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Tips for Small Business

Business Planning

 

Business Planning the most important ingredient

Unless you know how to get where you are going, you will end up somewhere else. Think about that.

Suppose you lived in Boston and decided to drive to Dallas, would use a map?

Of course you would. But what would if you didn't? It would be a very long trip and if you didn't know your geography, you probably would not make to Texas, never mind Dallas.

Starting or running or business without proper planning is like driving from Boston to Dallas without a map. Planning will show you your destination and the best road to get you there.

This information summary will provide you with an overview of planning and discus how and why to prepare a business plan.

 

Why Planning Is Critical

Planning gives you a path to follow. It makes your future what you want it to be.

It is the most important guide to starting, building and managing a successful business.

It is the best tool available to help a small business raise money.

A business plan can be a communications tool for investors, suppliers, employees and others interested in understanding the operations and goals of your business.

If you don't plan for the success of your business—you will fail. It is that simple.

Planning Can Be Difficult

Although planning is critical to your success, it is often overlooked in favour of intuition or "gut feeling."  There are other obstacles that hinder planning, including:

Lack of know-how—it is sometimes difficult to know how to plan and what to plan for.

Fear of the unknown—it is hard enough dealing with the problems of today without worrying about what's going to happen in the future.

Inexactness—the best set plans have a funny way of not working out exactly the way they should.

These obstacles are very real. However, they must be overcome if you are to be successful. While we may find it difficult to face the future, heading into it without any direction is much worse.

The Business Plan

The business plan is a written document that clearly defines the goals of a business and outlines the methods for achieving them.

A business plan describes what a business does, how it will be done, who has to do it, where it will be done, why it's being done and when it has to be completed.

Dreams and ambitions are great and important. But what really counts in the business world are results. Therefore, it is important to establish realistic goals with a sound methodology for achieving them.

A business plan:

Is the management and financial "blueprint" for a business start-up and profitable operation.

Is written by the business owner with outside help as needed.

Explains how the business will function and depicts its operational characteristics.

Details how the business will be capitalised and managed.

Elements Of A Business Plan

1. Business Description

Business name, address and owner identification

Identifies goals and objectives. Clarifies why you are or why you want to be in business.

2. Products and Services

 Very descriptive explanation of all products and services.

Describes what you are selling and why.

3. Sales and Marketing

 Sales and marketing are the core of your business rationale.

Your plan should address several basic questions.

Who and how large is your market?

How will you be competitive?

What pricing and sales terms are you planning?

How will you market your products and services?

  4. Operating Requirements

The plan should identify and describe the equipment, facilities and people necessary to generate your products and services.

How will your products and services be produced and made available to the customer?

 

5. Financial Management

This is the most critical part of your business plan. You will establish vital schedules that will guide the financial health of your business.

If you are just starting a business, your plan should include:

Projected "start-up costs."

Your expected profit or return on investment (ROI) for the first year.

Projected income state and balance sheet for two years.

Projected monthly cash flow statement for 12 months.

 If you have a young or established business, your plan should include:

Income statement and balance sheet for the last two years.

Projected income statement and balance sheet for the next two years.

Projected monthly cash flow statement for 12 months.

 Your plan should include an explanation of all projections. If you feel that your finance or accounting knowledge is not sufficient to prepare these statements, get professional assistance.

The bottom line is: will, or does your company make a profit?

6. Concluding Narrative

This segment of your plan should summarise your business goals and objectives and send a message that your are committed to the success of your business.

Put Your Best Foot Forward

Your business plan should be complete, clear, neat and accurate. It will be an extension of you and your business.

The length of a good plan will vary from a few pages to well over a hundred pages. The plan should provide a sound "blueprint" for your business and entice any reader to want to know more.

A Final Word On Planning

Planning is the most important part of starting and running a successful business. It is a fact...unless you know where you are going, you will end up somewhere else.

How To Get More Information

Information is power.

Make it your business to know what business information is available, where to get to and most importantly, how to use it.

Information sources include:

U.S. Small Business Administration

SBA District Offices

Small Business Development Centers (SBDCs)

Service Corps of Retired Executives (SCORE)

Small Business Institutes (SBIs)

 Consult your telephone directory under U.S. Government for your local SBA office, or call the Small Business Answer Desk at 1-800-8-ASK-SBA for information on any of the above resources.

In Washington, D.C. call 202-205-7333.

Also, you may request a free copy of The Small Business Directory, a listing of business development publications and products, from your local SBA office or the Answer Desk.

Other Sources

State Economic Development Agencies

Chambers of Commerce

Local Colleges

The Library

Manufacturers and suppliers of small business technologies and products.