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A business plan is important if you're running a company more complex than freelancing out of your basement.
That being said, the elaborate ones with the five year revenue projections are a complete waste of time and tend to border on fraud.
True. A group of MBA grads and one of their professors wrote an intricate business plan, invested all their cash and ran up their credit cards on a unique online business that sold less than $200. They finally stopped the bleeding and shut it down after they all lost thousands and thousands.
They filled in all the blanks on the business plan, just forgot the very basic question of whether or not people want your new service/product.
Unfortunately, I'm watching another person I know doing the same thing, investing all his time and efforts into a concept that doesn't make sense, trying to raise money on one of the funding websites (only a few family members are donating). Need to be careful not to only depend on friends and family for feedback, gives people a false sense of future success.
Need to be careful not to only depend on friends and family for feedback, gives people a false sense of future success.
Oh trust me, I've read enough and seen enough of people failing and struggling due to relying on friends/family. That thought doesn't even enter my mind.
Surprise! Business is nothing but numbers. Invoices, receipts, purchase orders, taxes, insurance, payroll, ROI, (Return on Investment), shipping costs, discounts to customers, etc.
At least you're honest about it. Knowing this, you will need to hire a team who does know, and that involves numbers.
It's not a surprise to me..I went to college a couple years and my major was business. I think there are plenty of Americans who have turned their dreams into realities without having an MBA or being a numbers expert. Ultimately yes, in my concept I would have to eventually hire someone to take care of important 'numbers' role..especially for the scale of business I'm thinking.. I'm not a complete idiot, I've managed my own finances and debt, but I realize there are others that would be better for the managing certain aspects of the job than myself.
It's just the initial business plan I'm thinking about now...these 'models' and 'projections', certain numbers I'm not sure where to begin with so that's what prompted my questions.
OP, if you don't understand your business idea well enough to put the details down in writing, then you don't have a business idea, you have a vague dream.
It's not a vague dream. I know what I want to do, where I want to do it, and who and why I want to do it for. I've started putting it in writing..there are specifics that I can figure out..I can figure out what supplies I need, where I will get them, the cost, etc. I can form a general price structure of services I want to offer, however at the moment I'm trying to decide if I want it to be high-end price or an affordable price scale. I can probably research and figure out what type of space I will need and how much it will cost. These are all things I'm working on.
But by the time I get it all figured out, prices can change. We all know that just in our daily lives. So then what? A few articles I was reading were talking about models and graphs and bar charts and profit margins blah blah blah. Someone mentioned here a 5 year plan. I'm just trying to figure out the 1st year plan...I've never done this before. How does a person plan for 5yr when they don't even know how the 1st year will go?
Some of this terminology I don't really understand, which is why I asked if there are people that you pay to help you form a plan. Yeah I went to college and took some business classes, but I never really grasped it as well as some people who are very 'numbers'-oriented. I've just always felt the determination and desire to have my own business or build a business..I'm a hard worker not great at numbers, whereas a person might be great at numbers but not such a hard worker. I -realize- I need help actually forming this concept into a functional thing. Some people just jump into something because they have money and think it's simple, but end up failing year 1...I'm not that dumb. I realize no matter what business it can be complex and there are a number of variables that will determine an outcome of success or failure. That is why I am here asking questions and saying I need help because I realize I don't have all the know-how.
The business plan is a very important. You present it to creditor and he'll estimate it. After check you can get some questions (you missed) that help to correct a business plan.
Sounds like you are doing good research on your product/supplies side. Have you thought about how you'll get customers and if they are open to purchasing your products?
Several years ago I had worked out a very detailed business plan that made total sense to me. A potential partner was very interested until he made some phone calls to our target market and they weren't interested at all. Thank goodness, money saved because we stopped the whole idea before investing anything besides our time.
A business plan will help you make a dry run before actually committing and wasting time correcting major errors later or scraping a bad idea before you get into big trouble. Granted your pro forma numbers will be somewhat theoretical. The best thing to do is to ask questions, ask an accountant, ask a lawyer, ask as many current and retired business owners who will speak to you. Lots to learn, and lots to take into account.
Need for, location, competition, your personal strengths and weaknesses, seasonality, licenses, legalities, taxes, structure, chart of account setup, payroll, payroll taxes, insurance....
A business plan with help you learn about things you didn't know you needed to know. It will also help with planning cash flow which is a major problem ending in failed businesses. Look at other people's business plans or formats but do yours yourself.
So I'm sitting here researching business plans and what needs to be included. It seems pretty intense and lengthy and involved. Does the average business owner really start out wit ha business plan..or do most people pay someone to help develop a business plan?
No you do not need a business plan to start a business, my Wife started a successful business without one. But if you want to borrow money from a bank, they will require one, they are not going to just hand money out because you have an idea.
Sounds like you are doing good research on your product/supplies side. Have you thought about how you'll get customers and if they are open to purchasing your products?
My concept is service-industry based, it's a unique and perhaps you could say 'trendy' salon concept. The demand and need will be there since popularity is growing in the industry and women will always want beauty services. We've learned that is recession proof. The only thing I feel I need to work on as far as demand is how to draw people in and keep them in.
But, do you know how much an advertisement costs in your local paper, or when quarterly fillings are due and what they are for, or the best legal structure for your entity, or how much insurance is and what kind you need, or how you will handle payroll for yourself and others, or how to get a sales tax number? Even how much a sign costs and how to get a permit for one?
What you are doing to make money is only a portion of any business. You'd be surprised at how much time and information you will need to manage the other necessary requirements in order to survive and prosper. You don't want to buy that new item for the place the week before sales tax is due and have the govt close you down or fine you excessive amounts for being late. This is why you should at least write a basic business plan and calendar.
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