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“You need a business plan.” Muriel Siebert, President Muriel Siebert & Company, Inc.
In this time of unrest in the job world, many people consider starting their own businesses. Great consideration should go into this, starting with a business plan. People starting businesses often don’t write a business plan for the same reasons they use their credit cards instead of applying for a loan. Ignorance of financial resources and realities leads them to try to make it without going through the necessary processes. Without a business plan, you’ll have a hard time getting others to take you seriously, and you may have more trouble succeeding in your enterprise. Of the many people I’ve interviewed over the years, those who failed to write a business plan remember having no idea how to answer the financial questions the plan raises. These are the very people who recommend most strongly that you write a business plan before you open yours doors. As they found the hard way, financial preparation saves time and money. Writing a business plan yourself helps you think about financial questions, plot your strategic course, and identify where capital can best be spent. Even after you’ve started your business, the plan is an important operating tool that helps you evaluate whether you’re on track, where you’ve made the right or wrong assumptions, and what adjustments need to be made. A business plan asks all the right questions—the questions that will have a bearing on your success in the enterprise. It forces you to think about the big picture of your company, including the four basics: the product, the market, the financing, and the people running it. It tells lenders and investors: - Why customers would want your product—what benefits and features distinguish it from the competition.
- What your market is: who benefits from your product, who would want to buy it, and how you would reach those people.
- How your business will grow, including a cash flow forecast that shows how the business will be financed, how you will spend the money, and how the loan will be repaid.
- Who will run your business. If you will be the sole proprietor, it describes your background in a related field and the present skills you will apply to the new business. If you have partners or other key members on your team, it describes them as well.
The business plan is also part of a loan application used by the loan officer to evaluate your financial background, credit history, experience in the kind of business you propose, understanding of the market, and education. When you go to a bank for a loan (or to other lenders) says Muriel Siebert, “You have to have a very good plan. You just can’t go in there with an idea. You have to have a potential financing plan and where you’re going to get your business from. You need to have enough reserves and enough capital to last through the start-up phase. Some people think they’re going to break even in six months, and maybe they need a year or more. Nothing every goes exactly the right way.” Shirley Nelson of Summit Bank also stresses the value of a serious business plan. “Most people who put together a business plan on their own pull numbers out of the air without showing where they got the information. You have to be able to sell somebody on why your business is going to work. You have to prove that with some statistics. Statistically, the ratio of losses on loans to women are lower than for men. Women work harder at paying a loan back.” A business plan provides you with more than financial figures and a marketing plan. By preparing one yourself, you get a feel for the financial needs of your business. First-hand knowledge is best, because it takes the mystery out of the process and provides you with realistic information. Pam Gilberd is the author of top-selling business/self-help books for women, including The Eleven Commandments of Wildly Successful Women , The Twelfth Commandment of Wildly Successful Women: Discover Your Own Best Answers to the Big Questions About Life, Work, and Love. She co-authored Leadership Secrets of Elizabeth I (Perseus Books, 2000) with Shaun O. Higgins. Only registered users can write comments.
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