Business Tip: Why a business should have a plan
By Lisa Barr
Business owners tend to start a business and not write a business plan.
Usually, writing a business plan is the last thing on an entrepreneur's mind because entrepreneurs are ready to hit the ground running.
Also, many small business owners do have a business plan in their head but not on paper.
According to bing.com, the definition of a business plan is a plan of future strategy: a plan that sets out the future strategy and financial development of a business, usually covering a period of several years.
As a business adviser, I like to refer to a business plan as a road map for the entrepreneur.
Plans tend to help businesses steer in the right direction.
Yogi Berra once said, "If you don't know where you are going you might wind up some place else."
A business plan tells the story of where you are today, where you want to be and how you are going to get there.
A written plan allows you to share your vision with employees, bankers, vendors, etc.
A typical plan consists of a management plan, marketing strategy, financial projections, competitor analysis, customer demographics, research and an executive summary. Each section takes time, thought and research to complete.
As you can see, it is not something that is usually completed overnight, and the main content has to come from the entrepreneur.
One of the most important and overlooked parts of the business plan is the exit strategy. An exit strategy is a plan of how you will leave the business once you decide to sell your business or retire. Having an exit strategy helps you make better business decisions now based on the number of years you think you will be in business. For instance, if you plan to be in business for five years versus 20 years, you will make different management and financial decisions based on this planning. You may decide not to take a loan that will take you 15 years to pay off if you plan to sell your business in five years.
Another thing to consider is a business plan is also something that can be revised as you see fit. This means that it is not something that is set in stone. Business plans change as owners get more seasoned, grow business or when opportunities come along.
You should always look over your business plan to see if you are following it, it is working and if you can do things better. Reviewing your business plan can be done on a quarterly or yearly basis or as you see fit.
A business plan is not meant to be put on the shelf so you can say you have one. You need to use it.
If you have already started your business without one, it is not too late to put one together.
If you or anyone you know may be interested in learning how to write a business plan, contact us at the University of Houston-Victoria Small Business Development Center at 361-485-4485.
Lisa Barr is the senior business adviser at the University of Houston-Victoria Small Business Development Corporation.