Why Write a Business Plan?

Writing a business plan, if you’ve never written one, can be a overwhelming thought. Perhaps you’ve never even seen one. Perhaps you haven’t enjoyed writing or don’t know where to begin. Maybe you have some experience in business and know about business plans, but just want some additional ideas. Or, perhaps you don’t see the need.

Many businesspeople apparently do not write or use business plans. Do you suppose that the guy running the local TV repair shop wrote one? Do you think your beautician wrote one? Well, if they got an SBA loan, then they did. Sure, you can do business without a plan, but consider the benefits of having one, such as obtaining funding from someone outside your family. Most of the businesses that fail have never written a business plan, while many studies have shown that companies with business plans have a higher probability of success.

People write business plans for a number of reasons. Perhaps the one most important, but one usually left unstated, is to be taken seriously. Whatever the ultimate purpose of your business plan, if your business is not taken seriously, you won’t achieve your purpose.

That having been said, perhaps the most common stated reason for writing a business plan is to obtain funding. This handbook focuses on funding. Funding, of course, is money that someone loans, invests in, or gives you because they believe you are going to be successful, and they want to share in that success. If you thought that funding only comes from banks, well, that is but one of probably several hundred sources of funding. With these points in mind, here are some of the major reasons and benefits of writing a business plan:

Obtaining funding as the basis for…

Attracting key employees into your company
Convincing key suppliers to give you credit
Creating a brochure for a business broker to use in selling your company
Presenting live presentations to investors and key suppliers and dealers
Designing a prospectus to sell stock in your company
Attracting business partners
Forming strategic alliances
To support the good management of your business…
Ensuring that everyone in your company is working towards the same goals
Convincing others in your company to allocate resources
Collecting your thoughts about how to run the business--which helps you monitor its progress and make course corrections
Managing your growth
Obtaining input from employees and investors

What Is a Business Plan?

A business plan is a written document used to describe your business. The sections of a business plan are fairly standard, though. Therefore, you have lots of help and precedents from those who have gone before you.
Each section in a typical plan has a specific purpose, for example, an overview of your company or of your products. A plan for a small, simple business can be quite short, perhaps as few as 8-10 pages. Certain sections can be as short as one page. Be reassured that each step of this process can be relatively painless and ultimately quite rewarding.

What investors want to know...

Building a business requires more than just an idea and a plan. For a moment (and you may need to refer to this moment often), put yourself in an investor's position... What would you want to know about a business before you invested in it? We often recommend investing an amount of money in a friend's business just to get the mental, physical, emotional, and spiritual experience of investing precious CASH in someone else's business. Now, more than ever, you must be convincing to the bone. And, expect that intelligent people with money will want to feel comfortable with you and your answers. You will find that, no matter who you are and what you are doing, you’re going to need answers to these basic questions:

• Who are you?
• Why are you in business?
• What is the opportunity here?
• What is the current situation in the world?
• How big is the market?
• What will you sell?
• How is your business structured?
• How will you make money?
• Who else is doing the same thing?
• How do you compare?
• Who are your most important customers?
• How will you reach and inspire them to buy from you?
• Do you have any strategic partners who will help?
• Who are the people running your business?
• What experience do you/they have?
• Who else are you working with?
• Who are your advisors? Who is on your board?
• Where are you today?
• What have you accomplished?
• How much money do you need to start / grow?
• What will you do with the money?
• How much money will investors make?
• When and how will investors make their money back?
  
  Your Executive Summary will either inspire an investor emotionally or not (that's how most of us make decisions). This will only open the door to further discussion and exploration. The rest of your plan must provide the whole story with proof, logic, and the introduction to the people who will be "response-able" to build and run the business. Investors likely have many interests. When you approach them with a complete plan...
  
  A) you will have the above answers firmly in your head and you will be able to speak them with certainty
  B) your plan will provide written documentation that adds believe-ability
  C) having done the math, you will feel great about your prospects for personal wealth, as well as a huge payoff for your investor(s)(who may get richer then you do from your deal).

How a good business plan can help your company survive

Why even write a business plan? There are certainly many excuses not to write one: They are more trouble than they are worth... It seems like a writing exercise that is a waste of time... Nobody reads them anyway... etc. etc. These are notions many entrepreneurs and business owners share about business plans and business planning in general. The truth is no one likes planning at all. There are too many things going on. Too many changes. Plans are useless especially when they keep you stuck on a narrow path and, if you are really anal about it, you will miss opportunities just because they aren't in the plan. Are we on the same page? Since I have been through everything entrepreneurs go through myself, I have learned a few things about the benefits of business planning I think you should consider:

Just give me more sales and we will be fine

Like most entrepreneurs and business owners, you think you real key to survival is simply more sales. Everything else can be managed if you have enough sales. Sales are good, we agree. It's the structure of your money-making machine that suffers if you let this tail wag your dog. What are you building here, where is it going, how will you most efficiently use your cash to do the right things first? Even if you are not in survival mode, carefully mapping your investments of cash is a wise move. Reducing costs is always a priority. Adding the right thing(s) next is crucial to avoid hiccups in your growth and wastes of cash on projects that must sit and wait until another priority is in place first. A good plan enables you to sort through your puzzle pieces and complete the picture efficiently.

