Business Plans – Not just for Newbies

It amazes me how many times a business owner will scoff at the idea of providing a business plan when seeking a loan. Their mentality is “I’ve been doing this for 20 years,” why would he need one? Well, it’s hard to see where your going without a plan to get there. Let’s say I want to go to California, I can either start driving West in hopes that I don’t hit Washington or Oregon, or I could get a map and plan my route.

Business plans are essential if you are starting a business, it will help uncover unexpected scenarios. Anyone can say that they are going to start a business and have their clients banging down the door, but what will really happen? I want to hear the bad stuff, I want to hear the worst case scenarios and I want to know how you plan to get out of it. Having a huge demand for your product or service may not be a good thing. If you cannot fulfill your customer’s needs in the time they deem acceptable – they will go somewhere else. If you have a lull in demand, are you going to run a special or pump up your advertising?

The same goes for existing businesses, the only difference is – it should be easier! You already know when demand will be up or down, you can plan to hire additional help in the busy season and advertise when times are slow. You can spend slow times concentrating on marketing, analysis of your business techniques and performance or future planning. You can do whatever you what, whenever you want, but if you don’t have a plan you’ll never get to where you want to be. More importantly, if you don’t have an actual plan on paper, you can’t explain the next 12 months of business to me, your banker.

So how do you make one? Well luckily there are a wealth of resources available, a quick search on Google yields some great starting points, just look for free resources, don’t pay for it. The SBA has a great set of small business tools, the section on business plans can be found here.  If you have Microsoft Word, there are some great templates you can try out here. Lastly, one of my favorite sites, Entrepreneur.com has an entire section devoted to business plans here.

This post is more of a plea, please make a business plan, do it for me when you need money, do it for yourself when you want to make more money. If you create a new business plan every few years and stick to it, you’ll find yourself able to retire much earlier – I promise.