The Importance of a Business Plan



Though both my business partner and I have worked for several businesses over the years, in various phases from start-up to established enterprise businesses and have even been a General Manager for one, it was not until we started my own business that I had a true appreciation of what being an executive was versus the business owner. As a business owner, the buck stops with you and are responsible for the overall direction and financial profitability of the company. I had written many business plans for companies over the years, but like many business owners did not feel I needed to write a business plan because I understood my business.

In our first year of business, I began working with a variety of start-up businesses at various phases in different industry sectors. In each case, I would start talking to them about the importance of a business plan. Some had actually started a plan as they were looking for funding. In most cases, they had tried to write it themselves without ever have written a plan or with an understanding of what the government, a bank, or investor is looking for in order to provide a grant, loan, or investment. Many of the plans fell short as they were not able to articulate their market, provide detail on what value their product or service provided, show credibility of themselves running a business, did not have a marketing or sales strategy that showed how they would generate revenue, and in many cases had an independent accountant create financials without a full understanding of the business. There were a couple companies that felt they did not need a business plan as structure would be too confining on the entrepreneurial spirit. They felt they knew what they were doing and the goal was just making revenue. The fact was that each time you talked to them; they had a new business idea or had decided to change what their original plan was and were not producing any level of revenue. The truth of the matter is that anyone can find someone to buy something from them, but success is found in creating a business that is focused on generating repeatable business that is sustainable, is profitable, and depending on the business down the road is transferable.

As I looked at them with a level of confusion, I started looking at my own business with my business partner. In my own head we were focused on a particular target market, knew what services we offered, knew our market price, and we knew the type of marketing and the types of partnerships we needed to develop. We began doing serial contracts and began generating revenue. I built a website, started a blog, began networking, and doing all the “right” marketing tactics. As I started looking at one company that we were working with and saw all of the pitfalls that happen when you are not able to articulate what you provide to the market concisely. It suddenly hit me that though I have a mission and a vision for what I do, and had generated revenue in my first year of business, I myself was still thinking as an executive and not a business owner.

I have written many business plans and would actually say I excelled at understanding the business and articulating it well on paper. The difficulty came when I began writing my own plan. It was no longer knowing what was needed, but actually articulating to myself what kind of business I truly wanted to not just be today, but long term. ​ About 6 years back we took the time to write a business plan for two reasons. I knew we really could not criticize others if we did not truly practice what we were preaching and knew we wanted to look for some funding for marketing and office equipment. I realized that though we were generating money,we did not have a plan outlining our long term goals and requirements.

My business partner and I decided we were going to create a business plan to help further define our business, what products and services we wanted to offer to our target market, determine what partnerships we were missing, and look at our short and long term financial goals. I started developing the outline for the plan. I then started investigating small business grants and loans available online. I filled in a form for information on a particular grant, which unbeknownst to me at that time started a time clock of when a business plan needed to be submitted, which gave me the push I needed to get it done. I had a deadline of 4 weeks, but what I found I was complete with the plan in 2 including research, detailed definition of business in required areas, writing and editing. Though it seemed some days to be an onerous task, when it was complete I truly felt more like a business owner as I truly had a grasp of the direction and focus of my business and what was possible. This plan helped us define a sustainable repeatable business model and gave us the confidence we needed that we can implement it and become profitable.

Since completing the plan all those years back, we have talked to a lot prospects and potential partners. At the end of the conversation, they said they truly understood our value proposition and what we were doing. They felt what we are looking to provide is unique and beneficial to owner-operated businesses. Of course it was hard to abandon the first client asking us to do something that would have made us money, but if what they were asking was not going to provide value to their overall business, it wasn't going to benefit them or us. For those businesses, they likely hired someone to do what they believe they need, but when they uncover there was not any intrinsic value – it won’t be our company that they associate with the lack of value. Once we implemented our long term strategy through our website and marketing materials, it was obvious to potential clients where we will add value to their business versus just performing serial contracts based on just our ability to do it.

Though a business plan may seem confining or a difficult process, it is truly what defines and provides a roadmap for the success of your long term business. It is truly your game plan. It does not have to remain stagnant – it can be changed and updated as the market or your business changes, but it will provide clarity on where you are and where you are going. The plan does not need to be as large as the one that we developed to go after funding. It can be as small as a few pages and for internal use within your company to provide clarity of direction for everyone.


#businessplan

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