Five Common Myths That...
1. We don't
need a business plan.
If
you are in business, or even contemplating
a business, you need a business plan. Success isn't
as much about succeeding, as it is about not failing. A
properly prepared plan forces you to think through the big
picture and agonize over many of the details, before errors
in intuition or judgment cost you or your client money,
or even result in bankruptcy. Without it, investors won't
invest and buyers won't buy.
2. We need a
business plan, but not right away.
If you
are a Visionary or a Start-Up, you need to begin assembling
the elements of a business plan, almost immediately after
your "business idea" hits you. The best plans evolve
over an extended period of time, and the less time you give
yourself, the less likely the plan will be credible. If you
are marketing
a business, the sooner you present a credible financial
picture, the sooner a buyer will consider your price.
3. We need a
business plan, but we can do it ourselves.
Given
enough time, money and the right skill sets, you will probably
be able to generate a credible business plan, maybe even a
very good one -- but, at what total cost to your business?
Your inspiration, energy and vision are essential to the success
of the plan, but the cost of becoming a business planning
"expert" may seriously erode your ability to meet
the challenges of actually staying in business.
4. We need a
business plan, but we can't spend more than "x".
If obtaining
financing or attracting a buyer is critical to the existence
of a business, then the potential value of a business plan
should be the cost of not achieving the goal (i.e, the cost
of going out of business). Estimates vary widely, but expect
the cost of a professionally
prepared business plan to be about 1% of the benefit that
it is capable of achieving (e.g., $10,000, on a financing
request of $1 million).
5. Thank goodness,
we only have to do this once.
A
business plan is really only as good as the results it
predicts. It should be viewed as a living document that requires
constant nurturing and revision, as circumstances change and
business knowledge improves. Protect your investment, by periodically
comparing actual vs. planned results, analyzing sources of
variance and using this information to improve the plan's
long-term utility and predictability.
Business Confident
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