Business Plans For Dummies. Paul Tiffany
In fact, the business terrain out there is littered with the desiccated remains of what once sounded like a “good idea” but never got beyond that point (anyone recall Pets.com?). Meanwhile, a good idea hitched to a sound plan for moving ahead is something that both experience and history have shown to be a highly positive factor — take a look at Amazon.com for just one example. Your purchase of this book is not an expense. Rather, it is an investment — and one that will yield dividends to those who take the process seriously. We don’t, and can’t, guarantee success with our suggestions for how to plan your business venture, but we do believe that the odds will improve substantially by following the guidelines we offer. So, OK, just do it — but first do your homework (and also eat your spinach); you won’t regret it. And as for that need for speed, just ask the second mouse at the cheese trap what it thinks of being first… .
In this chapter, we look at why having a plan is so important and how you can use your business plan in different ways. We talk about your business plan as a guide to your company’s future and a record of where you’ve been and how you’ve done. We help you take the first steps in describing what you actually plan to do and how you plan to do it. Finally, we look a little closer at two important groups: investors who may want to own a piece of your business and lenders who provide funds to help you grow.
Bringing Your Ideas into Focus
The concept of a plan originated with the early builders of, well, buildings, not businesses. If you’ve had a house built or have remodeled one recently, you know that this kind of plan is still around (and is expensive). Over the centuries, however, the meaning of the word plan has expanded to include time as well as space. A plan in the modern sense also refers to a view of the future, as seen from the present. You make plans for a business trip next month or a holiday next summer (holiday, you ask; what’s that? Is it an Italian word?).
What your industry will look like
What markets you want to compete in
What competition you’ll be up against
What products and services you want to offer
What value you can provide customers
What long-term advantages you think you’ll have
How big and profitable your company can become
To create this detailed view of the future, you have to make a whole bunch of predictions about what’s going to happen down the road. If your company manufactures crystal balls, of course, you’re in luck. If not, you have to find other ways to make some basic business assumptions about the future.
Looking forward
A business plan provides a view of the future. Whether your company is large or small, whether you’re just starting a business or you’re a part of a seasoned company, you still need some sort of planning process to point you in the right direction and guide you along the way:
A brand-new company makes a business plan to get its bearings and often uses the plan to get funding.
An up-and-running company uses a plan to prepare for the inevitable changes in the marketplace.
A large company needs a plan so everybody sees the same view ahead.
A small company constructs a plan to make sure it has the necessary resources to survive year-in and year-out.
In fact, a small company needs a business plan most of all; unfortunately, small businesses are often the last to prepare a formal business plan. If you own or manage a small business, you already know that you’re the jack-or-jill-of-all-trades. You hardly have enough time to get your daily business chores done, much less plan for next week, next month, or next year. But because you run a small business, you simply can’t afford not to plan.
Looking back
Your plan creates a view of the future. In years to come, you can use old copies of your plan to look back and determine just how well you predicted the future.
Your plan maps out a direction in which to go and the route to take. You can use it to gauge how skillfully you accomplish what you set out to do.
Your plan forecasts where you want to be. You can use it to check out how close you come to your targets for the industry, your market, and your finances.
Looking around
You can use your business plan to tell the world (or at least anyone out there who displays an interest) meaningful information about your company. No matter who you deal with or why, your plan has a ready-made description to back up the claims you make. Your plan comes in handy when you deal with the following constituencies:
People you want to recruit to join your organization as staff associates
Suppliers you want to work with on a regular basis
Distributors interested in carrying your product or service
Customers