If you are starting a business of your own, you have likely heard of the importance of a good business plan to get it off the ground. The question is whether or not this is actually true. How important is a business plan in the overall scheme of things. Can you get a business off the ground without one? Well of course you can. However, the real question you should be asking yourself is… if I don’t have a business plan, am I shooting myself in the foot? As the old adage goes…if you fail to plan, you plan to fail.
What I want to take about in this article is the foundations of a good business plan. As a professional in this field, I have had many business plans come across my desk. Some have been good, but most have been bad. Actually, most have been terrible and not worth more than the paper they were written on. Why is this? The answer to that question is quite simple and forms the basis of this article. Most are just “pie in the sky” numbers, projections and dreams, and do not contain any realistic numbers or variables. In short, the best way to get anyone to read your business plan is to keep it short and simple. But most of all, make it realistic. How do you go about doing this? Quite simply, get help from qualified professionals.
Have professionals help you prepare it
You don’t necessarily need a professional business plan writer to help you develop your plan from beginning to end. You can involve a number of people along the way. The best part of this strategy is that you will undoubtedly learn something along the way. Getting involved with professionals in their key areas will provide you with valuable knowledge, tips, strategies and a general understanding of a number of key areas of business.
The following professionals are a good place to start to help you write the different parts of your plan:
- Marketing consultant: the marketing of your company will be a big part of how successful you are. Have a marketing expert help you develop your marketing plan. They can also help you brand your business and create a logo.
- Professional accountant: One of the most important professionals will be an accountant. He or she will be involved with the formulation of the projected statements and forecasts for your business which usually include an income statement, cash flow and possibly a balance sheet.
- Lawyer: If your business will involve any sort of legal element, you may want to consult your lawyer to help you address these.
- Banker: In 99% of the cases, a business plan is written to obtain some sort of funding, Have your banker involved from the start so that you have a good grasp of the financing side and how that will impact your business and financial projections.
If you don’t have some sort of strategy to help you market your business, you might as well not even bother getting started. It’s not enough to just hang a sign on your door while you sit. wait and hope for the phone to ring or someone to email you. This is the area where a lot of start-up businesses make mistakes. A good marketing consultant will help you with your strategy as well as provide you with some ideas you may not have come up with yourself. The marketing plan will also be important in the projections as it will contain many of the factors used to determine the revenues of the business, and the advertising and marketing expenses.
At the end of the day, what most people will be interested in when reading your business plan is the financial projections. Now I may be a bit biased here, but the first thing I always do is turn to the projections and statements of a business plan and see whether it is even worth reading. In a fraction of a second I can tell whether or not a professional was involved. In most cases, they have not and it shows. Remember, anyone can just dump a bunch of numbers onto a spreadsheet. But in the end, do those numbers make sense? And are the numbers attainable?
An accountant will also give you a good dose of reality by shedding light on expenses that you may not be aware of such as payroll taxes, workers compensation liabilities, business taxes, retail sales taxes etc. When I read a business plan I want to see the impact of these elements. If they are not there, most people won’t even bother reading the rest of the plan.
If your business will involve legal elements and the services of a lawyer or other legal professionals along the way, it would be a good idea to get them involved in the process. For example, if you are starting an employment agency, you may want to be up to speed on various laws that are applicable. Why? Well once again, some of these may impact the numbers and should be taken into account. At the very least if you will be using a lawyer to draw up contracts, leases, or other legal documents, you will need to know how much to budget for that expense.
If you are writing the plan to obtain funding, then it is a good idea to talk to your banker to get a feel for the financing side of the equation. You may want to know what interest rate you will be paying on any loans or lines of credit. You may want to check to see if the bank will cover your entire funding needs, or only a portion of it. Another important variable is the term of the loan. These numbers will be vital in the overall business plan including the cash flow and financial projections.
In summary, what you want is a prepared document that doesn’t just slap a bunch of numbers and unusable statements together. There is nothing more impressive than a well thought out and “put together” business plan. It may require a lot more time, effort and money than you may be willing to put into it. But if you do, it will be an investment that is guaranteed to pay dividends.