Do You Use a Business Plan

[gtwister09]

After reading the topic "eBay=feeBay", it got me to wondering how many businesses use a business plan.

So here's my questions....

Do you use a business plan?

Have a Business Plan

If so how often do you change it?

Does it include marketing and advertising?

What items do you consider important in your business plan?

Don't Have a Business Plan

If you don't have one, is it because you don't have a model for a business plan or other reasons?

Just curious after reading some comments in various posts.

Regards,

Ben

[Bree]

I wrote business plans for entrepreneurs professionally and full time for 15 years. I can tell you that most small businesses do NOT rely on business plans in any serious sense of the term. I can also tell you that very very few large businesses fail to create and maintain business plans. You will find that almost all substantial companies devote considerable resources to this exercise and do so on a continuous basis.

I work for IBM right now and they have more people doing business planning than most companies have employees. The old saying is that if you fail to plan, you are planning to fail. Here are the latest stats on the small business failure rate.

Small Business Survival RatesSmall Business Openings & Closings in 2007:

• There were 637,100 new businesses, 560,300 business closures and 28,322 bankruptcies.
• Two-thirds of new employer firms survive at least two years, 44 percent survive at least four years, and 31 percent survive at least seven years.
  
• Findings do not differ greatly across industry sectors.
  

Sources: U.S. Small Business Administration Office of Advocacy, September 2008

Survival and Longevity in the Business Employment Dynamics Database, Monthly Labor Review, May 2005. Redefining Business Success: Distinguishing Between Closure and Failure, Small Business Economics, August 2003.

Now of the 70-30 at 7, which group do you think took business planning seriously? The best way to learn planning is to start doing it. Experience is a great teacher.

:soapbox: :soapbox: :soapbox:

[Denise]

When we started out, Rod did a course which included doing a full business plan. He found it helpful at the time. But he has never updated it. Wonder what we would find out if we did????

[Bree]

When we started out, Rod did a course which included doing a full business plan. He found it helpful at the time. But he has never updated it. Wonder what we would find out if we did????

Small businesspeople tend to be so busy doing the operational work of the business that they spend less time doing management tasks. Planning is a management task.

One consequence of failing to plan is that the business tends to run on inertia. The direction of the business is set by past action rather than projected vision. That makes it much harder to respond to changes in the market. You just keep doing things the way that you have been. When the entrepreneur does respond it is typically impulsive and all too often very detrimental to other areas of the business.

Good planning is essential to good management.

[Denise]

So what questions do we ask ourselves to update?

[CitizenKate]

Great topic! I took a course offered by our local SBDC on how to develop a business plan. It really was a challenge to focus on it, for the reasons Bree mentioned: too preoccupied with operational management. But the course really kind of forced me to get it done, and it was well worth it!

Here's are some free business plan templates you can download from SCORE (Service Corps of Retired Executives). They have different ones for new businesses and established ones.

SCORE Template Gallery

And if you explore around the site, you'll find an abundance of other useful free resources they offer to people starting and running businesses.

Kate

[gtwister09]

Denise,

Bree is correct that many business fail. Some organizations like Gartner place the number even higher than the numbers she stated. Many get caught up in the operational side of the business and are driven by the winds of business. Unfortunately the operation information is only one such aspect of a business plan. Other items that are included could include as stated the operational information, organizational model, marketing aim and objectives, financial information, even an exit strategy plan if you are so inclined and other such items.

Most of them use some form of SMART targets in their business plans. SMART = Specific, Measurable, Achievable, Realistic and Timely. Identification of key performance indicators need to be performed according to a SMART principle. These could include sales/profit figures over time, new product development, market share numbers and other benchmarks. Another trite saying associated with this is "You are what you measure." As Kate and Bree have already stated there are lots of business plan sites, process guides and templates that can assist.

Business planning cycles are used to monitor your progresses in achieving your objectives. It is essentially an analysis of where you are to date and then charting the most promising roadmap to develop your business.

This planning cycle could also be used to compare your company to other competitors and create a new road map to reshape your business. Differentiation from the rest of the marketplace coupled with business planning can be a vital resource. As always make conservative estimations in order to give your business some cushion if unforeseen problems arise.

Time periods for this process are different because each business is different. It depends upon your products and sales model. Heavy sales related business may review them quite regularly in order to meet objectives.

It is also important to be aware that major events such as changes in your marketplace (competitor consolidations, acquisitions, new products/breakthroughs) or other things like economic factors should trigger a review of your objectives. Regular assessment of performance against the plan/roadmap and a revised forecast is necessary. It could even include things like benchmarking against competitors, cash flow forecasting, equipment purchases, market targeting and other items like work-life balance.

Regards.

Ben

[Shorts]

I admit that the business plan part of the business is one I'm not eager to spend time on, but I try. Intellectually I know it must be tended to. My formal education is training and fitness. Ben's last statement using SMART is a term that is especially related to training goals, and its an absolutely necessary tool I used to write programs for clients based on an up-to-date evaluation. And without setting goals from that evaluation point, then theclient has no direction and is just floundering around.

