Do I need a business plan?
2009/07/28 11:17 AM
Hi Sarah—I’ve been in business almost 2 years. My first year of business I broke even and am hoping to make a profit my 2nd year. My big question is….how important is it to have a business plan? I don’t have one and that is always sitting in the back of my mind. Thx, Tina Hill Kidzsack
Dear Tina,
Ah, the dreaded business plan question. Rest assured you can let this thought go and think up some more awesome products. I can see both sides to the coin on this one but personally I am an anti-business plan person. Honestly, unless you are going after investor money, I just don’t know whom you would need to prove anything to.
If you broke even the first year and are hoping to be in the black this year – you are doing something right Tina! Congratulations.
A BP is really just an overview of what you GUESS and HOPE will come to happen during the course of the BP’s life. Since you don’t KNOW what will happen every month, it’s all a guessing a game. I play a similar game with the students in my Tele-course during the “Finances” week.
You can play too, just make an excel doc and fill in different sales numbers, COGS, and of course with growth comes more expenses so don’t forget to add those in too – these could be tradeshow, commissions, showrooms fees, and general overhead or employees. This will give you a birds-eye view into how much you need to sell to gross what you are hoping for. You may find that you need 200 more stores or just to get the stores you have now to order one more time a year.
Whatever it turns out to be, this will give you some insight into how and where to spend your time and energy.
I like this approach better as it gives you some realistic numbers and a goal to try to hit rather than you scrambling to try to fulfill all the promises in a BP. I am a firm believer that slow and steady wins the race.
You have a very cool product and I wish you the best!
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There are 7 comments
Ros says: First–Hi Tina! Great question. Like Tina, I don’t have a “Business Plan” and feel guilty not having one since I launched a couple years ago. I do remember a friend who took a course with SBA say you really only need one if you’re seeking an investor–reiterating what you just said.
Although, I would like “success” to happen immediately, I also believe in “slow and steady wins the race”. It’s a motto I live by that keeps me forging ahead.
Thank you!
[…] the full scenario here. So what say you? Is a formal business plan still a requirement for every entrepreneur out there? […]
I couldn’t agree more Sarah! Why waste valuable time writing a hypothetical document when you can be dealing with realities in the business and hatching new ideas. To me, spending more time working on your marketing plan and setting goals is more valuable over the long run.
“Honestly, unless you are going after investor money, I just don’t know whom you would need to prove anything to.”
Running an IT business, you would think we would have some 100 page detailed plan. We do not. I’ve never sought outside funding beyond what I can secure on my own merit. Do I have a plan? Yes. Is it written in great detail with some power point to go along with it? No.
If you do not have a plan, here is something that I do find useful. Create a vision, mission, strategy, and about us statements. These exercises help you put context to your business, which can be helpful in sales, marketing, and day to day discussions.
Vision: Future statement looking what you want to achieve.
Mission: The more short term way/method you are going to achieve your vision.
Strategy: The “how” you plan to implement your mission.
Who we are/What we do sell: 30 second, 90 second, 5 minute, 3 sentence, 1 paragraph, 1 page versions. This is simply useful to boil your business down to its core. Very useful to understand for implementing strategy.
Example:
Vision: There should be no hunger in my city.
Mission: Our mission is to end hunger by engaging local community leaders to setup soup kitchens backed by corporate donations.
Strategy: Identify key community leaders, focus on businesses that may have excess food (caterers, groceries, etc). ….
Who we are: We are a local organization that brings together business and community leaders to end hunger in our city.
The other thing I try to do is to take 5-10 minutes at least once a week. Pick an aspect of your business and write that business plan in your head. Go over the details, focus on needed resources, brain storm etc. This can be a very specific task, such as
How can I improve order processing?
or it can be broader
What’s the best marketing strategy?
Doing this weekly helps you thing strategically, which can be difficult if you are bogged down in day to day operations.
Hey–Just wanted to say thanks to everyone that posted…esp. Jeff H..Wow! I’m going to copy what you wrote, highlight it, and get crackin! Thanks!!
I am so relieved to read this post and all the comments. I get the WOW no business plan comment quite often. I couldn’t agree more about only needing it for investors. But I often wondered if I was alone in my thinking. Thanks Sarah! love your blog.
Sheena http://www.lizzieloushoes.com
YAY! thank you for the confirmation that a business plan is not necessary in launching a successful business.
I have read many articles on individuals and people who have made ideas work; not one of them ever gave credit to their “superior business plan”
They did however mention some similar action steps and modes of operation including:
* be passionate about what you take on as your business
* get ready to work hard, and do not give up!
* hire your weaknesses (ie I am not so good with writing patents, therefore I count on my Patent Attorney to help out)
* be okay with making mistakes and learn failure can actually be an opportunity
* have fun *
Lisa Illman, President The Kritter Kommunity, LLC http://kritterkommunity.com http://krittersthattwitter.com lillman@kritterkommunity.com 1-888-8KONDOS
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