Small Business Plan
Section 3. - Planning
Writing a small business plan is mostly myth! Don’t believe everything you read about small business plans—neither their use, nor how they must be written. The great majority of what is being provided today about business plans is directed at the high-tech/Internet/high-profit-potential businesses that are looking for substantial outside investment. These are the “darlings” of the startup world, and everyone is looking for the next Google or Facebook. You might even be surprised to learn that many people consider these high-tech businesses to be the only new businesses that should be called a “startup.” That is nonsense of course, but since there are already thousands and thousands of pages written for that elite group, I intend to concentrate instead on the development of a small business plan for everyone else—the majority of startup businesses.
A large number of new entrepreneurs do not believe they need a business plan…and in many instances they don’t—at least not a “formal” plan. However, every small business should do very thorough "planning". Nothing needs to be formal…it can just be a few scribbles on cocktail napkins, a loose-leaf file full of your thoughts and calculations, a 3-ring binder with dividers, or a wall covered with butcher paper...whatever helps you record your visualization and thinking.Examples
So, let’s approach writing a business plan in a way unlike anything you’ve read about planning so far. To do this, we will take a single business concept, let’s say—starting a coffee shop business—and look at the planning involved in the various “levels” of this business, and how many different small business plans could be developed for just this one business concept. To best show this, we will set up five (5) different scenarios for developing a business plan for a "coffee shop" business. Business plans for each of these scenarios will be discussed at length in separate reports listed in the "List of Reports" at the end of this document. Here are the five scenarios we will discuss in those reports: - Scenario no. 1—Coffee Shop Business Plan When Self-financing
This first scenario is the simplest of all for a new business startup. In this small business plan we’ll assume that you are going to finance the business entirely from your own savings, and that no other parties will be involved in the financing of your business for some time. We'll call the planning for this scenario; a Simple Business Plan. - Scenario no. 2—Coffee Shop Business Plan With Partner
This small business plan would be very similar to scenario no. 1, but you will need to do more planning regarding the partnership itself, so we'll call this Strategic Planning For Business. - Scenario no. 3—Coffee Shop Business Plan For Larger Startup
For this scenario, we’ll assume you need more startup capital than you can provide yourself, and it will likely come from family, friends, and alternative financing…but we’ll also assume that you will NOT need major outside investors, or Venture Capitalists, at this time. Business planning for this scenario will be a little more organized than in the first two scenarios, so we'll call this activity Business Plans For Small Business. - Scenario no. 4—Coffee Shop Business Plan For Major Startup
Here we will assume you want to start up a much larger operation that will require either Angel Investors, or Venture Capitalists. This business plan is the granddaddy of them all, and is the most formal business plan you may ever write. Writing a business plan of this magnitude is a major undertaking, and we'll call this effort Creating a Business Plan. - Scenario no. 5—Coffee Shop Business Plan For Business Expansion
When you start a new business, regardless of which scenario you start in, one of the things you are always thinking about, even if you don’t put it in your initial business plan, is growth. There almost always comes a time when you want to expand your business and you will need outside financing for the project. This means you will have to write a business plan to present to your bank, or other financing source. Obviously, we'll call this Business Expansion Planning.
You’ve likely noticed that a business plan is developed for its audience—for those people who will be studying it and making important decisions based on the contents. If you are the only one who will ever see and use your plan, it only needs to record your vision and your thinking. If Venture Capitalists are going to be studying your plan; then it needs to be fully developed for them.Warning! Business plans are like newspapers—they are of value for only a short period of time. They give a snapshot of your thinking at a given moment and then are of minimal value…unless changed as you change your thinking and direction. Don’t fall in love with your small business plan—if you do, you could very easily inhibit your flexibility and innovation. You are in command of your business. Your plan must not control you—it is simply a reference, or reminder, of your own thinking. If you find you are enamored with your business plan…shred it. You can always begin another. You might also ascribe to this bit of wisdom—
“Plans are made to be tinkered with—and eventually torn up. Blind devotion to any plan is downright dumb.” —Tom Peters
Important-- To help you in determining just how much time and effort you need to devote to your small business plan, I have prepared individual reports for each of these 5 scenarios, plus other topics relative to small business plans.Since I want these reports to actually relate to more than just the coffee shop business plans, I have made them more generic while still addressing each of the coffee shop business plan scenarios.
List of Reports For This Section WHY WRITE A BUSINESS PLAN?
This report deals with both the practical and the psychological reasons for writing out a small business plan—no matter how crude and simple it might be. This is an especially important report and should be read by every entrepreneur regardless of business size. SIMPLE BUSINESS PLAN
This report covers Scenario no. 1, which is the simplest form of business plan. It assumes only a sole proprietor (you), and that you will finance the entire business yourself. STRATEGIC PLANNING FOR BUSINESS
This report covers Scenario no. 2. It is very common for small business entrepreneurs to start up a business with other friends. This makes sense if the others have certain expertise that you don’t have, and also, if everyone can share in the startup cost. Having more than one “owner” however, can present problems—this report helps you avoid those problems. BUSINESS PLANS FOR SMALL BUSINESS
This report covers Scenario no. 3, and discuses a small business plan that could be used when looking to family and friends to help you with startup and early operating money. This plan is not as elaborate as a plan for outside investors, but you do need to share your vision in a professional manner. CREATING A BUSINESS PLAN
This report covers Scenario no. 4. When you start looking for outside investors, you had better have a perfect small business plan in hand. This report helps you understand what you need and where you can go to get guidance in putting this plan together. BUSINESS EXPANSION PLANNING
This report covers Scenario no. 5. Planning for expansion is quite different than the small business plan for a new startup, and this report explains those differences. BUSINESS PLAN EXECUTIVE SUMMARY
This is the most important part of any formal business plan, because it is what determines whether the rest of your plan even gets read or not. It can also work as the best stand-alone brochure with which to attract investors.
These are only a few of the different types of small business plans you may be exposed to in your entrepreneurial career, but they are most likely the ones you will first encounter.I suggest you start with Why Write a Business Plan? and then read through all the planning reports shown in this "List of Reports." Just don't "over-plan" to the point where you never get started, because—
“Vision without action is a daydream. Action without vision is a nightmare.” —Japanese Proverb
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