Many people starting a new business have the idea that putting their business plan on paper plan is an unnecessary exercise in mental gymnastics. The typical attitude seems to be: OK, I may have to write one, but after it’s finished I’ll get on with the real business of starting my business. That’s not true. Never was. Never will be.
The reason you owe it to yourself to prepare a written business plan is similar to why blueprints are used to build a house. Always on paper, blueprints spell out where every stick of lumber is to go, including details on their dimensions. Every electrical outlet appears on the blueprint. So does every window, every door, even every cubic yard of concrete.
In short, everything anyone needs to know about building that house is right there in its blueprint. That blueprint includes numerous pages – each a mini-plan for some essential building phase.
The page for the front elevation indicates its among other details overall height and width of the house. Other pages provide similar details for its right and left sides, another for the rear view. There’s also a page for the roof that indicates its pitch, roofing materials, etc. The blueprint consists of mini-plan after mini-plan.
Every detail anyone involved with building that house wants to know about it is right there in those blueprints. Likewise, every detail anyone involved with your business wants to know about it – potential lenders or investors, certainly, but particularly you, yourself – should be included your written business plan.
Just as with the blueprints, within your business plan should be a number of mini-plans, descriptions of how you’re going to handle key elements of your business. Your Physical Plant/Office Plan spells out how much space you’ll need, when and why. Your estimate of how much that space will cost is one of many numbers you’ll include in your Financial Plan.
You should also have a Marketing Plan. Why? Because, as the saying goes, “Nothing happens ’til somebody buys something!” In your Marketing mini-plan plan you’ll identify your target customers, who and where they are, when and how you intend to reach them. How much you intend to invest in reaching them is another number you’ll include your Financial Plan.
Notice that word “invest.” Smart business owners try not to “spend” money. Their goal is to make sure every check they write generates revenue and profit that is several times greater than the total dollars shown on that check.
You’ll also need a H.R. Plan – for your Human Resources. How many employees do you anticipate your business will need? What skills should they have? When do you anticipate hiring them? And how much do you think you’ll have to pay each of them? Salaries, wages and benefits show up where? That’s right, in your Financial Plan.
Those are the basic “mini-plans” included in most written business plans. Depending on the nature of your business, you may also find yourself developing an Inventory Management Plan, a Purchasing Plan, even a Sales Plan, assuming your business requires a sales staff. Sales, remember, is not the same as Marketing. Marketing and Sales serve different functions.
Oh, you say you’ve already got all those details tucked away in your head? Well, tell that to a potential lender when your business needs to borrow money. Or tell that to a potential equity investor if you intend to sell stock. They can’t see what’s in your head. They want to see your business plan – on paper.
Rarely is a home built without a blueprint. Likewise, very few successful businesses are built, grow and prosper without a written business plan.
Even if you’re certain you’ll never have to raise additional money, your written business plan will not only tell you where you’re headed, it documents where you’ve been as a way to track your progress. By referring to your business plan often, you can avoid making a wrong move – or, by looking back, spot where you may have made one along the way.