Tag Archive for 'business plan'

You say your business plan every day

Do you have a business plan? What? In your head? How’s that working for you?

Don’t know how to get one started? Well consider this conversation that happens many times, every day, between business owners just like you and the people they meet.

Friend: “Hi Joe. Heard you started a business. What’re you doing?”

Owner: “Oh, hi, Sue. Yeah, John and I are selling square widgets to round widget distributors.”

Friend: “What? How’re you going to do that?”

Owner: “We discovered that no one has thought to offer square widgets to these guys. Our research found that round widget companies not only need square widgets sometimes, but they’ll pay a premium for them.”

Friend: “I thought you couldn’t get new square widgets anymore?”

Owner: “Well, we discovered that round widget companies don’t need new square widgets, so we’re buying seconds, cleaning them up, repackaging and delivering them to those customers.”

Friend: “Sounds like you’ve found a niche. How many can you sell in a year?”

Owner: “We’ve identified the need for 15,000 this year, and with the trend in the market, we think we can double that within three years. Gotta go. See ya later.”

Let’s look at what just happened. Without realizing it, Joe essentially said his business plan to Sue. In two minutes Joe identified the business, management team, industry, market opportunity, customer profile, vendor profile, pricing strategy, market research results and, finally, growth plans. All that’s left is to add a few other elements, write the narrative and project the numbers.

Since you’re probably having similar conversations that means you’re saying your business plan, probably without realizing it, every day. But is that a useful form?

There are a bazillion reasons to put your plan on paper, but we only have room for the three most likely:

  • To get a bank loan
  • To attract investors
  • Because it’s an essential management tool

So now that I’ve convinced you how important this management tool is, when you do yours, don’t make these mistakes:

  • Don’t wait until you need a business plan to start one.
  • Don’t wait until you have time.
  • Don’t make it harder than it has to be.

The words of a conversation like the one above are the seeds from which you can grow your business plan. So just start writing what you already know, like Joe said.

A written business plan will help you achieve new levels of management professionalism and success. Here’s a good place to see something less than a bazillion sample plans without any commercials: www.bplans.com.

Write this on a rock … You already say your business plan every day. Now write it down.

Business planning will always be relevant to success

In this week's video I explain why business planning is essential in small business.

Business planning will always be relevant to success from Jim Blasingame on Vimeo.

Business planning will always be relevant to success

The Age of the Customer is disrupting and making obsolete many older practices, but not the requirement for business planning, especially cash flow.

A business plan is the result of thinking, researching, strategizing, and reaching conclusions about how to pursue opportunities. It may exist only in the head of the planner, but it’s better when written down.

Whether elaborate or simple, a written business plan is an assembly of facts, ideas, assumptions, and projections about the future. Here are three ways to use a written plan:

  1. To document the due diligence on a new business or the future of an existing one.
  2. To evaluate opportunities and challenges, and compare them with your strengths and weaknesses.
  3. To assist when getting a bank loan and essential when courting investors.

So how does a static, written plan work when a business is always in motion? It works when you turn your plan into planning. A plan is like a parked car; planning is taking that car on a trip.

Planning is measuring your business motion against the baseline of assumptions and projections you made in your plan. Planning allows you to see how smart you were when the plan was written, or where your research and assumption skills need work. It also highlights external forces you face.

Written business plans often become collateral damage during challenging economic times. But you can’t allow planning to meet the same fate. Indeed, when things slow down there is even greater need to check your position than when things are rockin’ and rollin’.

Here is a critical two-step planning activity that is the heart of a business plan and the essence of planning. Beginning with these will help you operate more successfully anytime, but especially when things are slow.

1. Build a 12-month cash flow spreadsheet in a program like Excel, so you can project and track the monthly relationship between cash collections and cash disbursements from all sources. This planning tool will provide a rolling picture of cash flow in any given month.

2. Look at the “Ending cash” number at the bottom of each month’s column. A negative number in any month means you’ll need to add cash from sales, reduce expenses, add cash from another source, like a bank loan, or some combination.

A banker once told me that if I could bring him only one financial document with a loan request it should be a 12-month cash flow projection that included both how the borrowed cash would be used and the debt service. I always listen to my banker and you should too.

A business plan is important, but planning is essential.

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A business plan and business planning

A business plan is the result of thinking, researching, strategizing, and reaching conclusions about how to pursue opportunities. It may exist only in the head of the planner, but it’s better when written down.

Whether elaborate or simple, a written business plan is an assembly of facts, ideas, assumptions and projections about the future. Here are three ways to use a written plan:

  1. Document the due diligence on a new business or the future of an existing one.
  2. Evaluate opportunities and challenges, and compare them with your strengths and weaknesses.
  3. Assist when getting a bank loan and essential when courting investors.

So how does a static, written plan work when a business is always in motion? It works when you turn your plan into planning. A plan is like a parked car; planning is taking that car on a trip.

Planning is measuring your business motion against the baseline of assumptions and projections you made in your plan. Planning allows you to see how smart you were when the plan was written, or where your research and assumption skills need work. It also highlights external forces you face.

Written business plans often become collateral damage during challenging economic times. But you can’t allow planning to meet the same fate. Indeed, when things slow down there is even greater need to check your position than when things are rocking and rolling.

Here is a critical two-step planning activity that is the heart of a business plan and the essence of planning. Beginning with these will help you operate more successfully anytime, but especially when things are slow.

