Question: I've had my business operating for over two years and have never had a business plan. I'd like to do some expansion, but now I'm told that in order to get even a small loan I'll need to have a business plan. Can SCORE tell me how I should go about this and why it's important?
Answer: Sometime during World War II, Winston Churchill was quoted as saying, "He who fails to plan is planning to fail." This saying has been often repeated, but unfortunately is not always heeded.
Well, the good news is that it's never too late to make a plan. Easy, yet comprehensive "simple" business plans can be done by anyone either contemplating a new business or trying to grow an existing business.
In an article published recently in Forbes, contributor Patrick Hull says, "The simple act of writing down your idea and outlining how the business will operate can be helpful to ensure that you communicate your vision and that everyone is on the same page.
It also helps you benchmark and check your progress as the company grows." Hull also shares five tips for creating a "great business plan" at http://goo.gl/SCnTo.
SCORE now has a new Business Plan Outline published to help small business entrepreneurs create that all important business plan. This can be found at http://goo.gl/LsjPE.
The business plan outline consists of a narrative and several financial worksheets. The narrative template is the body of the business plan. It contains more than 150 questions divided into several sections. Work through the sections in any order that you like, except for the Executive Summary, which should be done last. Skip any questions that do not apply to your type of business. When you are finished writing your first draft, you'll have a collection of small essays on the various topics of the business plan. Then you'll want to edit them into a smooth-flowing narrative.
The real value of creating a business plan is not in having the finished product in hand; rather, the value lies in the process of researching and thinking about your business in a systematic way. The act of developing the business plan helps you to think things through thoroughly, encourages you to study and research to make sure of the facts, and look at your ideas critically. This takes some time now, but avoids costly, perhaps disastrous, mistakes later.
The business plan SCORE provides is a generic model suitable for all types of businesses. However, you should modify it to suit your particular circumstances. Before you begin, review the section titled "Refining the Plan," found at the end.
It suggests emphasizing certain areas depending upon your type of business (manufacturing, retail, service, etc.). It also has tips for fine?tuning your plan to make an effective presentation to investors or bankers. If this is why you're creating your plan, pay particular attention to your writing style. You will be judged by the quality and appearance of your work as well as by your ideas.
It typically takes several weeks to complete a good plan. Most of that time is spent in research and rethinking your ideas and assumptions. But then, that's the value of the process.
So make time to do the job properly. Those who do write a business plan never regret the effort. And finally, be sure to keep detailed notes on your sources of information and on the assumptions underlying your financial data.
For assistance with developing your business plan, Northern Arizona SCORE will be offering a Bankable Business Plans workshop, Saturday, April 13, from 9 a.m. to noon. This will be held at the Flagstaff Chamber of Commerce, 101 W. Route 66, Flagstaff, AZ 86001 and is $25 per person.
Get started with a SCORE volunteer business mentor today. All SCORE mentoring services are free of charge.