Business plan minimizes risk

by Michele Skalicky

SBJ Contributing Writer

Business plans are an important part of any commercial venture. They help owners gain control over the progress of their businesses, allow investors to decide whether to invest in a business and help to ensure a successful operation.

A good business plan "makes you ask yourself all the questions and provide answers to all the questions, so it minimizes risk," said Jane Peterson, director of the Small Business Development Center at Southwest Missouri State University.

But if a prospective entrepreneur has never written a business plan, it's difficult to know where to start.

Peterson suggested starting with a good guideline, one "that asks questions and prompts you, and tells you what you need to research and investigate so you don't leave anything out."

The Small Business Development Center houses a library with several different sample plans and guidelines from pamphlets to a two-volume set on how to write a business plan, Peterson said.

The center also offers courses about 10 times each year, which take attendees through the entire business-plan-writing process. The next class will be held July 7 and 9.

The course is based on a book by Rhonda M. Abrams, "The Successful Business Plan: Secrets and Strategies." Abrams said seven factors should predominate the planning process: the business concept, understanding the market, industry health, capable management, financial control, consistent business focus and anticipating change.

According to Abrams, the business-planning process comprises five fundamental steps: laying out your basic business concept; gathering data on the feasibility and details of your concept; refining and focusing the concept based on the data you compile; outlining the specifics of your business; and putting your plan in compelling form.

Some good places to get data are libraries, computer data bases, the U.S. Census Bureau and the U.S. government.

Abrams advised limiting the plan to 15 to 35 pages and projections up to three to five years into the future. And, the business plan should look interesting. "Graphics, charts and illustrations catch the reader's attention, explain concepts and break up the monotony of the text," according to Abrams.

Standard plan components include:

?The executive summary, which sums up the entire plan. (Abrams advised writing this last since this is what will compel readers to delve into the rest of the plan).

?Company description, which outlines the basic aspects of the business.

?Industry analysis, which evaluates standards, characteristics and trends of your industry.

?Target market, which looks at who you'll sell your product or service to. "A thorough understanding of your target market will give you focus when developing your product or service, designing a marketing plan and forecasting sales and expenses," Abrams wrote.

?The competition successful business owners need to have a strong sense of their competitors and be prepared for new ones, according to Abrams.

?Marketing plan and sales strategy, which look at such things as how to advertise and what customers want, as well as laying out a cost-effective and realistic approach to positioning products and services in the market, Abrams wrote.

?Operations how you are actually going to run your business, including location, lease, a production plan and utilizing new technology.

?Management and organization, which details your management team, experience and successes of key people, compensation and incentives, and how your board of directors is set up.

?Long-term development what you want your business to look like in three to five years.

?Financials, which includes financial projections for three to five years into the future and historical records of the past three to five years for businesses already in operation.

?Appendix gives greater detail about particular aspects of the plan.

Peterson said the standard order in which information should be presented, as listed above, is recommended when using a plan to obtain financial backing.[[In-content Ad]]