Can it prevent you from doing something stupid?

Actually yes. Entrepreneurs are infamous for jumping on deals. All kinds of deals, but do these deal make sense for your business? A good plan includes flexibility to take advantage of opportunities along the way — it provides a context, a framework for what kinds of things you will do as well as not do. If you are good at remodeling homes, you may not do well to suddenly start manufacturing cars, even if you can get a good deal on the equipment. However, it would make sense to jump on deal for some concrete equipment. Be careful venturing into a business where you may not have credibility with customers (where they believe that you can provide a good product or service). Building a successful business is hard enough, keeping focused helps your customers understand what you are about, believe that you are good at it and be enthusiastic about referring others. A good business plan will keep you guided in the right direction and provide room for the right deals.

Don't wait for the money, get going now.

That's right. What can you be doing now to build your business? What can you do to add value to your business even if you really need investment capital? What can you be doing that will generate sales? Zooming out to a 50,000 foot view of your business can be a very enlightening experience. Where does your company fit in the world, where is it going, what opportunities do you have, who is around who can help and what can you do next that is within your capacity to do right away? Developing a good plan enables you to see the forest and the trees.

What happens if you are successful?

Failure is easy... Look for an excuse everyone will believe, quietly close up shop, put your tail between your legs and slink away. No problem. People do that every day. The real problem surfaces when there is a lot of money on the table. Your work has paid off; orders are piling up you and have a rapidly growing company on your hands. I call this a "high-class problem." Believe it or not, this is often where may companies fall apart. With a good plan in place, you will already have an efficient structure in place your next moves will be the right ones.

But how do you get there from here?

Have you ever started your car only to discover that one of your sparkplug wires is disconnected? Even a perfectly good V8 runs like crap if just one cylinder isn't firing properly. It's not like the remaining 7 cylinders will still get you going — barely — it's as if the entire engine is almost worthless even if just one plug wire is disconnected. Likewise, it can take just one employee, who either just doesn't get it or just isn't with the program to mess everything up. It is vitally important all of your people see and understand the big picture. I recommend having them contribute part of the plan themselves — they'll see the big picture as well as design in their part to make it work. A good planning system enables collaboration and provides ideas each person can adopt as their own.

You don't have to do all the work yourself.

Tom Sawyer got the other kids in his neighborhood to paint that fence. I've been in those meetings where everyone is going in different directions, their noses in everyone else's business, but their own. Collaboration gone a business plan is their opportunity to design what they will do as well as review what everyone else has designed for themselves to do. You no longer need to be the center of tension. The plan is. You are the referee making sure that all the parts move together and that all spark plugs wires are connected. With a good business plan in place, the right hands know what the left hands are doing, making your management job easier.

Doing the math will set you free

Ever have a day when you ask yourself if this business is even worth going on with? You may be surprised to discover that if you were to tweak one area of your company, many things could change. A brief top-down calculation may show you exactly where you are off and what, if you were where you would like to be, that would look like. You would also have some straight-forward logic to share with those whose job it is to make the improvements. You may also be surprised to [re]discover the true potential of your business and rekindle your enthusiasm to go on. Having a good business plan provides a tremendous sense of relief that you are on the right path.

The same thinking that got you into trouble will not get you out of trouble.
- Albert Einstein

For a moment, pull you head out of the sand.

It's easy to get caught up in all of the details and emergencies with running your business. You must look at your situation differently. If this were someone else's company, could you fix it? You probably could. What if you could step away from some of the emotional attachment and systematically compare each component of your business with a structure that included a variety of ideas cross-pollinated from many industries? No blanks to fill-in, just ideas to discard. These may also trigger many ideas from everyone involved. Implementing one's own idea is a lot of fun and very motivating—as you well know. With a good business planning process, you could harness this power within everyone who works with you.

The planning process has to be easier

If it were more difficult to go through the business planning process than to just go on with your business, no one would ever do it. As you will discover, the business planning process is worthwhile. Plus, you will produce a document you can use much like a composer uses sheet music — every musician can see exactly how to play their part. Of course, we have an elegant solution to help you through the planning process and to develop a comprehensive business plan for your business.

Not sure about writing business plans?
That's alright! We'll lead you through it.

You may know your business and be very excited about the possibilities; however, you may not know how to write a business plan. This is very common. (And, if you don't know your business very well, but are still excited about your concept, we will help you build a business around it.) Writing a plan to map out your entire business to convince an investor or lender to back you is different. That's where we come in. HPC Business Consultants have a business planning system that has all the knowledge necessary to create a convincing plan. (And build a business.) All you need to do is fill out a questionnaire that will guide us through the entire process to publishing a plan you can take to any investor or lender.

What if my business is different?

Good question. If you have an idea for a unique business—you are not doing it the way "it's been done before," this is what we can do for you. If you want an angel investor, venture capitalist or any lender to understand and believe in your unusual approach, and take you seriously,we have the ideal business planning system to help you win them over.

Contact us today so we can get started on your written plan which will contain all of the information you need to present in an easy to read, authentically impressive format expected by investors and lenders today.