The business plan is generally the last thing you want to focus on. It takes a lot of time and forces you to slow down, marshal your thoughts and write them down which you’d prefer not to do since you’d rather be engaged in starting up the business. But you can’t run away from it, because you know that the bank will want to see it and that the landlord of the store front you fell in love with will ask for a copy. So, if you can afford to, you hire someone,a recently graduated MBA, to write it for you (and you get your money’s worth … LOL… something utterly useless!)
You need to write it yourself and here we’ll spell out ten good reasons why.
photo credit: Orin Zebest
1. It forces you to take all the great ideas about this business and translate them into words. As you do that, it brings clarity to a lot of the concepts that are in your head (which someone else can’t do). It makes you feel confident that you know what you are doing. The business plan is for you.
2. It gives you an opportunity to run the business on paper by making all of the needed financial assumptions about revenue and expenses.
3. It allows you to see when and if you have positive cash flow and how much working capital you will need in the start-up phase.
4. It makes you drill down into all of your start-up expenses, giving you an exact start-up sum you’ll need before you even open the doors.
5. You’ll have to list all of the ongoing expenses and take a good guess at how many months it will take you before you start getting revenue. This together with the start-up expenses will give you an exact amount of start-up capital you’ll need to have so you can go into business and stay in business until you start to generate enough revenue.
6. The Bank wants to see your plan to understand how you’ll pay the loan back and if you have the necessary skills to run the business. You’ll need to understand everything in the plan so you can defend it when asked questions.
7. The landlord will want to see it to figure out whether the business will work and if you’ll be able to pay the rent.
8. You’ll need to do all the research on your market, your customers and your competition.
9. You’ll need to assess your strengths and your weaknesses and understand the skills you need to improve either by learning quickly or by hiring good management or taking on a partner.
10. It gives you a clear set of measures and milestones against which you’ll run the business. It is your map to the future and you’ll use it to track the progress of the business and you’ll keep adjusting the plan as you change your assumptions to fit the changing economic, technological and social environment.
The business plan is not a one-time event but an ongoing process. You need to be constantly measuring your progress and checking it against the plan, It helps you stay on top of your entrepreneurial game.
