SAN ANGELO, Texas — Too many small businesses decide to write a business plan only when they have to.
Unless you need to seek assistance from a lender or investor, there is no plan. Don’t wait to write a business plan until you think you’ll have enough time. The advisers at the Angelo State University Small Business Development Center hear small business owners say, “I can’t plan. I am too busy getting things done.” If you are indeed that busy, it is imperative to plan.
Writing a business plan is not the easiest thing to do and mistakes can and will be made. Let’s take a look at some of the common mistakes that are made when writing a plan and try and make this easier and more understandable.
Most people think in terms of profits instead of cash. When the idea of starting a business begins to take shape, think about what it costs to make or sell the product, how you will price it, and what profits per unit would be. Many potential small business owners think sales minus costs and expenses equal profits. However, we don’t spend the profits in a business. We spend cash. Understanding cash flow is critical.
Be realistic and don’t overestimate the successes of your business venture. You don’t necessarily need a great idea to start a business. You do need time, money, perseverance and common sense. Few small businesses are based on a new idea. A new idea could be harder to sell than an existing one, because potential customers don’t understand a new idea and are often unsure if it will work.
Leave out vague and meaningless information such as “being the best.” Remember the objective of the business plan is to help guide you. Include specific dates, management responsibilities, goals and objectives and cash flow projections.
Tailor your plan to its real business purpose. Business plans are often documents that are presented to lenders or investors. They can be detailed action plans, financial plans, marketing plans and even personnel plans. They can be used to start a business, or just run a business more efficiently and successfully.
When working on the financials use conservative numbers so you can defend them. When in doubt, be less optimistic.
A business plan doesn’t need to be a doctoral thesis or a novel. The SBDC has a library full of books to assist you with the process. Our advisers are here to help you along the way.
“Business Tips” was written by Paul Howard, Business Development Specialist and Certified Business Adviser IV of Angelo State University’s Small Business Development Center. Contact him at Paul.Howard@angelo.edu.