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Your
Business Plan:
A Solid
Investment in Your Company's Future
By John Troland, Owner of
The Business Plan Group
A recent AT
& T Small Business Study found that only 42% of the
businesses surveyed used a formal business plan. Simply
stated four of every ten businesses did and 6 did not!
In this day and age of a fast paced economy one might
expect that as many as nine out of ten would effectively
use a business plan. It has been said for years that
most businesses do not plan to fail; they fail to plan.
It should be categorically stated that EVERY business
should have (and more importantly USE) a business plan.
A common misconception with some business people is that
unless a business is seeking capital it does not need a
business plan. Considering that a major reason for
business failure is management incompetence (translated
perhaps not utilizing a business plan) let's consider
then some valid reasons for using a business plan and
some important pointers in their preparation.
A business not seeking capital would utilize a business
plan to establish goals and objectives for the business
over a number of years, probably two to five. In
addition the plan would provide a tool to track actual
results against projected revenue and expense figures.
Adjustment could then be made in revenue or expense
projections if needed.
A new startup business would utilize a business plan in
two ways. One would be as just mentioned after the
business becomes operational. An obvious need exits if
the startup business is seeking capital from an angel
investor, venture capital source or some lending
institution. The investor/lender must see the company's
plan for becoming operational, making a profit and
having the ability to repay the money borrowed. In
addition the investor/lender must be convinced that both
the business plan makes sense and cents (will be
profitable) and that the company's management team can
execute the business plan in the desired fashion.
An existing business could use a business plan in one of
several ways. First, in addition to those reasons
already mentioned, it could use a plan to obtain
financing to purchase real estate, machinery or
equipment. In addition it might use a plan in
conjunction with seeking a loan large enough to payoff
an existing loan and that would provide additional funds
for some purpose(s) as stated in the business plan.
Another use of a business plan by an already existing
business might be to obtain capital to be used to
acquire another existing business. In this instance a
strong case would have to be made in the business plan
that the operating income of the combined operations of
the two companies would meet the projections as set
forth in the business plan.
In writing a business plan these are some important
pointers to keep in mind. First the financial
projections should be realistic, conservative and
attainable. Pie in the sky numbers will be both obvious
and detrimental in the long run. Secondly both market
and competition research should be detailed. Thirdly
these should be a dynamic, turn-me-on executive summary.
Fourthly keep the length of the plan in the 30-40 page
range; long winded plans, may actually turn off a
potential investor/lender. Lastly assemble the best
management team possible -after all they are the ones
who will both execute the plan and work to achieve the
desired results - the continued economic vitality of
YOUR business.
View a Suggested
Outline for Writing a Business Plan
Related Books:
View All Articles from Business Info
Guide
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