I get this question a lot. I always wonder why people are afraid to take the time and effort to plan their business. That boils down to who they think the plan is for. If they think it is for a lender or an investor, then I could see that. But the plan is for you. It is your business.
I have yet to meet a client who can’t talk for at least a half an hour on why they want to do their business, where they want to do their business, how they want to do it. You get the idea. If you can talk about it you can put it into writing. A business plan is simply a who, what, where, when, why, and how of your business. It is also a road map of how you are going to take your business from point A to point B and what it will take to get there.
If you have ever taken a trip of any length greater than 3 days you would want to plan it out. Which roads are we going to take? Is there any road construction we need to avoid? How much gas will it take? What is our budget? What lodging do we need? How many meals will we eat and what can we afford? Etc… The point is, we make it this huge issue when it doesn’t have to be. Lean Business Canvas has been around a long time and is a short version of what we have just covered. It is in my opinion not enough. It works with lenders though.
What I ask most people is to plan this as if it was for only you and cover all the details that matter for a business. It is important to know what you are putting money into and how it is going to pay you back. We need to be flexible and know that things don’t always go according to plan. It is good to have a backup plan and understand the possibilities of each.
We give out templates that ask seemingly repetitious questions. The process though is to get people to think about what they are trying to accomplish. A business plan is not a 30-second elevator pitch, rather it is a detailed account of how you plan to build your business. No one would build a house without a plan or a road or anything at all. Yet, people will want to spend hundreds of thousands of dollars on a business with no plan. It makes absolutely no sense to me.
How can we help? I typically do the financial forecasts for my clients, but not until they have given me their plan. I require a plan to do the forecast. We also help with templates, reviewing plans, offering suggestions, etc. But really, I ask people to sit down with their significant other (if they have one) and go through this as a team to get all of the ideas out there and to work on the details together. A lot of time people find it is far easier than they thought.
The truth is if you try to do it without a plan it seldom works. The plan sets expectations and how you will meet them. It also makes us think through the process of running a business, as well as the costs.
I recommend reviewing every quarter the first year, semiannually the second year, and annually after that. It is not something to fear, it is something to do and then to execute to put you on the road to success. I will be happy to help you. Just reach out. Together, we can do it.
By Todd Rausch, Western Iowa tech Community College Regional Director for the Small Business Development Center. Our business is your success.