Local resources offer aid in writing business plan

Formulating a business plan is an important primary step in starting a business, one that should take place well before seeking financing or hiring employees, according to Howard Southerland, chapter chairman of the Service Corps of Retired Executives (SCORE).

The SCORE team is just part of what the Springfield office of the Small Business Administration has to offer those interested in small business.

"Our mission is to counsel people who go into small business," Southerland said. "The way we do that is through our membership, which is made up of experienced businesspeople."

Assisting with the formulation of a business plan fits in well with SCORE's purpose.

"We strongly recommend a business plan, and we also talk to people about finances, because the biggest reason businesses fail is undercapitalization," Southerland said.

SCORE holds business workshops once each quarter at a cost of $20, and business planning is just one of the topics covered. SCORE also offers a publication on how to write a business plan.

Putting together a business plan achieves several goals, according to Southerland.

"It defines the business for the owner and gives them a direction, a map to follow," he said.

In addition, a thoughtfully prepared business plan can help identify potential obstacles and challenges to making the business workable and profitable.

The very process of writing the plan can cause a prospective entrepreneur to examine areas of starting a business that might not have been explored without the exercise of working up the plan, Southerland said.

Jane Peterson, director of the Small Business Development Center at Southwest Missouri State University, said writing a business plan helps a potential business owner orient himself.

"It provides a road map to help a person know where they're going," she said. "It can reduce risk, and it will enable a person to describe their business to another individual, such as an investor or lender."

SBDC offers a "How to Write a Business Plan" class every month, excluding December, Peterson said.

The class provides a broad overview of the process of writing a business plan. Following the class, each participant may make an appointment for a one-on-one session with SBDC staff to go over the plan.

"We really recommend that they go through the steps themselves," Peterson said.

"We help people, and we guide them, but we don't do it for them. When someone does their own business plan, goes through the steps and does the research, they learn a lot," she added.

SBDC also has a small-business library with more than 1,000 small-business-related publications that potential business owners can use for business plan research.

The steps to writing a business plan are as follows, according to Southerland.

Be able to describe the business exactly.

What are you going to do? What product or service are you going to sell? What will your hours be? Where will your business be located?

Address pertinent marketing issues.

How will you take this business to market? Who is your competition? What are you going to do to set yourself apart from the competition? What forms will your advertising take?

Calculate business projections.

No. 1 on this list is the cash flow statement, which is must be presented to most lenders in order to be considered for financing. This should be projected for 18 months, month by month, and quarterly for the second 18 months, Southerland said.

Address management concerns.

What are the people in this business going to do? What are the qualifications of the staff, even if it is a sole proprietorship? What makes you think you are able to run this business?

Write an executive summary.

The executive summary tells the story of the business in a few paragraphs. It should be as interesting as possible, as it will be required reading for potential lenders.

The fruits of writing a business plan can show up far down the road for small businesses, according to Peterson.

"People who do business planning are going to have more potentially successful businesses and will stay in business longer," she said.

In addition, Peterson said, those who write a business plan are less likely to be derailed by an unexpected circumstance that could cause the business to close.