Anyhow, I would imagine many folks fail to put energy into a business plan because they really have no idea what exactly should be measured and evaluated. No doubt everyone here is capable of collecting and analyzing data, but what data?

[Go2Tex]

Because I'm a one-man operation, my business plan can be kept in my head. I started to write one a while back but then realized nobody but me was going to even read it and I couldn't really answer many of the questions. I haven't had to apply for financing for my business which is about the only reason for writing one. The plan for now is to find a way to drive more buyers to my website. The way to do it, I figure is to get more pages linked to my page to get my page further up in the search results. Also to work on local networking. Hit the local stock shows, pass out some cards, hang some brochures. Maybe make up some inventory and set up a booth. I don't like cleaning or repairs, but I'll bet when things get tough, the tough start relining their old saddles. I might even have to get listed in the yellow pages.

Bree, interesting statistics. Everyone knows small businesses fail. But you left out the part about why they fail. The reason the big companies don't fail as fast as the small ones is that money makes money. They have options that small companies don't. And, as we have seen lately, the bigger they are, the more likely it is the government will bail them out.

[TrooperChuck]

Brent, I'm in the same boat you are... maybe even a slightly smaller one. I'm just a hobbyist who sells a few saddles and leather goods. I don't want my leather work to turn into a full-time job. I got a business license (and consequently, my business tax forms) simply because it allowed me to buy materials a lot cheaper. I don't see myself getting business loans, accepting credit cards, or even building a website. I wish the feds had a tax category for "Commercial Hobby".

I have tons of respect for those who operate a REAL business, but it looks to me to be a LOT more work than I want.

So, my business plan is.. well, I can't really say it's in my head because I never thought about it until I saw this thread.

[Go2Tex]

Brent, I'm in the same boat you are... maybe even a slightly smaller one. I'm just a hobbyist who sells a few saddles and leather goods. I don't want my leather work to turn into a full-time job. I got a business license (and consequently, my business tax forms) simply because it allowed me to buy materials a lot cheaper. I don't see myself getting business loans, accepting credit cards, or even building a website. I wish the feds had a tax category for "Commercial Hobby".

I have tons of respect for those who operate a REAL business, but it looks to me to be a LOT more work than I want.

So, my business plan is.. well, I can't really say it's in my head because I never thought about it until I saw this thread.

Yeah, that's how I got started too. I realized that if someone dropped a dime on me to the government, I'd be in deep doo doo for not collecting sales tax. OK, so how do you do that without getting a tax ID number and business license? Well, I was then in business.

Every year at tax time I wish I could go back to the simple days of not being a business, but Uncle Samboski won't let me. My business can never be a hobby again because it makes a profit every year.... Not much profit, but enough that the "Spread the Wealth" socialists want their cut.

And these Pollyanna politcians talk about helping out the little guy, the so-called middle class. .... what a crock.

[TrooperChuck]

I know what you mean! Its funny... I worked for a government agency for 22 years and had a great career, but I really don't like and don't trust the government. I could go on and on about how our government is not what the Founding Fathers intended, but I guess I don't need to be raising my blood pressure.

[JohnBarton]

Small businesspeople tend to be so busy doing the operational work of the business that they spend less time doing management tasks. Planning is a management task.

One consequence of failing to plan is that the business tends to run on inertia. The direction of the business is set by past action rather than projected vision. That makes it much harder to respond to changes in the market. You just keep doing things the way that you have been. When the entrepreneur does respond it is typically impulsive and all too often very detrimental to other areas of the business.

Good planning is essential to good management.

I am great example of that. Most of my decisions are impulsive and not planned. I have sat down for a total of two hours in the last 18 years to write a business plan and my eyes glaze over.

Even now I sit down with the calendar to try and plan orders for the next three months and I can't focus on it.

I do agree that a lack of planning and foresight makes it much harder to run a business as it seems as if everything is a crisis.

But it's tough to be head cook, dishwasher, janitor, accountant, and marketing vice president all at the same time.

I have often wished for a service that provided small business essentials - something like a backoffice for small businesses that handles accounting, billing, marketing (i.e. help with ad creation and placement), and business planning. All small businesses have the same needs in these areas and it's often not enough to hire people for these tasks and just too much for the prinicipals of the business.

So if there were (and there probably are already) some companies that could handle this for a nominal fee then it would free up the prinicipals to do more of whatever their business is, at least that's my theory.

[Go2Tex]

I am great example of that. Most of my decisions are impulsive and not planned. I have sat down for a total of two hours in the last 18 years to write a business plan and my eyes glaze over.

Even now I sit down with the calendar to try and plan orders for the next three months and I can't focus on it.

I do agree that a lack of planning and foresight makes it much harder to run a business as it seems as if everything is a crisis.

But it's tough to be head cook, dishwasher, janitor, accountant, and marketing vice president all at the same time.

I have often wished for a service that provided small business essentials - something like a backoffice for small businesses that handles accounting, billing, marketing (i.e. help with ad creation and placement), and business planning. All small businesses have the same needs in these areas and it's often not enough to hire people for these tasks and just too much for the prinicipals of the business.

