YOU AND YOUR BUSINESS PLAN
This section is for you to pull it all together for this class...to help prepare a winning Business Plan for your business idea. The small business concepts that were explained in the learning sections surrounding the circle of the Home Page are all brought together to help you write YOUR plan. The outline above helps you bring together all your research and learning into the final product, the Business Plan. It is in the center of the circle because it represents you and your idea to make your business on the reservation a winning one.
Why do a Business Plan
A good business plan is a tool to measure performance over time. It can be the basis for sound decision making. It can educate and motivate others. It is a strategic vision of your company. It is a means to steer your company where you want it to go. It is a means of communicating your vision to others. It is an important step in turning ideas for products and services into a successful venture. It can help you avoid mistakes, which can save you effort, time and money. It is a tool to keep your business under control. It helps you develop the competitive spirit to make you prepared and ready to operate. It will help you to make a decision on whether or not to start at all. These are a lot of good reasons to do a business plan!
The act of “doing” is the most important aspect of the plan. It forces the entrepreneur to think through the steps that they must perform to take an idea to reality. Today, hard work and common sense are not enough to automatically assure success. Technology, a competitive marketplace, and people themselves have become more complicated than they were even a few years ago. One of the principal reasons for business failure is lack of planning. “The business that fails to plan, plans to fail.”
Who is the plan for?
Do a plan for yourself, first and foremost. Plan to update, change and amend your plan regularly. The process should continue through the life of your business, and will guide you through every step.
Your plan will give potential investors the information they need to make a decision on whether to invest or not. It helps them to analyze risk and make an informed decision, which can be important if and when things get rough.
For a business site lease on reservation lands, a business plan is usually required to obtain Tribal and other approvals required. This is often required before other clearances and approvals. The feasibility of your business is often required "up-front" using the plan.
It gives lenders the information they need to make an informed decision, also. It answers their questions of ‘how much’, ‘how long is it required’, and ‘how and when will it be repaid’. It is today an essential element in applications for startup loans and Small Business Administration guarantees. Your plan can provide your accountant, attorney, and insurers with information, which they will use to serve you better. It can also educate, motivate, and empower your employees who will be your key to success.
Authorship
Investors and lenders expect a plan to be neatly typed and free of errors and poor grammar. Use professionals to help only if absolutely necessary. Having another person do the plan for you is discouraged. Don’t make it too slick or polished, either. Substance is more important than form. Don’t waste scarce financial resources on a too professional looking document. Avoid the “trust me” school of thought. It does not work with business plans. If your product is the best in the market explain why. Avoid the use of vague, qualifying words such as ‘might’, ‘probably’, ‘maybe’, or ‘perhaps’. Be positive and definitive or don’t say it at all. Confidentiality is also a consideration. Don’t just hand out your plan to anyone. Non-disclosure statements, control numbering, and labeling each page “confidential” are all methods of making sure your plan doesn’t end up in the wrong hands.
What do investors and lenders look for
They want to know your history. Your experience and credit history are important factors in making their decision. What is your collateral? What assets do you have and what are you willing to risk for your success? Lenders look for secondary sources of repayment. How will they get repaid if things don’t work out as planned? What is your repayment plan? The investor wants to know that you are receptive to his needs for information, and have given consideration to how and when he will be repaid, also. For a lender, the asset financed should meet the term of the loan. Equipment loans should typically be no longer than five years. Accounts receivable and inventory are usually limited to one year. What is the demand for your product or services? Demonstrate through sales history, orders or other market data, including surveys and market studies for startups. Is there enough margin of error in your plan? Lenders want room for unplanned events which would not prohibit repayment of their loan. Are your plans and projections reasonable and realistic? Take a conservative approach, which you are confident you can achieve. Be able to “out-perform” your projections.
The physical plan
Put your completed plan in a 3-ring binder for yourself. When you share copies you should try to keep it as short as possible, while covering all the necessary information we have covered. Make changes, additions, and deletions over time, and keep it up to date. Your cover sheet should contain your company name, address, phone numbers, logo (if you have one), the names, addresses and phone numbers of key management, the date of the plan, and who prepared it.