Why You Need A Business Plan
 By Terry M. Blair

A business plan will not put your business on autopilot or guarantee profitability. But it beats starting from scratch every morning. It’s absolutely and necessarily the best map to success you can have. Unfortunately, many small businesses, and perhaps most home-based businesses, suffer from business plan mythology.

Myth No. 1
A business plan is necessary only if you seek investors or a bank loan. Wrong.

It’s true that financial backers will expect to see a business plan that shows your projected income and expenses, your target market, plans for growth and contingencies for economic slow downs. But consider what that means.

If other people need to have assurance of these things before they put their money into your business, shouldn’t you? Is the possibility of losing your own money less important than investors’ concern for their money?

Myth No. 2
A business plan must be a long, complicated document that’s difficult to compile. Wrong.

It’s true that large corporate entities can have massive, complex business plans. But one of the blessings of having a small business is that everything is scaled to size – including your business plan.

There is no reason a modest enterprise can’t operate on a business plan that fits on one side of a piece of standard printer paper. Of course, the plan also can be as detailed and lengthy as your circumstances require.

But the bottom line is that you need to address the major points, and address them only as far and in as much detail as is required to be useful. The business plan for a one-person home office targeting a very specific market with very particular needs probably can fit on one or two pages without sacrificing substance. Indeed, being able to state your mission that concisely probably will do more for keeping you on track with your plan than any 100-page master plan.

Myth No. 3
A business plan becomes worthless as your business ages, changes and grows. Wrong.

It’s true that when a business plan is drafted, it depicts things as they are and as they are expected to become. It’s equally true that nearly every plan becomes dated. But that doesn’t mean the plan becomes useless. It simply means the plan needs to be updated.

Although this may sound like onerous, unprofitable labor, it can actually be some of your wisest investment in time and effort. A business plan that becomes out-dated is of little use. But a business plan updated as conditions warrant is invaluable.

Consider the business plan like a short-term weather forecast. You don’t rely on what the forecast told you last year for tomorrow’s weather. You need to get a new forecast since conditions have altered. Updating a business plan is common sense. Otherwise, the time you invest in drafting it in the first place is wasted.

Business Plan Basics
Here are some basic elements for a business plan. Answer these questions honestly, because your plan will only be as good as the information you provide.

1. What is your projected income for the next year and the next five years?

2. What are your projected expenses for those periods?

3. What is your target market, and how do you plan to communicate to it?

4. What are the steps for growing your business, and what is the timeline for implementing them?

5. What specifically will you do if business takes a downturn and you need to cut back?

And don’t forget to build into your plan a periodic review for assessing whether these elements must be adjusted.

For a helping hand in drafting your one-page or 100-page business plan, check out Automate Your Business Plan book and software at www.business-plan.com.

You can also turn to AFS for help. The small business consultants at AFS ProTalk® can give you guidance and ideas for creating your business plan. Best of all, the ProTalk consultants are just a phone call or keystroke away. For more information, click “Benefits” in the top toolbar and then click “Professional & Consulting.”

(Posted November 2005)

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