BOOK DETAILS

Business Plans For Dummies

Business Plans For Dummies

by Paul Tiffany

ISBN: 9780764576522

Publisher For Dummies

Published in Business & Investing/Skills, Business & Investing/Processes & Infrastructure

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Sample Chapter


Chapter One

Preparing to Do a Business Plan

In This Chapter

* Getting your planning resources together

* Figuring out who needs to work on the plan

* Laying down some planning ground rules

* Checking out what the written plan looks like

Planning is serious business. For many companies, a solid business plan is the difference between success and failure. Many people going into business for the first time want to rush right in, print up business cards, hang up the sign, and start making money - a natural response for anyone excited about a new business idea. But taking a little extra time up front to prepare can pay off in many ways down the line; especially when it comes to writing a business plan. Face it, after your company is up and running, you may not have all the time you need to devote to the major pieces of your plan.

Identifying Your Planning Resources

Having the right resources at the right time can make business planning easier and more successful. Fortunately, you can now find more useful and usable business-planning resources than ever before, from books and software to Internet Web sites and real, live experts. Of course, you may also find plenty of stuff that isn't worth looking at - much less paying for. And you can't always judge a book (or software program) by its cover.

As you begin to put together your business plan, you may discover that you need some additional tools - a book devoted to marketing, for example, or business-planning software that can help you create and maintain your written document.

Hitting the corner bookstore

Obviously, you've already selected one of the best hands-on business-planning books around. But okay, you can also find other useful business-planning books out there - particularly books that concentrate on specific areas, such as marketing or financial planning, and books that focus on particular kinds of businesses, such as not-for-profits or sole proprietorships.

You can find out a lot about a book by reading through its table of contents. You should also try dipping into the first chapter. If you're browsing on the Web, booksellers like Amazon.com often include a detailed table of contents, along with the first chapter, directly on their Web site. Readers' reviews and ratings you can find online can also help steer you toward other particularly useful books. And don't forget to ask your colleagues, business advisers, or investors to list their favorite business books and resources.

REMEMBER

The basic principles of business planning may be timeless, but certain subjects - Internet marketing, for example - change rapidly. A three-year-old book may already be ancient history. If you want to find timely information, such as details about tax considerations for a small business, be sure to check the book's publication date.

AHEAD OF THE PACK

For the timeliest info, turn to magazines, newspapers, and journals. They offer a terrific way to keep up on what's happening in the world of business in general - and your industry in particular. The business press also provides an efficient way to routinely scan the business environment for trends or new developments that may affect your business plan. If you're not sure what periodicals focus on your particular industry or your region, do a quick search on the Internet (see the next section for more details).

Surfing the Internet

Today, hundreds of Web sites offer information on business planning. Some are free; others tease you with a sample of what they have to offer and then charge you for more details. In our experience, some of the freebies can be just as helpful as the subscription sites, so we suggest that you check first to see what's free for the asking before you plunk down your hard-earned cash. In particular, the federal government offers heaps of solid information on planning, starting, and operating your own business through its Small Business Administration site (www.sba.gov). Even the IRS (www.irs.gov) has helpful planning tips, which are also available on the Web.

Lists of the hottest business-related Web sites have a way of going out of date fast. And a resource that appears hot to one entrepreneur may not be suited for another. Your best bet is to prowl around the Internet yourself, looking for useful resources. On search engine sites the keywords business and plan lead you to plenty of generic business-planning information. For a more efficient hunt, tailor your search by using keywords specific to your business area (technology, retail, travel, financial services, and so on) along with the words business plan and see what you come up with. Make sure to bookmark any promising Web sites so that you can return to explore them later in more detail. Check out the sidebar "Internet hotspots for business-planning info" in this chapter for helpful Web site addresses.

AHEAD OF THE PACK

Beyond sharing some basic business-planning tools, the Internet is also a great place to turn for the latest information about competitors, markets, business trends, and new technologies - all the things you need to know to put together a complete picture of your business environment. We're constantly amazed at how much information you can find in corporate press releases, company home pages, executive bios, online business magazine articles, Securities and Exchange Commission (SEC) registrations, and thousands of other online documents.

WARNING!

The Internet may be a gold mine of business information, but you may also find plenty of fool's gold. Unlike magazine articles, which are typically checked for accuracy, much of the info on the Web hasn't been validated. Often the Web site providing the info is also trying to sell you something.

