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How To Understand & Prepare a Business Plan

Business Planning: Passion Before Planning There is a certain kind of friend I get from time to time, whom I’ve come to call in my mind “the starry-eyed dreamer”.

This will be a guy – sometimes a gal – who flutters around from one path to another most of their lives. No matter what they’re doing, they’re always ready to do something else. They join the military in a burst of gung-ho, and then want out. As soon as they can get an honorable discharge, they cash in their college G.I. plan and work towards a major, fiery with ambition. Then, a year short of completing their degree, they drop out. They’d rather be a truck driver. They go to truck school and lease a truck, and drive two routes, and decide they don’t like it and quit. Now they want to be a webmaster.

They go on and on and on like this… wasting huge chunks of their lives when any plan could have led to success if they’d only stick with it. Sound familiar? If you’ve known a “starry-eyed dreamer”, try to pin them down about what their motivation is to get into their latest career path.

“So, Mr. Starry-Eyes, why do you want to be a paralegal now?”

“They make tons of money, man!”

And that’s all. They may go on about how great paralegal work is (based on reading Groklaw.net or the latest John Grisham novel), but really they’re just trying to talk themselves into wanting to do the work so they can be as rich as they think a paralegal is. And that’s just the thing. They have to talk themselves into it.

But highly successful entrepreneurs never had to do that. They didn’t pick the work; the work picked them. At the time Bill Gates or Steve Wozniac got into computers, computers weren’t making any money. They did it because they loved working with computers, and the money eventually came to them. Famous authors like Stephen King just find out that they love writing so much that they practically couldn’t stop. They work for years, getting rejected and struggling along, and then they make it big. Billionaires like Ted Turner saw media not as a way to make money, but as a fascinating game to play, something intriguing that they did for the challenge.

All the sites and seminars and books out there written for entrepreneurs hammer home the points about planning and managing all too well, but what gets seldom mentioned is that every plan you make won’t help you, if you don’t like the work.

There’s a very complex psychology at work here. It’s almost like Zen mysticism: the best way to make money is to act like you hate money. Ignore money and think about what you love to do, without thinking about money. Then start doing it. And keep doing it until it brings you money.

Then, along the way, that’s the time to start with your business plan. That’s the time to follow the advice of the entrepreneur gurus and financial independence wizards. That is the only time when that advice will actually help you; when you have a niche where you’re already passionate and committed to following through.
Firstly, let’s define a small business plan. A small business plan is a summary of how a business owner, manager, or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the business to succeed. It is a written explanation of its business model.

Business plans are used internally by management and are also used to convince outsiders such as banks or venture capitalists to invest money into a small business.

Business plans often quickly become out of date. One common belief within business circles is that the actual plan may have little value, but what is more important is the process of planning, through which the manager gains a greater understanding of the business and of the options available. Have a look at these few articles when you want to learn more about the knitty gritty of starting a small business.

Here’s An Example Of A Business Plan

Most business plans can be seen as a collection of ’sub plans’ including a marketing plan, financial plan, production plan, and human resource plan.

The business plan has many forms. There is a format that is typical:

* Executive summary
o explains the basic business model
o gives rationale for the strategy

* Background
o gives short history of company (unless it is a new company)
o provides background details such as:
+ age of company
+ number of employees
+ annual sales figures
+ location of facilities
+ form of ownership including
# sole proprietor
# partnership
# entrepreneurial startup
# private corporate startup
# publicly traded corporation
# limited liability company
# public utility
# Non Profit Organization
o background of key personnel including
+ owners
+ senior managers
+ head scientists and researchers

* Marketing & Sales
o the macro environment
o the competitive environment
o the industry
o the customers priorities
o product strategy
o pricing strategy
o promotion strategy
o distribution strategy

* Production and Manufacturing/Operations
o describe all processes
o production facility requirements – size, layout, capacity, location
o inventory requirements – raw materials inventory, finished goods inventory, warehouse space requirements
o equipment requirements
o supply chain requirements
o fixed cost allocation

* Finance
o source of funds
o existing loans and liabilities
o projected sales and costs
o break even analysis
o expected return
o monthly pro-forma cash flow statement

* Human Resources
o assign responsibilities
o training required
o skills required
o union issues
o compensation
o skills availability
o new hiring

Other specialized sections such as product research and development, legal strategies, marketing research, or inter-company collaborations, are added to deal with unique features or characteristics of the business or its markets. Here’s a good starting point to ensure you do it right the first time.

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