What is at risk without a business plan?

Entrepreneurship is learned, a study I read stated that most businesses start with and average of $8,000 and writing a business plan will help you get a business loan because if you ask for a business loan and do not have one, they will ask for it before they start the loan application.

That said, not every business situation dictates that a full business plan be developed. However, the more money you have to invest and the more at risk the more important a business plan becomes - planning reduces risk.

Use Writing a Business Plan as Professional Development

Writing your own business plan over an extended period of time will be like going to your own private professional development course. It allows you to become a student of your own business.

Goals + Research + Strategy = Business Plan

A list of goals might be a plan of what you want to achieve, but that does not make it a business plan.

A goal only reveals your intent or where you expect to end up. A formal business plan details the exact formula you feel you need to put together to attain your primary goals. My definition of a business plan is a formal document written to capture and communicate the planned direction and maneuvers required for the business to accomplish its most important goal-profitability.

Profit is no accident, and by writing and following a business plan, you increase the odds of achieving profitability. A business plan incorporates the same methods good managers use to guarantee the ongoing viability of the business. It is much more than notes on a napkin or a to-do list. A business plan is a road map to guide the business, its owner(s), and its employees on the journey to success.

Your completed business plan can be used to compare actual results achieved to the goals you originally set in your business plan. The review process will help keep your business on track, make sure you are taking appropriate actions, and ensure that they are in alignment with the strategic direction spelled out in the business plan.

Good Management

A manager's role is to provide leadership, maintain focus on core objectives, and prevent distractions from diluting the company's strength or slowing momentum.

Planning allows you to think about the details of your operation and how they all need to work together to form a viable, ongoing, and healthy entity. business planning mirrors the practices that good managers use as an ongoing evaluation process. They gather information, identify the resources needed, set business goals, and create a blueprint for accomplishing those goals.

I promise that if you follow the process in my book you will be excited by what you learn about yourself and your business. You will find yourself systematically reviewing every area of the business. Your business background, skills, and writing ability don't matter.

If you are curious and willing to learn, I will guide you each step of the way toward creating an effective business plan.

Business Plans as a Management Tool

In reviewing U.S. and Canadian studies of business failures, I found that bankrupt and successful firms had similar business plans and financial plans.

The major difference between success and failure was that 81 percent of successful firms periodically took stock of where they stood with respect to their goals, and they followed up by making adjustments to their practices and expectations. The sad news is that less than 33 percent of bankrupt firms with financial forecasts in their business plans actually compared their results with their forecasts, and only 40 percent of those took any remedial action when their forecasts differed from their goals. (Source: Failing Concerns: Business Bankruptcy in Canada, Characteristics of Business Owners 1992 by U.S. Department of Commerce)

This strikes me as just plain silly. If you do not know what is going on in your business (what's working, what isn't), you will never know what you need to do to make sure you reach your goals.

Business planning always makes sense in the right context with the right intention. Not creating a plan because it is 'too much work' is a cop out and most likely do not know what you do not know - a business plan will help you discover what you need to know.