Small Business Advice
Why You Need a Business Plan
QUESTION: All the self-help books encourage me to develop a business plan. I believe I know how to run my business, so why should I go to the time and trouble of writing it down?
ANSWER: Reflecting on my own experiences in growing my business I, too, felt I knew the steps necessary to ensure success. Organizations like SCORE, that offer free business counseling to aspiring entrepreneurs, did not exist at the time. I had my share of successes and failures learned in the school of “hard knocks.”
Suffice to say, I would have had fewer failures had I taken the time to develop a strategic business and marketing plan in the beginning stages.
In addition to providing a roadmap to follow, the business plan is also a valuable document that potential investors and bankers want to see in considering your requests for funding. It’s not enough that you think you know how to run your business; they want to see your thoughts in a concise, well written form.
There are a number of outlines available for a nominal fee. SCORE provides a free one you can access here.
Lenders and investors are not inclined to read a lengthy and often repetitious document. Ideally, your business plan should not be more than 10 pages, including financial projections. Below are some key questions to answer when creating your plan:
- If you are a startup, do you have the necessary funds to cover your startup costs and monthly operating expenses until you reach the point where income matches or exceeds outgo?
- Who are your target customers and what value do you deliver to them? What customer needs or wants will you be satisfying?
- How will you reach your customers? What is your marketing strategy?
- How much are your customers willing to pay for the value you offer? What are they currently paying? What are your pricing tactics?
- What resources are needed to produce your product or service, deliver it to market and make a profit? What kind of infrastructure will it take?
- What is your e-commerce strategy and what role will it play in your business?
- Who is your competition? How will you compete and what are your competitive advantages?
- Do you have a team in place to include an attorney, accountant, insurance agent, etc.? You need to have professionals as part of your team.
The business plan causes you to think through all of these issues and formulate a plan for success. All it takes is an investment of your time.
Gray Poehler is a volunteer with the Naples Chapter of SCORE.
A SCORE counselor since 2005, Gray Poehler owned and operated an independent insurance agency with 20 employees and two locations. He has earned the Certified Insurance Counselor designation and is familiar with both personal and commercial property and casualty insurance. Areas of expertise include: Business Finance and Accounting; Business Strategy and Planning; Business Operations; Human Resources and Internal Communications; Sales, Marketing and Public Relations.