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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?
I'm just a person with an idea of a business concept. I have a general idea of exactly what I want my business to be, who I want to serve, and what I want to do with it. Beyond that, I'm not a numbers person. It just makes me wonder, the average person who runs a small businesses - local convenience store, barber shop, thrift store, bakery, etc. Did they all start out with an elaborate business plan or just an idea and grow from the bottom?
Any advice? I'm kind of the person with the grand idea but not much know-how or means to put my dream into motion.
01-21-2015, 08:54 PM
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I would think it'd depend on the kind of business you're setting up. If you need to line up suppliers, figure out appropriate pricing, etc, then it would seem wise to have a plan.
Watch some of those restaurant rehab shows and you see what happens when people don't have a plan. Overbuying food that then has to be thrown out, setting prices that don't actually cover the cost of food and labor. They wind up in disaster precisely because they didn't have a plan and didn't want to deal with the numbers.
You need to have certain things in writing, how are you going to get leads/sales, what does your business stand for, how will the work be handled. (Yourself Employees Contractors) Pricing structure, how will you manage your risk? Also when will you say no, for instance could you fulfill a 10k unit order or build a full web application that 3000 employees use everyday? Having a plan helps you focus on whats important, at the same time plans can change so you may have made a lot in social media marketing one year, but the next sales dipped and now clients want search engine marketing services. You will have to change your plans according as the business environment changes.
.......... Does the average business owner really start out with a business plan...........
He does if he expects to get a business loan.
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.
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.
this!^^ - to obtain a business loan you MUST have a business plan/proposal to clearly state how the business will be run, where profit will be coming from and etc... lenders will require to see this and also discuss with their financial advisors in order to say NAY or YAY to the loan.
In addition, even if you were to have the cash flow for the business, you would definitely need a business plan as well. To clear your own mind and lay out all the things that you thought of.
You definitely need to do a business plan for yourself to see whether or not your idea will work. Chances are you won't get a loan anyway, most new business start-ups don't.
So, with your own money and credit, can you start your business and keep it going for awhile? If you need retail space, do you have money for deposits, rent, renovation, fixtures, signage, permits?
What is your product/service? Can you do it yourself? Do people want to pay for it? How do you get new customers? What will be the cost of advertising/marketing? Are there any competitors? What are they doing? If not, is it because your idea won't work in the marketplace? How much will your overhead be? Will you have to pay other people or companies, if so, how much?
You really want to think through each aspect of your business and then research to get real numbers. You want to find out on paper first whether or not there will be a challenge running your business, not six months and $10,000 later.
I think alot of people just wing it, that may also be the reason such a large percentage of small businesses fail. I started my business off as more of a hobby that surprised me how much money it was making and grew as my buisness grew. I didn't have a business plan. I can say in 3 years we grew big and fast. We started with $300 and 3 years later are doing 2 million a year in sales. I learned a lot of lessons the hard way. I could have saved tens of thousands of dollars forming an scorp instead of doinga sole proprietership for years, and then an s corp over an llc which I eventually turned it into. I learned a lot of lessons the hard way. Having a business plan could have prevented that.
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A good, comprehensive business plan is critical if you expect to be able to borrow money, get a lease on commercial/industrial space, or have credit with suppliers of utilities, goods, materials and supplies. Most will ask for it on a startup. I bought a business that had been there for 7 years but was stagnating due to an absentee owner, and did a business plan for building it up. I did not have to borrow for the purchase but had to submit my business plan to get a mortgage on a house a few months later without the 2 years of profit/loss statements. Of course, that was in 1993, lenders would not be as likely to go for that now.
... Does the average business owner really start out wit ha business plan..or do most people pay someone to help develop a business plan?
I'm just a person with an idea of a business concept. I have a general idea of exactly what I want my business to be, who I want to serve, and what I want to do with it. Beyond that, I'm not a numbers person.
...
Any advice? I'm kind of the person with the grand idea but not much know-how or means to put my dream into motion.
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.
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