Posted on April 7, 2011 in Starting a Business

Importance of a business plan for start-ups and small business

Author: Karen Fischer
By Karen Fischer, RK Fischer & Associates

I have worked for several start-ups and small businesses over the years, but it was not until I started my own business that I had a true appreciation of what being an executive was versus the business owner. As a business owner, the buck stops with you and are responsible for the overall direction and financial profitability of the company. I had written many business plans for companies over the years, but like many business owners did not feel I needed to write a business plan because I understood my business.

In my first year of business, I began working with a variety of start-up businesses at various phases in different industry sectors. In each case, I would start talking to them about the importance of a business plan. Some had actually started a plan as they were looking for funding. In most cases, they had tried to write it themselves without ever have written a plan or with an understanding of what the government, a bank, or investor is looking for in order to provide a grant, loan, or investment. Many of the plans fell short as they were not able to articulate their market, provide detail on what value their product or service provided, show credibility of themselves running a business, did not have a marketing or sales strategy that showed how they would generate revenue, and in many cases had an independent accountant create financials without a full understanding of the business.

There were a couple companies that felt they did not need a business plan as structure would be too confining on the entrepreneurial spirit. They felt they knew what they were doing and the goal was just making revenue. The fact was that each time you talked to them; they had a new business idea or had decided to change what their original plan was and were not producing any level of revenue. The truth of the matter is that anyone can find someone to buy something from them, but success is found in creating a business that is focused on generating repeatable business that is sustainable, is profitable, and depending on the business down the road is transferable.

As I looked at them with a level of confusion, I started looking at my own business. I in my own head was focused on a particular target market, knew what services I was offering, knew what my market pricing was, and as a marketing and sales person knew the type of marketing and the types of partnerships we needed to develop. I began doing serial contracts and began generating revenue. I got a website, started a blog, began networking, and doing all the “right” marketing tactics. As I started looking at one company that I was working and saw all of the pitfalls that happen when you are not able to articulate what you provide to the market concisely, it hit me that though I have a mission and a vision for what I do, and had generated revenue in my first year of business, I myself was still thinking as an executive and not a business owner.

I have written many business plans over the years and would actually say I excelled at understanding the business and articulating it well on paper. The difficulty came when I began writing my own plan. It was no longer knowing what was needed, but actually articulating to myself what kind of business I truly wanted to not just be today, but long term.

Though a business plan may seem confining or a difficult process, it is truly what defines and provides a roadmap for the success of your long term business. It is truly your game plan. It does not have to remain stagnant – it can be changed and updated as the market or your business changes, but it will provide clarity on where you are and where you are going. The plan does not need to be as large as the one that we developed to go after funding. It can be as small as a few pages and for internal use within your company to provide clarity of direction for everyone.

By Karen Fischer, RK Fischer & Associates