So if there were (and there probably are already) some companies that could handle this for a nominal fee then it would free up the prinicipals to do more of whatever their business is, at least that's my theory.

Well, there ya go. Just go out and hire Super Woman as your back office secretary. She could handle everything you mentioned including all the government red tape and headaches that come with having an employee. And have her do all this stuff on a part-time basis and pay her just enough so that you don't have to have a dental medical and retirement benefit package for her.

[Shorts]

Well, there ya go. Just go out and hire Super Woman as your back office secretary. She could handle everything you mentioned including all the government red tape and headaches that come with having an employee. And have her do all this stuff on a part-time basis and pay her just enough so that you don't have to have a dental medical and retirement benefit package for her.

Why not right? Everyone's doing it.

Actually the program you should be shooting for like is pushed here at this base, is "volunteer opportunities"?

[Bree]

Because I'm a one-man operation, my business plan can be kept in my head. I started to write one a while back but then realized nobody but me was going to even read it and I couldn't really answer many of the questions. I haven't had to apply for financing for my business which is about the only reason for writing one. The plan for now is to find a way to drive more buyers to my website. The way to do it, I figure is to get more pages linked to my page to get my page further up in the search results. Also to work on local networking. Hit the local stock shows, pass out some cards, hang some brochures. Maybe make up some inventory and set up a booth. I don't like cleaning or repairs, but I'll bet when things get tough, the tough start relining their old saddles. I might even have to get listed in the yellow pages.

Bree, interesting statistics. Everyone knows small businesses fail. But you left out the part about why they fail. The reason the big companies don't fail as fast as the small ones is that money makes money. They have options that small companies don't. And, as we have seen lately, the bigger they are, the more likely it is the government will bail them out.

We disagree. Big businesses make money because of good management and well thought out decisions. There are countless businesses that had loads of money and with poor manangement and poor planning they simply lost loads of money. Circuit City is an example in the news recently. You can also take a look at a little company named General Motors.... a company that was swimming in cash and squandered it through incredibly poor management over many years.

Can you do a business plan in your head?? I suppose that you can. The difference as I see it is that the "processes" that a well planned business operates under, documents, reviews, monitors, and constantly tries to improve are habits in the "plan in the head" business. Like other habits, they are hard to break and change. Sometimes it is hard to even recognize that they are habits. That's why it is hard for some small businesses to respond to change.

That's also why out of the ordinary events tend to be crises for small businesses while for large businesses they are variations that they have planned for time and time again. They have clearly defined procedures that go into operation at the first sign of trouble.

They can actually look up what to do in most cases. Someone... usually a team of people... has written down a set of steps designed to address issues and opportunities. The small operator has to reinvent the wheel constantly. That is his chief disadvantage not lack of capital... huge amounts of wasted time and effort.

[Go2Tex]

We disagree. Big businesses make money because of good management and well thought out decisions. There are countless businesses that had loads of money and with poor manangement and poor planning they simply lost loads of money. Circuit City is an example in the news recently. You can also take a look at a little company named General Motors.... a company that was swimming in cash and squandered it through incredibly poor management over many years.

Big businesses make money because at some point in their history they were good companies with a good product or service. That's how they got to be big. Now, they have name recognition, and they are established and trusted. They survive on their reputation and their own momentum. They can make disasterous decisions and recover because they have the capital to do it. They can buy out the competition or influence politicians to better their position in the market. A small company can't do that, no matter how good a plan they have.

I don't know why Circuit City went out of business, but I believe GM was eaten alive by it's union UAW. Plus, they produced an inferior product compared to the competition. That's a recipe for disaster.

[JohnBarton]

Well, there ya go. Just go out and hire Super Woman as your back office secretary. She could handle everything you mentioned including all the government red tape and headaches that come with having an employee. And have her do all this stuff on a part-time basis and pay her just enough so that you don't have to have a dental medical and retirement benefit package for her.

I didn't say that. I said a "service" that handles all the back office stuff.

I thought about this more than ten years ago. All businesses have common tasks, billing clients, paying bills, government paperwork, legal issues, keeping up with licenses and insurance and so on.....

But those tasks combined aren't usually enough to warrant a full time employee and still they sap the time of the producers in the business.

So a "Small Business Service" could handle those things centrally for many clients at once. Such a service could negotiate better insurance rates through access to many customers, the administration costs per client should be lower through refined processes, automation, experience, and so on.

I would expect that the SBS would be providing their employees with decent wages and benefits.

[Go2Tex]

I didn't say that. I said a "service" that handles all the back office stuff.

I thought about this more than ten years ago. All businesses have common tasks, billing clients, paying bills, government paperwork, legal issues, keeping up with licenses and insurance and so on.....

But those tasks combined aren't usually enough to warrant a full time employee and still they sap the time of the producers in the business.

So a "Small Business Service" could handle those things centrally for many clients at once. Such a service could negotiate better insurance rates through access to many customers, the administration costs per client should be lower through refined processes, automation, experience, and so on.

I would expect that the SBS would be providing their employees with decent wages and benefits.

It's a fine idea. I was just making a bit of tongue-in-cheek there. If it didn't cost too much, I'm sure a lot of small businesses would go for it.