  • Build a 12-month cash flow spreadsheet in a program like Excel, so you can project and track the monthly relationship between cash collections and cash disbursements from all sources. This planning tool will provide a rolling picture of cash flow in any given month.
  • Look at the “Ending cash” number at the bottom of each month’s column. A negative number in any month means you’ll need to add cash from sales, reduce expenses, add cash from another source, like a bank loan, or some combination.

A banker once told me that if I could bring him only one financial document with a loan request it should be a 12-month cash flow projection that included both how the borrowed cash would be used and the debt service. I always listen to my banker and you should too.

I talked more about business plans and planning on my radio program, The Small Business Advocate Show. I’ve also talked with Tim Berry, the guru of business planning, founder of Palo Alto Software and author of The Plan As You Go Business Plan, about the difference in business planning and a business plan. Take a few minutes to click on the links below and listen, plus leave your ideas on how planning helps your small business.

Write your business plan, but practice business planning with Jim Blasingame

The difference between business planning and a business plan with Tim Berry

Success calls for two kinds of passion

Over the years, as I have talked with budding entrepreneurs, it continues to amaze me how many have not conducted anything close to a prudent amount of research as they start their businesses. Indeed, they often act as if they must get their business going right now or they will just pop.

This kind of impatience is dangerous.

Doing my best to talk them down off the ledge, I walk the fine line between slowing them down a little and dousing the fire of their entrepreneurial passion with my tough love.

Yes, passion is important. And when would-be small business owners get that far away look in their eyes at this impetuous stage of a start-up, they have plenty of passion for what the business does. They can’t wait to sell suits, manufacture plastic parts, bake bagels or (your dream here). But while their passion for what they want to do will come in handy, without a healthy attraction for business fundamentals, passion has only slightly more value than a dream. As the Texans say, it’s all hat and no cattle.

This will be on the test: Success as a small business owner requires two kinds of passion: The first is the love of what you want to do, as described above. This is like the way a mother loves her newborn baby, and it’s the easy kind. In fact, it’s too easy.

The object of the second kind of small business passion is less adorable but not less important. This is passion for a profession that requires dedication to learn and practice management fundamentals and acceptance of a return-on-investment timeline that pushes the deferred gratification envelope. See, I told you it was less adorable. The closest kin to this kind of passion would be that which is required for parents to love their teenagers anyway, during those moments when they don’t like them very much.

It’s critical for a starry-eyed start-up to make the distinction between these two types of passion. Passion for what you sell won’t be enough when payables exceed receivables, making payroll (“Is it Friday again? Already?!”), when customers are the most difficult, when an employee becomes part of the problem, etc.

These and a long list of other abiding small business challenges will require you to deliver on the management fundamentals you became good at because you had that other kind of passion – the kind that made you become a high-performing, professional business owner, not just someone who dreamed of being one.

Small business success requires both kinds of passion.

Recently on The Small Business Advocate Show, I talked with my good friend, Tim Berry, about some of the myths of small business ownership, including his thoughts on passion and persistence. Tim is the founder of Palo Alto Software, developer of Business Plan Pro software, and author of The Plan as You go Business Plan and Hurdle: The Book of Business Planning. I hope you’ll take a few minutes to click on the links below to listen and, as always, be sure to leave your own thoughts and/or experiences.

Myth 1: You can be your own boss

Myth 2:  Passion and persistence are enough

Myth 3:  A business plan is no longer necessary

Small business plans are only as good as the planning that follows

A business plan is the result of thinking, researching, strategizing, coordinating and reaching conclusions about how to pursue a specifically stated business opportunity. It exists in one or both of two places: on paper (including electronic “paper”) and/or in the head of the planner. Whether elaborate or simple, a business plan is a collection of ideas, facts, assumptions and projections about the future.

Why is a business plan necessary? Here are five good reasons:

1. It’s important to conduct due diligence on your proposed new business or future direction of an existing one.

2. It’s essential to take stock of the potential opportunity and compare that with your ability to pursue it effectively.

3. It’s necessary to evaluate your ability to overcome any obstacles discovered during the plan development.

4. A written business plan can be helpful in getting a loan from a bank and is usually essential when courting investors.

5. Anything in writing is always more valuable than relying on memory.

But a business operates like a movie, not a photo album. And since a business plan is more like a snapshot than a video, how does it help? It’s a good question that’s often asked, and the answer is it establishes a baseline from which you execute the most important management fundamental of all, planning. A plan is static; planning is motion, just like your business. A plan is a parked car; planning is conducting a safe cross-country trip through heavy traffic.

Planning is checking your moving business activity against fixed assumptions and projects you made in your plan and then measuring performance, or lack thereof. Planning allows you to see how smart you were when the plan was written, or where your due diligence and assumption skills need work. It also highlights any external changes that you must deal with.

For existing businesses, written plans often become collateral damage in an economic downturn. But you can’t allow planning to meet the same fate. Indeed, when things slow down there is even more need to check your position than when things are rocking and rolling. In a recession, planning should be conducted daily, not monthly. And if you’ve been a business owner in other recessions, you know that it’s sometimes necessary to do hourly planning.

Recently, on my small business radio program, I discussed this with the world’s business planning expert, Tim Berry. Tim is the founder of Palo Alto Software (www.paloalto.com)and an original member of my Brain Trust. Don’t miss this opportunity to hear from the master about why now, more than ever, planning is one of your keys to survival. And don’t forget to leave a comment or question.




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