Most entrepreneurs avoid writing a business plan until they’re confronted with  the ultimate obstacle:  a need for outside funding.  The first question out of a  lender’s mouth, whether an angel, venture capitalist or banker* is inevitably, “Can I see your business plan?”  If you don’t have one, the conversation ends there. 

So if you’re unsure about needing a business plan, or if you’re sure you don’t need one, you should ask yourself the following questions—just one “yes” means you need a business plan. 

If you’re a start-up:

• Do you need outside funding (i.e., money from someone else)?
• Should you think about the big picture—where you want to go and how you’re going to get there?
• Do you want to avoid as many mistakes as possible?

If you’re an existing business:

• Do you need outside funding?
• Do you feel like your business is running you rather than you running your business?
• Do you want be more proactive and less reactive?

A business plan is an invaluable investment of your time and effort, regardless of whether you need outside financing.  I liken it to eating your vegetables—you may not like it, but it’s really good for you.  Why?  Because a successful business needs a solid foundation from which to grow.

What follows are the three most frequent excuses entrepreneurs use to rationalize why they’re not writing a business plan.  Since a business plan can mean the difference between success and failure, be sure not to fall into this trap.

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The number of resources available to help write a business plan is virtually infinite.  With the aim of narrowing down the list to a helpful few, here are a few of my favorites:

Business Plan Website

The Small Business Administration (SBA) at www.sba.gov.  The specific link for business plans is:

www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html.

Business Plan Book

My favorite book is The Business Planning Guide by David H. Bangs, Jr.  It explains each part of a business plan in clear, concise language without too much jargon.  Examples can be found throughout.

In-Person Assistance

These wonderful organizations offer literature, seminars, workshops and consulting services at little or no cost:

• SCORE (Service Corps of Retired Executives):  www.score.org

• SBDCs (Small Business Development Centers):  www.sba.gov/sbdc

Legal Issues

Nolo Press (www.nolo.com) is the resource for legal information for consumers and small businesses.  Their legal self-help publications address a wide variety of topics, and can be purchased online or found in local bookstores and libraries.  More importantly, their information is trustworthy and easy to understand.  Topics include patents, trademarks as well as how to decide on the best legal entity for your company (LLC, incorporate, etc.).

Creative Financing

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Attracting an investor is like attracting a mate—you want to pique the investor’s interest without showing all your cards at the outset.  The perfect vehicle for achieving this delicate balance is the Executive Summary.

The goal of an Executive Summary is to whet the appetite of the investor by presenting a compelling premise, an irresistible hook.  Your short (5 pages or less) document is meant to give a potential investor every reason to say “yes” and little reason to say “no” to a face-to-face meeting.

While it’s typically included as part of the business plan, the Executive Summary should ideally function as a stand-alone document.  Its function is to build enough interest to get you meetings with potential investors.  Once you’re at the meeting, then you can dazzle them with your presentation and ready answers.  Ideally your Executive Summary should include the following 10 ingredients:

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Okay, you’re finally writing your business plan.  But will it help you secure the funding you need?  Will it be your road map to success—helping you to build a successful business?

Most entrepreneurs write their business plans with one goal in mind:  to raise money.  Even so, a business plan is a double-edged sword.  While it allows you to introduce and sell your business to the reader, it also gives the reader the opportunity to say “No, thanks.”

Don’t blow your big chance.   Now more than ever, you only get one chance to make a good first impression.  Below are 7 mistakes to avoid—7 sure-fire ways to shoot yourself in the foot.

Note:  If you are writing your business plan for the purpose of developing an operating blueprint, it is just as important that you avoid these 7  mistakes.

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The world’s oldest form of business partnership is alive and well. In fact it is thriving and growing. It is the business partnership of two people who live together; they are called copreneurs.

Copreneurs make a powerful business team. Their special relationship brings a unique synergy to their company. They also face unique pitfalls. It is not an easy task to critique the work of the one you love. The business relationship can easily consume the personal relationship. And then there is the question of how to divvy up the workload.

A well developed and documented Strategic Action Plan that is used on a daily basis goes a long way to alleviating many challenges facing copreneurs. It provides them with something to point to other than each other!

A Strategic Action Plan is a working document that provides the road map to manage and control the growth of the company. It defines the long term measurable objectives for the company and links them to specific actions to be taken in the next year. It is the glue that keeps the partnership together.

It is always assumed that because copreneurs share a very close relationship they also share the same vision for the company. This is not necessarily true and so the first step in the development of the Strategic Action Plan is to clearly define the company’s Mission Statement. There are two kinds of mission statements. The first is a mission statement full of meaningless platitudes; this is easy to develop and quite useless. A real mission statement tells the reader what the company does, who it serves and what sets it apart from the competition. This type of mission statement is very difficult to write but is an essential foundation for the Strategic Action Plan.

