Business Planning Part 2
December 6, 2004
Building a Business Plan
By: John Klesaris
When looking to the future, it's important that you set goals that you can identify clearly. What's more important, though, is knowing WHY you set your goals.
For example, when I address a group of business owners, often one of the questions I ask is 'What is your profit margin?' While some cannot tell me, others are quick to respond '15%' or '20%' or '30%' to show that they have done their homework by setting a goal.
But when I go on to ask 'Why did you choose that number?', I usually get a blank stare, or a stammering answer about why it is so 'low' or so 'high', depending on what they think I am driving at. What most fail to realize is that 'low' or 'high' has nothing to do with my question. What I'm really asking them is what process they went through to arrive at that number, whatever it might be.
What's The Difference?
I know this seems like rambling, but stay with me on this. If you set a profit margin, shouldn't it be based on something more than a 'nice round number' to keep track of? I once had a contractor answer 'That's what I determined it would cost me to retire in Hawaii in five years.' While his answer brought a load of laughs, it was a good one if that was the intention.
You see, that's what the business plan does for you. It forces you to answer that question about where you really want your business to go. It makes you state what you want it to become, why, and what you will do with it as it evolves. It's your blueprint for the life you always wanted, professionally AND personally. After all, when it comes right down to it, isn't your business just an extension of you?
This is the number ONE benefit in going through the exercise of writing a business plan. Because it forces you to answer 'why' as it pertains to every aspect of your company.
It makes you justify, to yourself, the reasoning behind every decision you make, and every system and process you use. It makes you think of things you never thought of before, and rethink things that you believe. In short, it is the very best way to clarify exactly WHAT you do and WHY, where you are taking it and a road map to get there.
Only YOU Can Do This
You know, I'm the lazy type. If I can hire something out, I will, rather than do it myself. I always feel pressed for time, and I've always got too many pots on the fire. So I know all about what it takes to commit to a project of this nature. It took me five years to actually sit down and take the time to write my first business plan. But a funny thing happened....
It Started Off As Interesting, Then It Was FUN!
After the initial hurdle of committing to do it and then gathering the information, I began to get excited. Questions came to mind, things I'd never thought of. Ideas began pouring out of my mind, and I couldn't get to sleep. It was hard, no question, to spotlight the weaknesses. You know the ones; low compensation for the owner (ME!), limited benefits for employees, wanting to do better, needing more time, struggling to compete, limited labor pool, etc. The list could go on and on.
But facing these challenges was liberating, almost like being let out of a cage. And once you do that, put a challenge in front of your mind, it begins to work overtime on finding a solution. As you come up with solutions, you feel better and better, until you are literally bursting with energy and enthusiasm. It's like your business is reborn!
What About The Bank?
Oh, yes, the reason so many people begin a business plan in the first place. Seems like a minor reason now, doesn't it? I know that all the financing in the world wouldn't have been worth the feeling I got when our first business plan neared it's completion.
Like most, I started mine to get financing. But when it was completed, I concluded that this was the BEST thing I had ever done for my business, BAR NONE. In fact, the things we had learned and the changes we had implemented in the process actually made the financing UNNECESSARY for our continued growth. How's that for a revelation!
Just Do It
It's not out of reach for you, believe me. If I could do one while running the business, working in & out of the field and still make time for my wife and four kids and their activities, you can too. You just need to put it into perspective, and set a steady pace. It's a small commitment to make for the knowledge you will gain. And who knows, maybe you'll get the bank to give you three or four million to boot!
To Your Success,
495 North PHCC
P.S. I have included the following Links for your reference. You will find useful information relevant to preparing a business plan. At 495 North, members regularly discuss their own business plans with each other, and the progress they are making.
Copyright 2003 by John Klesaris
PHCC Educational Foundation .
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