ARCHIVED  December 1, 1997

Business plans promote realism about prospects

Experts say that out of the thousands of new businesses that start each year, half will be gone within a year, and in five years only five will remain standing.If you are going to be successful in business, you need to have more than just an idea. In addition to perseverance and a little luck, you need to have a plan — a business plan.
While it is true that many successful business enterprises did not have a plan starting out — Reebok International and Mrs. Field˜s cookies are companies that did not have a formal business plan — most entrepreneurs need to have some sort of business plan.
"It helps you define what your market is," said Tom Gordon, a SCORE representative in Greeley.
SCORE is the Service Corps of Retired Executives, a group of retired business owners who offer free technical advice to wannabe entrepreneurs.
"It makes you think about how you are going to do it, what you are going to produce and how you are going to sell it," he said.
At the very least, a formal business plan will put the meat on the skeleton of a business idea and give the budding entrepreneur a course of action to follow. At the most, a business plan is required if the business owner plans to borrow money from a bank or raise capital through investors.
Along the way, a formal plan can help sell the business owner, potential customers, suppliers and employees on the enterprise, especially during those periods when the skies look their darkest.
"You really need to write it for yourself as well as the bank," said Gordon, who added that the plan is not a one-time deal. "You revisit the business plan and revise it every couple of years."
But what should a business plan include? David Gumpert, author of "How to Really Create a Successful Business Plan," says a business plan should include the following:
n A cover page: Include the company˜s name, address, telephone number and name of the business owner or chief executive officer. This may seem like common sense, but the devil is in the details, and the plan should look as professional as possible.
n A table of contents.
n An executive summary: This is the heart and soul of the business plan, and, aside from the financial portion, is the most critically important. It is not a preface or introduction to the plan. It is the business plan in a shorter version. It should capture the essence of the plan in two pages or less.
n A profile of the company or proposed company: This should be basic information about the past, present and future of the company. If it is a new company, the profile should include information about the product and its evolution, the market and what plans the company has for tapping into that market.
n A formal marketing plan: What is the customer target group? Who is the competition? Is it growing or declining? Is there any interest in the product or service?
n A description of the product or service: What makes it special? How is it produced? What is the cost? What kind of warranty comes with the product?
n A profile of the sales and promotion plan.
n A summary of the company˜s financial situation. "This is the toughest part," Gordon said. "Too many times, people get caught up with the dream and don˜t face the facts." The financial portion of the business plan should include detailed information about the company˜s current financial situation — its current and projected sales, expenses and profits. Gordon said this part of the plan is critical, so the plan needs to be as detailed as possible for it to be effective.
All of this information is critical. Fortunately, there are thousands of guidebooks on how to write a business plan available at public libraries, bookstores and small-business development centers. There are also software programs designed specifically for writing business plans, and groups such as SCORE offer free assistance to business owners. These resources are available to help the plan˜s writer crystallize their thoughts, and prepare all of the needed information.
In addition to this, the business plan needs to look professional. With desktop publishing software, either in-house or at businesses such as Kinko˜s, business owners can put together a package that both looks good and contains the needed information.

Experts say that out of the thousands of new businesses that start each year, half will be gone within a year, and in five years only five will remain standing.If you are going to be successful in business, you need to have more than just an idea. In addition to perseverance and a little luck, you need to have a plan — a business plan.
While it is true that many successful business enterprises did not have a plan starting out — Reebok International and Mrs. Field˜s cookies are companies that did not have a formal business plan — most…

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