By Jean Kruse / Guest Editorial
A business plan is a formal statement of a set of business goals, the reasons they are believed attainable and the plan for reaching those goals.
It may also contain background information about the organization or persons attempting to reach those goals. Tim Berry, who taught starting a business at the University of Oregon for 11 years, author of many books on business plans and founder of bplans.com, has done some research on the history of business plans. He found that very little was written about business plans until the late 1960s, which he said, tracks “very closely with the high-tech boom and growth of Silicon Valley, and with venture capital.” Still, the spike in books written about business plans only began between 1990-2000.
That research tracks with my experience. During the 1980s and 1990s, I assisted many of my clients in the compilation of documents required by the Small Business Administration (SBA) to get a loan that would be guaranteed by the SBA. Not having read any books about business plans, I did not call the documents we compiled a business plan. But, in fact, that is what they were. In 2012, I assisted a SCORE (Service Corps of Retired Executives) client in successfully getting an SBA guaranteed loan; the required SBA forms had not changed much; they require all of the information that is generally provided in a business plan, but those forms are not called a business plan.
Many SCORE volunteer mentors are skilled in helping our clients prepare business plans. A SCORE mentor will not do the work, but our role is to guide the entrepreneur in getting the job done. It is our view that the work of preparing a business plan is well worth the effort. I am currently working with a SCORE client who has spent many hours researching all of the details of her plan. The mistake she made, and the mistake I believe most of our clients make, is that they have followed a business plan example they found on the Internet and the result is that their plan is way too long, usually they have much of the same information repeated over and over again in each section. Another problem is in not doing enough research into the costs and the probable income stream; when I see a cash projection with the same amounts in each month’s column, I immediately assume those amounts of revenue and expenses were not well thought out.
Yes, your new business venture probably needs a business plan, even if you do not plan to borrow money, but it does not have to be 40 pages long. Shoot for 10-12 pages maximum and be sure to be able to back up your cash flow projection numbers; you might have a whole notebook of back-up research to show that those numbers were not just pulled out of the air. That back-up notebook does not need to be a part of the formal business plan, but it is very important. If I help you, I will want to know how you arrived at the numbers.
In 1968, Intel’s business plan was just one page (and they got the money); you can find it online at www.chiphistory.org/exhibits/ex_images_of_history/ex_IoHb_1968_intelbp.htm
In my next article, I will provide more information about business plans and tips for making one that is a winner. In the meantime, if you are struggling with your plan and want an experienced SCORE mentor to critique it or give you some tips to get started, go to our website (www.scorecr.org) and request a mentor or call (319) 362-6405 or visit our office between 10 a.m.-3 p.m. on any day, Monday through Friday, except federal holidays.
Our office is in the SBA office at 2750 First Ave. NE, Ste. 350, Cedar Rapids; phone (319) 362-6405, ext. 2005. SCORE counselors/mentors are experienced in several different business areas and our services are free.
Jean Kruse is a SCORE counselor, past chair of SCORE CR and a certified public accountant. She operated her own CPA firm for 13 years and in 1988, joined RSM McGladrey, a national firm, where she provided accounting and tax services to small businesses.