Why You Need A Business Plan

BB&T

Lorrie Hamilton

Lorrie Hamilton

Lorrie Hamilton

Why You Need A Business Plan

Do you have a great idea for a business, or an idea of how to grow your current business? Prospective and current business owners often make the mistake of trying to move forward with a business without having anything in writing; it exists just as an idea in their mind. How do you take it to the next step?


Make A Business Plan

If you have a plan written down, you are more accountable to it. Yes, you can make changes along the way, but you can always check if you are staying true to your mission or plan and see what is working or not working.


Once you get started with a business plan, here are a few questions to ask yourself:

  • Did you do enough homework?
  • How are you financing the business?
  • How is the business going to be run?
  • Have you taken into account possible obstacles to overcome?

Doing Your Homework

Take a look at census statistics and the statistics from the Chamber of Commerce, as well as data that is available through SCORE and the Small Business Development Center. Using this information, try to answer these questions:

  • Is the type of product or service something your demographic wants or needs? If you are doing business locally, are there enough people in your target demographic in the local area?
  • Is your product or service something that is affordable for your demographic?


Securing Financing

An important part of a business plan is financing. Are you self-financing, looking for investors, or applying for a loan? The bank and investors want to see what is going to happen in a month, a year, five years, or more. They might ask:

  • Have you taken into account all your business expenses and cash outflows?
  • How exactly will the loan or investment money be spent?
  • How will it benefit the business? How will your business move forward by getting the loan?
  • What is your expected profit or outcome?

Sometimes businesses need a loan for something as simple as buying a building instead of renting, this turns the space it into an asset instead of a liability. This comes up quite often, and purchasing their own space can help a business tremendously.


Planning To Run Your Business

If you have a business idea in mind, you also need to determine how much you are going to do in-house, and how much you are going to outsource.

  • If you have a physical product, are you going to create, distribute, and package it? If not, have you researched who could do the manufacturing for you?
  • How are you going to market your business or otherwise spread the word about it?
  • How are you going to keep costs down for consumers?
  • What happens if the manufacturing is not set up correctly, or your partner helping with one aspect is not prepared?

If you do some research into these questions, you will be better able to determine if it is worth performing some tasks in-house or if you need to partner with/hire another company to handle some tasks. For example, a client developed a product, had it manufactured by one business, and had another business package it in a different part of the state. For some business owners, outsourcing these tasks may be more cost effective than trying to do it all yourself or with your staff alone.


Determining Obstacles and Planning for Them

Another important thing to consider is potential hurdles for your business to overcome. If you are looking for financing through investors or through a bank, they will want to see that you are prepared to handle these obstacles. Even if you are not looking for outside investment for your company, you should still take this into consideration.

  • Will your product or service be effective if there are slowdowns or changes to the demographic or industry you are targeting?
  • If you have a physical product, have you done your research in regards to expected changes in manufacturing practices, laws, or available materials?
  • Can the idea be protected or patented?
  • Can your idea be easily copied?
  • How do you protect yourself from an idea being copied?
  • Do you have the right people to help bring your idea to fruition? Do you have enough support from staff or partners to make your vision come alive?
  • If your equipment goes offline, what will you do?
  • What happens if you need to change manufacturers or packaging companies?

Many businesses will seek loans for a secondary piece of equipment to take on more customers, and if one goes offline they do not go out of business until it gets fixed or replaced.

You have to be forward thinking to make sure you can stay in business in case your equipment should fail.

Our local chapter of SBCD www.sbdc.unf.edu or Score Mentors of Citrus County www.citruscounty.score.org can help in preparing your business plan. Contact Lorrie Hamilton, Citrus Market Leader at 352-220-6091 lhamilton@bbandt.com or visit bbt.com for more small business tips.