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NOTHING BEATS A FAILURE BUT…A PLAN

By Sherice L. Bellamy

Many entrepreneurs and small business owners are familiar with the most common reasons cited for writing a business plan. One is to encourage potential investors or lending institutions to provide the capital needed to successfully start, run or grow an enterprise. Some mistakenly assume that unless they’re seeking financing from an outside source, a business plan is not necessary. Another common reason cited for writing a business plan is to use as a guide to: 1) describe the business and its purpose; 2) determine the resources needed to operate; 3) define the specific goals and objectives to be accomplished; and 4) direct the management activities of the organization.

Emphasizing these points, many articles have been written stating the main reasons that you should write a business plan. The most compelling is the Small Business Administration reports that 95% of all small businesses fail within the first 3 years, and 50% of all small businesses fail within the first year. The main cause of failure is generally related to poor planning. Poor planning can be defined as the lack of knowledge or experience, insufficient capital or financing, or the mismanagement or improper allocation of resources. This alone should be enough motivation to encourage anyone considering a new venture to begin by writing a plan prior to investing a lot of time, money or other valuable resources.

Unfortunately, there’s no one path to guarantee success, however, taking the initiative to write a formal business plan increases the likelihood of success. The process itself forces you to deal with the details and assists you in allocating resources more properly, thus, making better business decisions.

To reiterate, the research and gathering of information that is required to complete a thorough plan, allows you to analyze the feasibility of your idea, helping you to gain an understanding of all the components needed in order for your business to operate profitably in the marketplace.

A detailed plan includes, but is not limited, to the following:

 I. The Business II. Financial Data A. Executive Summary A. Loan Applications B. Description of the Business B. Capital Equipment and Supply List C. Marketing C. Balance Sheet D. Competition D. Breakeven Analysis E. Operating Procedures E. Pro-forma Income Projections (profit F. Human Resources & loss statements) G. Business Insurance F. Pro-forma Cash Flow

Despite the many challenges associated with small business ownership, small business (those with fewer than 500 employees) still drives the economy. This group makes up more than 99.9% of all businesses and employs approximately 50.7% of all private sector workers (http://www.sba.gov/advo/research/sb_econ2006.pdf). Those that dare to take the plunge and prepare properly ultimately reap substantial emotional and financial rewards.

Sherice L. Bellamy, SLB Associates, provides business planning and development services to small businesses and entrepreneurs. Located in Los Angeles, California, Ms. Bellamy can be reached by phone at (213) 384-5640 or email sherice@slbassociates.biz. You may also visit her website at www.slbassociates.biz.