Follow three simple rules when you use the Web for business research:

  •   Make sure the material is current. Many Web documents aren't dated, so you may not know whether what you read is the latest scoop or ancient history. Look for a date. If you can't find one, dig a little further to make sure that the information is still relevant; you can often do this by confirming the facts on another Web site.
  •   Know your sources. In the wide world of the World Wide Web, you may be hard-pressed to know exactly where the stuff you read comes from. If you read a rave review of a new business-software program, and the review comes from a respected business magazine, you can put your faith in it. If it appears without a source, however, on the software company's Web site, be suspicious.
  •   Double-check key facts and statistics. If you use specific pieces of information - about business trends, markets, competitors, technology, and so on - as the central building blocks of your business plan, make darn sure that they're correct. If you build your financial projections on a forecast that the market for digital widgets will grow at 40 percent a year, for example, you better make sure that information is true and not some widget inventor's private dream.

    Installing business-planning software

    Business-planning software allows you to automatically assemble all the components of a business plan, turning them into a printer-ready, spiffy looking document. The best programs also make easy work of the financial parts of business planning - creating income statements and cash-flow statements, for example, or making financial projections. Some software programs add graphics, such as tables and charts, which provide an easy way for your audience to see what you describe in the written document.

    WARNING!

    Business-planning software programs can sometimes make the job of business planning too easy. With all their bells and whistles, they may trick you into skipping the serious (that is, difficult) work of creating and writing an effective plan. Remember, the best software-planning tools guide you through the important aspects of business planning and then keep track of your words, sentences, and paragraphs. But they don't think for you. You should still do the serious mental work yourself.

    AHEAD OF THE PACK

    Investors and bankers who make a living reviewing and funding business plans are all too familiar with the look and feel of the most popular software-generated business-planning documents. If you use one of these programs, make sure you customize your plan to make it unique. The last thing you want is for your business plan to look exactly like a hundred others that cross a venture capitalist's desk every month.

    Seeking professional help

    No one knows the ins and outs of planning and running a business better than people who have done it. And most business people are happy to share their experience and expertise, as long as you don't plan on becoming a competitor! Many are even willing to mentor first-time entrepreneurs. Don't be afraid to turn to a grizzled veteran for advice if you run into questions you can't answer or run out of ideas to get your business off the ground.

    Finding expert advice is surprisingly easy. The first place to look is in your own address book. You may have an easier time getting help from someone you already know on a personal level. Ask your friends and colleagues for suggestions. Other good places to look for help are the Chamber of Commerce, a local college or university, or the business section of your newspaper. Of course, you may end up paying for expert advice. But when you really need help, the advice is well worth it. Later on, your advisers may pay you back by becoming your advocates, cheering your business on as you search for funding or your first customers.

    REMEMBER

    Choose experts with experience in a business similar to the one you're planning. After you identify a person, decide exactly what kind of assistance you need. You can't ask someone to plan your whole business for you, after all. But you can ask them to fine-tune your marketing strategy, for example, or review and critique your financial projections.

    AHEAD OF THE PACK

    Retired business people represent a rich - and underused - source of expertise. By default, they have more experience than almost anyone else, and they often look for ways to use their experiences to help others. Contact the Service Corps of Retired Executives (SCORE), a nationwide organization that works with the Small Business Administration (SBA) to provide help to business owners. SCORE (www.score.org) has a free online newsletter and provides free e-mail counseling. The group also has local chapters around the country, with retired business people ready and willing to help.

    Finding friendly advice

    Many local communities sport organizations of business people who convene to share ideas, exchange contacts, help each other out, and just plain socialize. Some organizations focus on helping specific groups, like women, Hispanics, homosexuals, or freelancers; others, made up of local people across the business spectrum, are open to the public. Thanks to the Internet, you can find business groups that regularly schedule online support meetings.

    AHEAD OF THE PACK

    Business networking organizations are an invaluable resource for help in planning and running your business. For information about what's available in your community, check with your local Chamber of Commerce. Ask if they have a mentoring program. Because Web sites change so fast, the best way to find a networking organization online is through a search engine.

