If you think of start a new business or enlarging an existing one, you need a plan. And not the kind of plan on the back of a napkin, but a comprehensive business plan that details your business goals, finances, and risks. It’s the first thing any small business lender will ask to see when looking for capital to make your idea a reality. But beyond trying to get a loan, there are other compelling reasons to build a solid business plan.
The benefits of writing a business plan
First and foremost, a business plan acts as a test of sanity. According to Bloomberg statistics, eight out of 10 new businesses fail in the first 18 months. While there are myriad reasons for these failures, the obvious truth is that most of these businesses shouldn’t have been started in the first place.
Figure 1: LivePlan allows you to create a visual “presentation sheet” that summarizes your business concept and goals.
Unfortunately, a good idea and the passion to bring it to life don’t always, or dare we say, often guarantee success. A sober business plan can help you overcome obstacles by forcing you to spell out every detail. After all, you might think a food truck selling tacos to these college students can’t lose. A business plan can show you that to cover the cost of the truck, insurance, taxes, labor, and supplies — while making a profit — you need to sell 500 tacos an hour. at $17 each. A dose of inconvenient reality, sure, but it’s better than finding out about this news after having swallowed up your money – or worse, the money of your loved ones – in a pipe dream.
Plus, having a black and white plan is something tangible that you can show people you trust for honest feedback, so they can point out flaws in your thinking. And as you grow your business, your business plan serves as a roadmap, a touchstone you can refer to lest you start to lose sight of the big picture.
Tips and Resources for Writing a Small Business Plan
As with most things, there’s a right way and a wrong way to prepare a business plan. “The biggest mistake budding entrepreneurs make is that they avoid going through all the steps necessary to create the plan,” explained Dr. Billie Blair, organizational psychologist and president and CEO of the international company. management consulting. Change Strategists, Inc..
“The business plan should be a comprehensive guide to how the business will be designed, developed, structured and managed,” Blair said. “This should, in fact, be your first strategic plan for the company. Anything less than that won’t give you enough starting analysis, or enough guidance to see you through your first year. The company offers a business plan brochurewhich is available for a nominal fee on its site.
Other useful resources come from your taxes. the US Small Business Administration offers a business plan tool on its site for registered users. The tool includes a step-by-step guide that walks you through creating your plan. You can complete each section at your own pace and come back to it at any time to make changes. When ready, you can generate your plan as a PDF file that’s easy to share with others, like a mentor or an advisor from an SBA resource partner such as SCOREthe Small Business Development Center (SBDC) or the Women’s Business Center (WBC).
Small Business Planning Software
On the business side, Palo Alto Software offers a range of products and services that teach you what a good business plan should be, then help you create it. Start with his resource site, Bplans.comwhich contains a host of helpful articles, tips and tools to help entrepreneurs create, and then run, a better small business.
On the business plan side, the site offers a complete guide to planning a businesssample plans, a free business plan template, tips on how to write a business plan, and common business plan mistakes (such as focusing on profits rather than cash flow).
Figure 2: Business Plan Pro offers over 500 plan templates across a wide range of industries that you can use as a starting point.
If you’re looking for additional support, Palo Alto Software has two products you should consider. Business Plan Pro ($99.95 for Standard Edition, $159.95 for Premier), the leading desktop app for creating business plans for 10 years, claims 1 million businesses served. The program includes over 500 sample plans that cover a wide range of industry types. Just choose the one that suits you best and start customizing it. Most importantly, Business Plan Pro ensures that your plan follows the format expected by banks and investors.
You are not a writer? Don’t worry: you can edit the text found in the sample outline so you don’t get stuck with blank page syndrome. You are not an accountant? Business Plan Pro also has you covered with built-in financial and spreadsheet features that explain the various terms and do the math for you. All you have to do is plug in the numbers.
Not omniscient? Well, you better be if you run a small business. But until that day comes, Business Plan Pro offers an error-checking feature that double-checks key areas of your plan to make sure your plan is realistic. There is also a full course on business planning, led by Tim Berrya recognized authority on the subject.
Business planning in the cloud
Palo Alto Software also offers an online version, LivePlan ($19.95 per month or $11.66 per month if billed annually). It provides the same tips, samples, financial tools, and guidance as its desktop counterpart, broken down into easy-to-follow steps you can update from anywhere. You’ll be able to see your revenue forecasts, staffing plans, budgets and more with just one click.
Of course, you’re not about to hand out copies of your entire plan as a conversation starter, so LivePlan offers a handy pitching feature. It lets you create a one-page infographic that summarizes your business opportunity — the equivalent of a 30-second elevator pitch — but with a longer shelf life. The online version also makes it easier for multiple stakeholders to view and edit a plan because it resides in the cloud and not on someone’s PC.
Figure 3: Enloop walks you through creating your business plan step-by-step and issues an EPS rating to let you know how your plan stacks up.
Another cloud-based business plan service provider, Endlessly, comes in four flavors (ranging from free to $24 per month if paid annually) and offers a host of handy features. The AutoWrite function guides you step by step to define your company details. It then creates a plan for you, which you can then edit and format as needed and output it as a PDF.
Enloop will also generate investor-ready financial forecasts from the numbers you provide, along with its unique Enloop Performance Score (EPS). This patented feature provides a FICO-like score for your business plan, updated on screen as you work on it. The score changes with your inputs and is designed with safeguards to avoid unrealistic financial forecasts (like selling 500 tacos per hour at $17 per).
There is also a unique industry comparison of your business potential, based on data from similar businesses. The program will test your plan in three critical areas – cash flow, important financial metrics, overall score – and generate a scorecard that rates your business’s projected performance.
Jamie Bsales is an award-winning technology writer and editor with over 20 years of experience covering the latest hardware, software and internet products and services.
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