A business plan is the entrepreneur's road map
Columnist Kirsten Asleson considers a new business idea.
It’s been back to the drawing board, so to speak, for a new business idea. Since January, the thought of a coworking space has kept me up at night. Some nights thoughts of dollars and cents flood my brain, and others, possible floor plans and décor ideas race around in my head.
During the past several years, this has included multiple women entrepreneurs who take a risk to start a business or who are taking the final plunge to transition from an employee to a business owner.
A majority of women entrepreneurs will agree an important piece of the entire process is writing a business plan while you're in the planning process. Business plans have been called the “blueprint” to your business operations.
The first time I had a brilliant business idea, I asked my dad if a business plan was even necessary. His response was a short “no, not in my opinion, BUT I would not be the one loaning you money.” He went on to explain that writing a business plan can be long, arduous work that ultimately is a guessing game when it comes to the revenue piece. But lending companies need this business plan and the figures help them decide whether or not your venture is a good risk.
In addition, dad’s idea of a business plan was a document a person created and then put in a safe, never to be looked at again. In reality, a business plan should change over time as the business develops. In fact, as business objectives change, it is common to have more than one business plan written.
Another reason to write a business plan is to test the feasibility of your idea. It can save you a great deal of time and money if it reveals that the business will not survive.
If you need any operating or start-up money, without a well-developed business plan, the money most likely won’t be loaned to you. Likewise, once you are established, having a business plan will raise your chances of borrowing money to stay operational or even expand.
There are many business plan templates on the internet and in the business section of bookstores. Here are some important points to keep in mind when preparing your business plan:
Be concise. The entire plan should be no more than two pages, the first with the facts and the second with the figures.
Be truthful and realistic. Your reputation is at stake, and you want to make a good impression on your potential investors or lenders. They will see through puffery – either now or later.
Have realistic assumptions in your figures, and spell these assumptions out. Be somewhat conservative in your projections for revenue growth and somewhat generous in your expense projections.
Include some contingency reserves. You will look realistic and be more believable because we all know things come up.
Include relevant, current industry comparison data to demonstrate that your plan is grounded in the current economic environment.
Although time-consuming and sometimes exasperating, writing a business plan is an essential part of having a business that is going to survive the start-up stage.
Bottom line, a business plan can help clarify what your business has done and where you are going. And if you are in a rut trying to decide if you should fold up shop or not, maybe writing a business plan will re-energize the hopes and dreams that motivated you in the first place.
Kristen Asleson is owner of Midwest Virtual Assistants. Send comments and ideas to firstname.lastname@example.org .