By Kaye Patchett
A business plan is more than a résumé to attract financing. As your business grows, it becomes an essential tool for planning. It helps you to evaluate where your business is today, where it is going and how best to get there.
If your business plan is gathering dust, it’s time to take it down from the shelf and set it to work, said Rebecca Wyant, director of training and support programs at the Microbusiness Advancement Center, 10 E. Broadway.
“It evolves as your business changes – as the economy changes,” she said.
Wyant’s courses in business plan development attract not only new business owners, but also established businesspeople looking for new ways to move forward.
“Nine out of 10 business failures in the U.S. are caused by lack of general business skills and planning,” Wyant said, quoting a Small Business Development Center study from Troy State University, Ala. “People don’t plan to fail – they fail to plan.”
Your business plan should include an industry analysis, your target market, competition, marketing plan, a definition of your products and services and their benefits, your policies and procedures, goals and objectives, financial statements, and projections for the next three years, Wyant said.
Revisit your business plan at each milestone, advises Stephen Hart, Tucson representative for the U.S. Small Business Administration.
“For example, having reached a goal, or moved on to the next level,” he said.
That process is your opportunity to take a fresh look at industry trends, your gross margins, where your target market resides, and whether you are following the best path to achieve your next goal.
“We’re always looking six months to a year ahead,” said Ryan George, president and CEO of 220solutions Inc., 7538 N. La Cholla Blvd, a database-driven Internet development company. George reviews his business plan every six months, with a major review annually.
“We’re looking at revenues, expenditures, capital investment in buildings and equipment,” he said. “And, most importantly, what positions we need to fill as we grow. We identify what our organizational structure looks like today, and what it should look like six months down the road.”
Regular strategic planning sessions enable others in the company to share his vision, George said. “It helps you to gather more input. If you keep everything to yourself, you’re just winging it.”
George has used his business plan to identify and achieve several major goals since opening his company five years ago.
“We purchased a building almost two years ago,” he said, “which we identified as something we wanted to do.”
The expansion will provide facilities to train clients in the use of new systems on site, eliminating time-consuming individual visits to customers across the country. “Recently, we completed a merger and acquisition with one of the companies we worked closely with in the past,” George said. The move was identified as an objective in his business plan a year earlier, he noted.
“A business plan helps you over a long range of time,” said Amanuel Gebremariam, owner of Zemam’s Ethiopian restaurant, 2731 E. Broadway. “It tells you what materials you need to buy – whether you need to expand or downsize.”
Gebremariam revisits his business plan monthly to evaluate the success or failure of his business strategies. The restaurant is busiest from November to March, he said. Reviewing his monthly finances helps him make predictions ranging from how much food to prepare to seasonal staffing needs. “Your overhead could be high if you have three or four people when you could run with just two,” he said.
The former business major with an MBA from the University of Arizona said, “Business school doesn’t teach you everything you encounter in real life.”
Gebremariam finds that using a written business plan minimizes the likelihood of being taken by surprise when events do not follow his projections. It also helps him to clarify goals. “It’s very important to put it on paper,” he said.
“As a living document it’s really your friend,” SBA spokesman Hart said. “It’s also your guide map. As your business changes, so should your business plan, to reflect the change.”
Key elements of a business plan
* Industry analysis
* Target market
* Marketing plan
* Definition of your products and services and their benefits
* Policies and procedures
* Goals and objectives
* Financial statements
Source: Rebecca Wyant, director of training and programs, Microbusiness Advancement Center of Southern Arizona