Every business works within the context of core beliefs. We have developed beliefs that define how we work with clients, lenders and investors. We consider them to be guiding principles that, if applied, will improve the quality of your business plan as well as the quality of your relationships with others. We share them with you in this article in the hope that you will find these beliefs worthy of adopting in your business as well.
Belief 1: Every business needs a written, organized business plan.
Every business, regardless of size, has goals and plans for where it will be in the future. These goals and plans are often just in someone's head. The brain is a slippery place! If those goals and plans are not written down, chances are they will be forgotten or altered on the fly without concern for the consequences. The discipline of preparing and reviewing written plans often makes the difference between failure and success. Belief 2: A business plan must convey the understanding of the entrepreneur.
If you do not understand what you are planning, how can a lender or investor feel confident in your management ability? On the other hand, even if you understand your plans but can't convey that understanding to the funder, the perception is the same. Belief 3: A business plan is a resume of your financial skills.
Your business plan is a window through which investors or lenders look at you and judge your financial skills. If your business plan looks like you have spent money unwisely in preparing your business plan, they figure you will spend the investment funds unwisely. Likewise, if your business plan shows you don't have the skills to properly project finances, they will not have confidence in your ability to control finances. Belief 4: Business plans are "owned" by those who make them.
We have found that for our clients to consider the business plan to be theirs they have to be deeply involved in its preparation. Don't "invent" numbers for your business plan. Work to make sure the projections are yours and that you can confidently stand behind them. Belief 5: Projections are future budgets.
You should consider the projections for at least the next year to be your budget. Furthermore, you can't create effective budgets without projecting the next few years beyond them. Budgets must be prepared in the context of future strategic and tactical plans. Belief 6: Projecting is not guessing.
Some people say you can make numbers do anything. Understand this: planning is not a game. Business plans are just that ... planned actions and directions for the future. Make sure your business plan presents a coherent, defendable, and believable scenario. (c) Copyright 2006, Leonard M. Stillman Jr., All Rights Reserved. |
