The real value of doing a business plan is not having the finished product in hand; rather, the value lies in the process of research and thinking about your business in a systematic way.
The act of planning helps you to think things through thoroughly, to study and research when you are not sure of the facts, and to look at your ideas critically. It takes time, but avoids costly, perhaps disastrous, mistakes later.
The objective is not to “write a plan.” Planning is a process to determine specific actions you must take to start or grow your business. The major task is to investigate every issue that may impact the business: competing products or services, the market, potential customers, pricing, supply, various business models capital required, environmental and regulatory impact, etc. After extensive analysis you summarize each issue and then choose actions that will have the most positive impact to address the issue.
Consequently, the plan is primarily a tool for you and not for another party such as a bank. Consider initially writing the plan as a detailed outline. They are easy to write and change and will free up time to determine appropriate actions. Remember a plan must be action oriented.
Consider including a Gantt Chart to list the actions to be taken, indicating for each action: the responsible person, the start and completion date, and the implementation expense. You may find a Gantt chart helpful, which tracks the phases and activities of a project. A three- to five-year planning horizon is recommended.
There are tens of thousands of suggested formats for narrative plans on the Internet. Look at a few, step back, and ask yourself what are the important issues each section is encouraging you to address. Quickly choose a format, or develop your own, and jump in and get started. SCORE and the SBA have templates online that you may use.
Do not develop your three- to five-year forecasted financial statements until the action list is completed since the list provides the expenses and timing for the accounts in the statements. This means the statements are the last things you will develop. In most cases you will be disappointed with the financial results.
Do not be surprised or discouraged — this is the first draft. To change the results you must change some due dates and expenses in the action plan. Since your plan is in outline form it will be very easy to change. You may need two to five drafts before your action plan and cash flow are acceptable.
When the business plan outline is acceptable, it is time to determine if a narrative version is necessary and in which format. Each party needing the plan will probably want a different format and, therefore, it is best to ask which form they desire.
Be sure to spend adequate time and effort on your marketing section. Define your product or service thoroughly, and construct a profile of your customer who wants what you are selling. Develop a plan of how you will get in front of those people who fit the profile, and then deliver your sales pitch.
The SBA has recently devised a tool to help you research your customers and your competition in a given area which you define. The tool is called SizeUp and can be accessed at www.sba.gov/sizeup.
Finally, you should know that your Ahwatukee SCORE mentors are here to help you design a business plan you can be proud of, and it is done at no cost to you.
• Tom Filesi is the chamber’s SCORE mentor.