    Assembling Your Planning Team

    The first step in creating a business plan is realizing that creating a plan is vital (see Chapter 2 if you're still wavering). The first question you come across after your realization is this: Who's supposed to put the darn thing together? In some sense, the answer depends on how big your company is:

  •   Small businesses: If your business is really just you - or maybe you and a couple of other people - making a plan for the company is your responsibility. But don't fret: Who better to create a view of the future and set business goals and objectives than the person responsible for reaching the goals and making the future happen?

  •   Medium-size companies: If your company is a bit bigger, the process of creating your written plan requires more organization - and more people. Putting together a plan is a big job, and involving all your key people has a certain advantage: Everyone involved in the plan has a stake in making sure that your company succeeds.

  •   Large corporations: If you're part of a big company, you may need to hire people who work on business planning full-time. Make certain, however, that you don't create an independent planning staff: You don't want your plan to take on a life of its own and get completely divorced from what's happening with your business. Remember: You have to make sure that your planners don't create the plan all by themselves. Your planning staff should always work along side the managers and owners who actually have to carry out the business plan.

    Setting the ground rules

    Putting together a business plan resembles any project that involves teamwork, from building a house to running a relay race. The clearer the ground rules, the smoother the process - and the happier your team. Make sure that your ground rules do three things:

  •   Identify key steps. Typically, the process of writing a business plan includes five distinct steps: research, first draft, review, revised draft, and final review. You can specify as many or as few of these steps as you think you need. Just make sure that you spell them out up front.

  •   Clearly assign duties. Everyone involved needs to know exactly what you expect from them. You can use the key steps you identify to create separate sets of tasks, and then you assign each task to members of your team (see the next section, "Delegating responsibility").

  •   Establish a schedule. Although writing up a business plan is a big job, the process doesn't need to be a long and drawn-out affair. A business plan has to be timely, responding to the current business environment - not the way it looked six months ago. After you complete the preliminary research, the rest of the steps are fairly straightforward. To keep your project on track, set due dates for each component of the plan and each step in the process. Give the members of your team as much time as they reasonably need, but no more.

    Delegating responsibility

    If your company is large enough to boast a management team, you should divvy up the work involved in putting together your written business plan. We're not suggesting that you delegate responsibility to make your job easier (although it certainly does). Different people bring different perspectives to your plan. With a team in place, you have a group of people ready to read and review drafts, offer suggestions, and fine-tune the document to make it as good as you can possibly can.

    We can't give you a simple formula for putting together your team. Every business is different. We can't even tell you the ideal number of people to choose - that depends on the size of your company and the complexity of your plan. But here are a few tips that can help you create an efficient and effective team:

  •   Keep your team lean and mean. Too many planners are like too many chefs in the kitchen - they get in each other's way. A bloated team can mean endless meetings and too many points of view. Involve only the number of people you think you really need to get the job done.

  •   Appoint people who want the job. Sure, you may have trouble finding volunteers who jump up and down at the chance to work on a business plan. But you need to make sure that whomever you choose is at least willing and able to complete the task. To spark your peoples' enthusiasm, take time to explain why creating a written business plan is so important. Refer to Chapter 2 if you need help convincing your team of the importance of a plan.
  •   Organize your team around the plan. By accomplishing this, you make sure that your people know the purpose of their task and how their work fits into the larger picture. Some of the assignments are straightforward. Your financial person takes charge of the financial review. Your marketing head puts together the business environment section. However, if certain pieces of the plan are more complex than others, think about assigning a small group to work on them.
  •   Put one person in charge. Keeping track of the whole process can be a job in itself, especially if you have a large team or a complicated plan. Name one person the project director to manage the team and ensure that employees complete tasks on schedule. Make sure every person on the team understands that the person you choose has the ultimate authority.

  •   Appoint a wordsmith. A business plan is a written document. If you're lucky, you have someone on your team who enjoys writing - or at least has the talent to put words down on paper. Pick a lucky person to be in charge of writing key sections of your plan, such as the executive summary. He or she can also serve as senior plan editor, checking grammar and spelling and making sure that the writing style is clear and consistent throughout the plan.

    (Continues...)

    Excerpted from "Business Plans For Dummies" by Paul Tiffany. Copyright © 2004 by Paul Tiffany. Excerpted by permission. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher. Excerpts are provided solely for the personal use of visitors to this web site.
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