Starting a successful small business starts with a solid plan

Dear Joan:
Could you please provide me with information as to where I can learn how to write a business plan. I am currently a mental health therapist looking at going into business for myself with no past business experience. However, I have worked as a manager for three and a half years.

Answer:
Entrepreneurs in America are trying their hand at everything from bagel shops to on-line services. Statistics from the IRS shows 23 million small businesses in the United States- that’s one out of every five households. Most small business owners don’t take the time to prepare a business plan. Perhaps that is one of the reasons that two thirds of all businesses fail during the first five years.

A business plan is just plain good sense. It will help you to put your thoughts in writing so you can anticipate any pitfalls that may stand in your way."

Fortunately, there are some excellent resources for any would be entrepreneurs who want to create a business plan. The Small Business Administration has many free publications to help you. (Call 1-800-UASKSBA for the offices in your state, or download information from their web site www.sba.gov.)

For instance, they provide an excellent booklet called "Checklist for Going Into Business," which will help you decide if going into business is the right thing for you. Mike Kiser, District Director for the Wisconsin office of the SBA, advises, "It’s important make sure you have the personal skills for running your own business. Too many people think they are going to work half as many hours and make twice as much money. They also underestimate how much time it takes and fail to account for the family disruption."

Another resource is a step-by-step booklet called "The Business Plan for Home-based Business." This workbook will guide you through each step. Most business plans have the following basic components:

1.      The description of your business and industry. In this section, you describe what the legal structure of your business will be (for example, a sole proprietorship or a corporation). You also describe the business’s principal activity (for instance, providing counseling services to individuals).

2.      The marketing plan is the core of your business rationale. Kiser explains, "This is one of the areas many people don’t think through. They may have a great idea but fail to ask questions such as, Who is my typical customer? How large is the market? Who is my competition? How much will I charge? They don’t think through how they will distribute their product or come up with an advertising plan and budget."

Another free source of information is the Small Business Development Centers, available at many state universities throughout the country. They will help you write your plan and are particularly strong in market analysis and feasibility studies.

3.      The financial portion is of critical importance. In this section, you will estimate things such as what assets you intend to use (such as a personal computer, furniture, etc.), where your source of funds will come from to pay for those assets, your fixed and controllable expenses, your projected cash flow (how much money will be absorbed by the operation of the business compared to how much will be available) and your profit margin.

Another good resource is the Service Core of Retired Executives (SCORE). Kiser explains, "SCORE is a national, free service provided by the SBA. These retired executives will review and critique your plan for free, drawing upon their experience in a particular industry or facet of the business. For instance, they can help with the financial component of your plan."

4.      A description of the management team’s strengths, and their roles and responsibilities is a key element. If you are going into business with a partner, for example, it is very important to decide in advance who will do what. It is also important to think through how many employees you’ll need now, and in the future as the business grows. You may also list key business advisors such as your attorney and accountant.

5.      You may also want to include components such as critical risks and problems you anticipate and how you will respond. For instance, unfavorable industry trends or regulations, price cutting by competitors, or difficulty obtaining credit could change your business plan.

Once your plan is finished, you will want to show it to your family, business acquaintances, accountants, bankers, attorneys and friends. Kiser agrees, "Now it’s time to ask people to ‘hurt your feelings.’ Ask people to be brutally honest. Better that they ask the tough questions now, than after your business fails and they say, "I could have told you, but I didn’t want to hurt your feelings."

With all these resources at your fingertips you’ll be able to create a plan long before you leave your current position. And when you do launch your business, you’re likely to be in the one third of all businesses that succeed. Good luck!


Joan Lloyd is a Milwaukee based executive coach and organizational & leadership development strategist. She is known for her ability to help leaders and their teams achieve measurable, lasting improvements. Joan Lloyd & Associates, specializes in leadership development, organizational change and teambuilding, providing: executive coaching, CEO coaching & leader team coaching, 360-degree feedback processes, retreat facilitation and presentation skill coaching and small group labs. Contact Joan Lloyd & Associates at (414) 573-1616, mailto:info@joanlloyd.com, or www.JoanLloyd.com 
 
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