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The Road Map To Small Business Success
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Business New Haven
8/7/2000
By: Priscilla Searles
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Although they may not know it, many businesses are doomed to fail before they even get started because the owner hasn't taken the time to create a business plan.
“A business plan is putting all your thoughts down on paper,” says Rose Bednarz. “It's a short story about the business - a road map, a guide to success.”
A professor in the business department at Gateway Community-Technical College in New Haven and program coordinator for the entrepreneurial studies and retailing/fashion merchandising programs, Bednarz has helped many prospective entrepreneurs develop business plans.
“When I work with students or clients, I try to take the pain out of putting a business plan together because I think it is a painful process, and it shouldn't be,” says Bednarz. “If you do your research it becomes easy.
“People don't write business plans, because it sounds too difficult,” says Bednarz. “Potential entrepreneurs just keep the plan in their heads because it's too painful to write down.” That, she says, is misguided.
Bednarz points out that it's never too late to develop a business plan, even if the business is up and going. “And there isn't an end to the plan,” she says; “it should be an ongoing process. It should be kept in a three-ring binder, reviewing and updating or re-visiting it at least once a year.”
Business plans are typically used to attract investors or to secure a business loan. According to Bednarz, both potential investors and lending institutions need the security of a plan to illustrate that the entrepreneur has a clear road map to success.
“Many business owners believe that a business plan is something established in concrete or written only to access a loan,” she says. “That is totally incorrect. A plan is a guideline or the general direction the business will take to maximize its opportunities, grow and prosper - and repay a loan.
There are common components to nearly any business plan. A summary of the entire plan comes first but is written last. Bednarz says entrepreneurs should start with the story of the business - why is the business being started, and a description of its general location in the chosen market. “You have to include a business description, customers, competition, marketing strategies, location, operations, management team, employees and so-on,” she explains.
The next step in the process is to develop the numbers, the financial information. “This should show how the business will make a profit and grow and, if applicable, pay back the loan when the ideas explained in the narrative are applied.
Keeping support files is also important. Bednarz suggests keeping articles that show the chosen market is growing, for example. “Support files should also include your résumé, tax forms, customer orders and references, price and brochures of equipment the company is going to buy.”
The executive summary is in many respects the most important part of the business plan. But Bednarz cautions people to be careful. Lenders, for example, don't have a lot of time to review a plan. “And be clear, concise and credible when writing a plan,” says Bednarz. “Have a clear idea of the business. The process of writing it down will help.
“There are a lot of questions you have to ask yourself when developing a plan. Who and where are the customers, who is the competition, what are marketing strategies, who will you hire, where should the business be located?”
There are plenty of other issues to address as well. But Bednarz doesn't believe that lack of specific knowledge on how to develop a business plan should prevent anyone from writing one.
“There are many organizations and agencies that will help you find the information you need to write the plan and help you with the process,” she says. “It's never too late.”
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