While the understanding of business plans has increased greatly in recent years, there are still many misconceptions surrounding such a document. In large part this is due to the nature of the document itself. Unlike an annual report, employment posting, or the majority of other business documents that are routinely created, a business plan is a much more fluid document. Every business plan will undergo changes at various times due to the ever-changing nature of the business itself.
Unfortunately, this fluid nature of the plan leads many entrepreneurs to discount its importance. This results in plans that lack the breadth and depth that a solid business plan should have. I encounter many people who mistakenly think, “If the plan is going to change anyways why put too much effort into it now?” Instead they put more time and effort into ‘getting the business going’ rather than fully developing the business plan. In fact, in your excitement over the new venture you yourself may be tempted to forge ahead without spending enough time thinking through the pitfalls, risks, and other problems that are bound to occur with your business. Sadly, this is the same type of thinking that has caused many businesses to fail because their owners did not put in the time necessary upfront to establish a solid road map for where the business is headed. As a result the business simply did not have the foundation necessary to succeed.
It is during the process of developing the business plan that you will see problems with the plan that need to be addressed. It is much better to deal with these potential problems upfront rather than a year down the road when the business is beginning to grow. I cannot think of a single client I’ve worked with whose idea of the business was exactly the same from the day I started working with them to the day we finished. The business plan creates a roadmap for where the business is headed.
Not placing enough importance on the business plan is akin to someone jumping in the car and heading somewhere with only half of the map of how to get to their destination. They are so excited to start the journey that they fail to accurately plot out where they are headed. Would you go on a long trip without knowing all of the steps of how to get there? However, this exact same scenario is played out time and again when businesses do not plot out where they are headed with their business plan. While not every business needs a 60-page document complete with appendices, call-out boxes, and graphs, every business does need a roadmap. Make sure you have a solid roadmap before starting out on your journey.
Next time I’ll address another common problem that occurs with the development of a business plan due to its fluidity – placing too much importance on the business plan.
Kevin Kundinger is a Managing Partner with Einstein Enterprises, LLC, a company that specializes in writing business plans for small businesses and startup companies looking to secure financing. For more information, visit the firm’s website at www.einstein-enterprises.com, call (888) 732-4202, or email Kevin directly at KevinK@einstein-enterprises.com
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