Brower: Businesses should plan their work, then work their plan
October 6, 2015
I have to give credit to Jerry Nissen of Channel 18 television for reminding me of this great business catch phrase.
Plan your work. Then work your plan.
In the course of meeting with more than 200 clients through my work with the Grand Enterprise Initiative here in Grand County, business plans and their importance is a constant topic.
Why should people have a business plan if they are considering a new business? Or why should people have a business plan if they are considering expanding or amending their current business?
“Even in the cases where entrepreneurs are hoping to borrow money from friends or relatives, a business plan is a must. No matter how cordial, familial or friendly the relationship, anyone who is going to lend an entrepreneur money is going to want to know that the person to whom they are lending money has a plan.”
There are simple and hard-to-avoid reasons for having a business plan in hand for any aspiring entrepreneur.
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First, if a person is setting out on a business venture that is going to involve asking for capital, whether through a loan or a grant, a business plan is a must. For starters, no banker is going to lend money to someone who does not have a business plan in hand. It's that simple.
And for the many nonprofit entities I've worked with, they know that they must have a business plan as well. No granting agency, no matter how beneficent and well-intentioned, is going to grant or loan money if the entity wanting the money doesn't have a business plan.
I like to remind nonprofits that even though they are nonprofits, they still need to be run as businesses.
Even in the cases where entrepreneurs are hoping to borrow money from friends or relatives, a business plan is a must. No matter how cordial, familial or friendly the relationship, anyone who is going to lend an entrepreneur money is going to want to know that the person to whom they are lending money has a plan.
So when it comes to getting capital for a business, no matter how informal, a plan is of critical importance. The real reason this is important is simple. They want to be assured that they will be re-paid for any loan they make. A business plan can help give some assurance about the ability of the lender to repay the loan.
So that's the practical reason for having a business plan. But I think business planning has another extremely important value that supersedes the mere nuts and bolts of showing how a business can re-pay a lender.
A business plan is also a great way for an entrepreneur to educate and reassure herself. Just the process of planning a business, using most any of the business plan templates or examples that exist out there, should help a person really evaluate their new business or business expansion idea.
A good business plan should first and foremost make the entrepreneur ask: What is my business? What makes this a business rather than a hobby? Why do I want to do this business? What are my expectations for this business? Do I want to get filthy rich or just break even?
Sometimes it's a great revelation when a person is asked this simple question for a business plan: What is your product or service and why will people want to buy it? That seems like the most obvious and self-evident question to ask, I agree. But it rests at the core of most people's ideas for a business. Through evaluation of that question people may discover they have multiple business ideas, business ideas that might not sell well or conflicting ideas of what exactly their business is.
Maybe, alas, their idea isn't a business at all.
And ultimately, I know that people then ask themselves something that goes above and beyond "business." They get into life and goals planning. They ask critical questions like: Why am I doing this? What's my real goal here? Are their alternatives to reach my goal without having a business? It can go on and on.
So, in reality, if someone starts a business plan honestly and with the right questions, it becomes more than just a business plan.
It becomes a life plan.
Next I'll cover some of the basics that should go into any business plan.
Patrick Brower is the Enterprise Facilitator for the Grand Enterprise Initiative, a Grand County based nonprofit that provides free and confidential business management coaching to anyone who wants to start or expand a business in Grand County. He can be reached by calling 970-531-0632 or at email@example.com.