and eventually sold. Once you've figured out your own end-goal, your business plan should answer some key questions, according to the SBA and SCORE:

• What service or product does your business provide, and what needs does it fill?
• Who are the potential customers for your product or service?
• Why will they purchase it from you as opposed to your competitors?
• How will you reach your potential customers?
• Where will you get the financial resources to start your business?
• Your business plan can be 25 pages, 10 pages or just one. It can be bound in leather, or three-hole-punched in a binder, or handwritten on a yellow legal pad. As long as it's in a form you can read - today as well as six months from now when you're reviewing it.

"I do believe in business plans," Greene says. "I don't think they all have to be the fully developed, written-out ones, but I think they're an excellent way for organizing your thinking about the big questions.

"Even if they're not going to write a full-blown formal plan, I ask them to use it as a guiding system to look at where they want to go, how they're going to get there and what it's going to take."

Greene also recommends you talk to a lot of people about your business idea - advisors as well as potential customers who would actually use your product or service.

"When you do the business plan, the last thing you do are the numbers," says Joan Deery, a SCORE volunteer from Hilton Head, S.C. "The value in the business plan is in the planning. As soon as you've finished the business plan, you're going to have to think about changes you're going to make to it because the market itself is changing.

"People think you do the plan, you put it in a drawer and you're done. The takeaway on the business plan is the planning."

With that in mind, the answer to your question is YES. You do need a business plan, no matter what kind of company you're starting or operating, our experts say.

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