As I talk to many small business owners, especially those with partnerships, it is interesting to find out how many do not have a formal Business Plan. On many occasions new start-ups begin with two or more individuals having an idea to start-up or take over a business. Discussions typically begin with great excitement by talking about what products or services the business will market and how things will progress within the company. On some occasions there will be a discussion with the previous owner, and even an accountant, pertaining to activities required to run the business. So it is with great excitement the business venture is launched. In many cases, this is where a foundational step is missed. This is where the gap begins to develop, as no real formal Business Plan was written. Who really needs a formal Business Plan anyway? The answer to this question begins with understanding why a Business Plan is important and then requires consideration of what is in a Business Plan. In summary
All Businesses do.
The function of a Business Plan is to process through all the required facets for running a business. It facilitates collecting all the ideas and thoughts of how things will be managed as the organization develops and grows. For solely owned businesses the Business Plan will act as a guide to keep the organization true to the initial intent and direction. For partner businesses, it will bring a common structural foundation with which all the partners will operate on. The process of building a Business Plan will require a progression through elements of running an organization ahead of situations that will arise during the course of the business venture. It will keep all partners true to a future goal, common direction, and set of expectations more than simply selling and making money. This posting will only focus on the basic Business Plan. Along with the Business Plan, there should also be a full financial plan and a comprehensive marketing plan. It will take all three to build a solid foundation with which the business can build upon. It will also establish a thorough document of record that can be utilized for financial and organization support.
Items in a basic Business Plan will be those things that give direction and guidance as well as statements and goals the organization is expected to operate within and towards. It should always start with a Mission Statement. Although short, it is important to document what the business is striving to provide. Goals are the next segment and should reflect what the business should achieve. Many will be measurable using statistics while other may not. Next is the development of a Job Analysis and a Job Description for all positions within the organization. These will involve a fair amount of detail and should be developed for each job in the organization to include owners and partners. Doing this function for each partner and owner is where the details and expectations of ownership will evolve to ensure everyone is on the same page moving forward. A section regarding hiring will include how the hiring process will take place and what testing and interviewing process will be in place to fulfill each job. Performance and Training needs should be addressed to include continuous improvement. Motivational factors need to be identified which typically will include how you will treat and motivate employees and staff. Communication processes as well as Management Style, Goals, and Unification will round out a basic Business Plan.
Often, partnerships split apart due to differing expectations of each other as well as differing expectations of the direction the organization is going. Many solely owned business feel there is no need for such documents. Many small businesses feel they only have to work hard and make money and everything will be OK. While many of these things I have discussed are thought about by owners and partners, documenting them is felt not to be necessary. The simple process of building a Business Plan often times surprises these same owners and partners as they begin to determine the gaps in running their organization. Many of these gaps have already surfaced in their organizations and caused great discomfort until they were resolved. More often than not, gaps also become counterproductive and impact the organizations bottom line before being resolved
if resolved at all. The effort is painless and the cost cheap. The gain is astounding.