The next step in the planning process ensures that the copreneurs have a common vision of where they want their company to go in the future.

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Whether you have a new business or one that has stood the test of time, you should create (or dust off) your marketing plan. Developing one doesn’t have to be a daunting task. Investing a little time will yield great dividends. Here are a few things to keep in mind.

Your plan should be a working document, a road map for your business. It should be designed to help you understand and grow your business. I recommend housing it in a three ring binder so you can change and add to it when necessary, include blank note pages, store relevant articles and expand on it throughout the course of the year.

Your marketing plan should include the following:

• List of products and services
• Detailed description of your target markets
• Challenges and competitive analysis
• Budget
• Identification of appropriate marketing vehicles
• Calendar with deadlines and expectations
• Goals; specific and quantifiable that can be monitored throughout the year

PRODUCTS & SERVICES
Your list should include all the services you offer including any you provide free of charge. Note which products or services are new, which will be offered in the coming year, which will be phased out, and those that are unique in the market. You might also want to write a list of products and services that you would like to offer this year or next year to begin the planning process.

TARGET MARKET
Next identify your target market. First, where are they located? Local, regional or national? Then define each target market as specifically as possible. Very often I have clients who say, “Everyone can use my product.” This is rarely true.

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A Business Plan is the essential document we are all meant to have – right? So why do so many of us not have one?

The principle behind having a business plan is to think strategically about how to grow our business, create new direction and organise our thoughts:

What am I going to do? Why? When does it all have to happen? What resources will I need? What could get in the way of success? How can I minimise the chances of that happening?

The principal challenge with traditional business plans lies not in the subject matter or the content, but in their format.

The majority of business plans are static documents, comprised of lists and columns with actions and dates. There is a proportion of the population that like to manage their work in this way – and they thrive on using the traditional business plan format. But the reality is that most entrepreneurs are entrepreneurial (funny that!) – and most entrepreneurs hate using lists! Lists don’t really reflect our way of thinking, creating or managing information.

We need a process that reflects the flexible and dynamic way we approach business. It is this ability that sets us apart from our larger, slower competitors.

The Project Management Approach

The project management based approach to business planning represents information in a much more flexible way, using mind maps or dynamic lists. Essentially your thinking is represented in small and large chunks, and grouped by area or ‘project’.

Let me demonstrate with a genuine example. My whiteboard contains all of my current and planned activities split into 3 areas – this week, medium term and long term.

My overall aims and goals for the business are listed on the right side. These don’t change much – but they are always there in front of me to keep me focused on what is important.

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In the heady arena of strategy, the consultants of the world find wonderful acronyms for the work they do. Today let me introduce one of those to you.

It’s the BHAG – the Big Hairy Audacious Goal!

This is the goal that really stretches you to think differently about how you do business. It’s the goal that going to help you transform your business, rather than being satisfied with incremental change. It’s the goal that’s going to inspire you to do your best work and outshine your competition.

So how do you go about making your own BHAG?

The first step is to shake off any beliefs about what is possible in your business. If you already have mindset that limits your achievements you’ll never get serious about a BHAG.

So – anything is possible (right?).

Next, pose some Very Hairy Challenges – like these ones….

I want to triple my revenue in the next 12 months.

I want the best known brand in Australia

I want to work 1 day per week and still earn the same amount of money.

You get the idea.

Now you have to work backwards from this endpoint in 3 steps. Let’s take the “triple your revenue” example.

Step 1: Brainstorm ideas for making more money (no limits remember – everything is possible)

•  Charge a lot more
•  Speak for money
•  Create a high-end wicked product to sell (or multiple wicked products)
•  Work with different clients who expect you to charge a lot more
•  Sell someone else’s related product for a commission
•  Go totally online and remove your overheads

Etc.

Step 2: Make a list of obstacles and ways of getting around them

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For any business to succeed it must know what it is about. It must be able to explainwhat it is there to achieve, and where it ultimately wants to end up. Unfortunately the majority of businesses can’t describe, or don’t have a picture of what they are trying to become. Either it’s just not considered important enough, or they get so caught up in the daily running of the business that there’s no time for thinking beyond the next cycle.

Having a vision and long term goals is essential. After all, if you don’t know where you are going, you’ll never know when you get there.

How Up To Date is your Street Map?
Think of it this way. When you get into a car, turn on the engine and roll out of the driveway, 99.9% of the time you always have a destination in mind. Whether it’s the office, the fast food drive through or a town that is miles away, you know exactly where you are going. And because you know where you are going, you can choose from several routes to get there. Each route will take you where you want to go, but there may be pros and cons associated with choosing one over the other (traffic considerations, length of the trip and so on). Still, you can consciously choose a specific path, to meet your needs on that particular day.

