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Planning
Your Business
Three months ago,
you were asked to think about the kind of business
you wanted. In subsequent articles, you’ve
been asked to gather information
and understand some of what it takes to get a business started.
Now it is time to take that step further and begin to plan
the actual business.
Each year many businesses
are started, and many more fail. Sometimes, it
is the "product" that doesn’t work. It is
more common that the business model fails.
The business model is the who, what, when, where,
how much, and at what price of the why (product). Everyone
has experienced different businesses delivering essentially
the same product or service. One succeeds and the
other closes its doors. Why? Business
isn't only about the “product”.
The most visible
aspect of business is typically its “product.”
The structure behind the product is the operations that
consume resources - people, time, equipment, and cash –
and determine success or failure. How
efficiently and effectively processes occur to deliver the
"product" determines the cash position and profitability
of the company. The
product is what is sold; getting it to the customer - marketing,
selling, delivering, and all of the support processes –
determines if you can make money and stay in business.
Business
success requires planning - whether formally
or informally, on paper or in your head. The business plan
generally consists of certain key elements:
-
company mission/vision
- marketing/sales
plan
-
operational plan
- staffing
- equipment/capacity
- general
administration
- capital
investment
- financial
plan/forecast.
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One
benefit of doing a formal business plan is that it requires
you to formulate and write down all the bits and pieces
that are in your head. Those bits and pieces
are integrated (hopefully) into consistent assumptions
and tasks that are quantifiable and enable you to understand
the interconnectivity between the elements of your business.
For example, what happens if you add sales staff to sell
a new product, but the new product isn't available for six
more months? What happens if your competitor cuts prices?
For most people, thinking
about starting their first business is intimidating and
overwhelming. There is so much that you
know you don't know and there is so much that you may not
know you don't know. The combination
of the two can seem insurmountable. Take
a deep breath and pull out a notebook and pen and start
writing.
Section One
is the "WHY" of the business - what you
want to do, sell, make, provide.
Section
Two captures ideas and thoughts about "WHO"
– customers, advisors, competitors, etc., and how
you think they can help you with the business (and WIIFM
the what's in it for me from their perspective).
Section
Three is the WHAT you need – equipment,
workers, etc.
Section Four
is WHERE and WHEN. These logically combine, because
you have to define things like where you are going to operate
- to start, in six months, a year, and so on. Be
specific about now and for the first year of the plan
- out of my home until I have enough money to go to a shared
office space, then at one year or when I have revenues of
$X to a stand-alone office, etc. See the when and
where do go together and lead you to the final section....
 Section
five captures HOW MUCH - time, money, and
everything else. For example, this is where you
put information on a computer and how much it costs to lease
and buy. [Quick note: Often in small or early-stage
businesses the decision is made on which alternative is
less expensive in the long run. Instead
the decision should consider which takes less cash today,
usually the lease. More in a future article
on cash flow!] This section is where you want to
accumulate the alternatives for your "wish list"
- new, used, and "make-do".
To put it in a better
perspective, when contemplating
eating an elephant - you take it one bite at a time.
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Lea
Strickland, MBA, CMA, CFM, CBM, president and founder of F.O.C.U.S. Resources
(a business management systems consulting firm that addresses the total
business through financial performance), has over 18 years experience
in financial and operational leadership positions with various companies
including four Fortune 500 and Global 100 companies. She has worked with
established and emerging companies—private and public, US and foreign-owned.
She holds degrees from The Ohio State University (MBA—Accounting,
Marketing and Human Resource (Change Management)) and The University of
Charleston (Bachelor of Science—Finance and Business Management
with technical minors in Marketing and Accounting). 
Lea
Strickland, MBA CMA CFM CBM