Focus of the Week

Introduction to Business Planning
The purpose of a business plan is to recognize and define a business opportunity, describe how that opportunity will be seized by the management team, and to demonstrate that the business is feasible and worth the effort. Where implementation of business plans requires participation of lenders and/or investors, the plan must also clearly and convincingly communicate the financial proposal to the prospective stakeholders: how much you need from them, what kind of return they can expect, and how they can be paid back.

Many entrepreneurs insist that their business concept is so clear in their heads that the written business plan can be produced after start-up; this attitude "short-circuits" one of the major benefits of producing the plan. "A realistic business plan might save you from yourself by persuading you to abandon a bad idea while your mistakes are still on paper," says Roger Thompson in Nation's Business.

Do many people need to be saved from themselves? Are many entrepreneurs so determined to go into business that they overlook or underestimate the potential pitfalls? Is that all bad? Can many business proposals stand the harsh light of skepticism?

Let us say we worked out the numbers on paper, and are convinced that we do not need to be saved from ourselves. Do we still need to write the plan? The discipline of writing a business plan forces us to think through the steps we must take to get the business started, and, to "flesh out ideas, to look for weak spots and vulnerabilities," according to business consultant Eric Siegel. A well-conceived business plan can serve as a management tool to settle major policy issues, identify "keys to success," establish goals and check-points, and consider long-term prospects....
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