Now imagine getting into your car with no destination in mind. You wouldn’t know when to turn right or left, or when to stop altogether. You could go forwards or in reverse – depending on your mood. You could keep driving around aimlessly forever – until you run out of petrol or the car breaks down.

Not having a long term destination for your business puts many business owners in the “aimless driving” category. If you don’t know where you are heading, then you can make any choice and go in any direction (including backwards). Plans are made based only on the current situation and short term goals.

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When someone mentions business planning we have been conditioned to think about writing a business plan. There are hundreds of books and articles, tons of software, an army of consultants, and a multitude government programs to help you write a business plan. There are virtually no resources to help you set up what today’s business environment really demands – a continuous, ongoing planning system. 

           
A commonly accepted theory is that for a business to survive and prosper it must be flexible and nimble. It must be able to turn on a dime as conditions warrant. Having a written five-year plan is not part of this picture. In fact, trying to follow a long-term plan during rampant change is not logical. It is applying linear thinking to a non-linear situation. It just doesn’t work. 

                     
Having a formal, written business plan is so accepted as being crucial to success that there haven’t been many studies or surveys to test this premise. If business plans were such a wonderful thing, there would be a significant and conclusive difference between businesses that have them and those that don’t. Interviews of 100 founders of companies on 1989s “INC 500” list of fastest growing private companies in the U.S. found only 28 percent had “full-blown” business plans. The 1993 AT&T Small Business Study found that 59 percent of small businesses that grew over the previous two years used a formal business plan. A 1994 survey of the country’s fastest growing companies found 23 percent lacked a business plan. “The Relationship between Written Business Plans and the Failure of Small Businesses in the U.S.,” by Dr. Stephen Perry, surveyed 152 failed and 152 non-failed small businesses in 1997. He found that 64 percent of the non-failed firms had no written business plan.

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If your company is expanding or just starting, this planning article is for you.

Know that you already have a plan. It’s in a place where it’s causing you more overwhelm and mistakes then it’s helping you. It’s time to take your plan from your head and put it in writing and I have the process for you to do just that.

This business plan process is strategic and tactical. IT NOT complete unless you take the plan you’ve created and turn your actions into results that can be monitored.

Know that the results of this simple planning system isn’t used to go after funding – if that’s what your company really needs. However, if you are seeking funding to start or expand your business and the thought of creating a 30-page plan is overwhelming, this plan is for you. AND prospective investors don’t read longer plans when you meet them; they want you to tell them something in 2-5 minutes and require something shorter and to the point, and this is a great short tool.

When you create a plan for the first time, what you’re really doing is taking what’s in your head and putting it down on paper for you to see. A very good thing, but not the whole story if you’re looking to grow your business.

Using the book, you’ll update your plan 3-4 times after meeting with those business owners who are supporting your business with their input. Done this way, the process should take you 20 or so hours to complete your plan. Then a couple of hours to create a scorecard fro your objectives and a project management system for your action plans.

Just creating a first draft will help you, no doubt about it, but it’s not the optimal. Seeing what’s in your head is important. You’ll be able to do what I did the first time I created a plan. I saw that I had great stategies and objectives - but they weren’t working for me.

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Introduction:

This article is written as a general discussion on the subject of “Due Diligence”. It is for informational purposes and not intended to be a definitive guideline for your exact situation. You should consult the appropriate professionals with regard to your specific transaction or situation. Further, this article is in no way advocating, suggesting or implying that anyone engages in any type fraudulent activities whatsoever. These are simply the things a buyer should be aware of when doing due diligence in buyer a business.

You spent months finding the right business. The seller says that you cannot go by what the tax return shows but the business is making a lot of money, and he can prove it. Your inspection of the profit and loss statement shows that sales have been increasing slightly in the last few years. Most important, and the best news of all is; the price is right! Does it sound too good to be true? I am sorry to tell you this, it probably is.

I think it was Benjamin Franklin who said, “A fool and his money are soon parted.” Mr. Franklin must have known a lot of business buyers. When buying appliances that break in a month, it costs you a few dollars. When you go to a swap meet and are cheated because the solid gold watch is really gold plated, it costs you a few hundred bucks. When a used car salesman cheats you, by selling you a lemon, where the speedometer has been turned back 100,000 miles, it costs you a few thousand dollars. Getting cheated buying a business can cost you many thousands to hundreds of thousands of dollars. The only investment or purchase that I know of where you can be cheated out of more money is in the area of real estate. Real Estate fraud can runs into the hundreds of millions of dollars and does.

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