Posted by Bob Adams on March 17, 1999 at 15:10:57:
In Reply to: starting a small business out of my home posted by Amy Ruggero on March 16, 1999 at 15:01:41:
The business plan should be the major focal point for thinking about a possible business, starting a business, seeking financing for a business, running a business...and even helping you achieve maximum value when selling a business!
Assuming you first have in mind an idea for a particular business. I suggest that you at least take a look at the issues that good business plan brings up...without jumping right into the writing of the plan.
For example, reviewing a possible business from the perspective of writing a business plan you will be forced to address such key issues as: Will the market support this business? What will be my competitive advantage? Do I have the qualifications to run it?
It may be by quickly reviewing a possible business alongside the outline for a good business plan that the business quickly appears less promising that you first thought. Or maybe there is a major issue that comes to mind that will cause you to do more research. Or maybe you will decide to pursue the business in a different way.
As you get more serious about starting your business and once you are beginning to solidfy in your mind that shape and form that your business will take on, then you should start writing your business plan.
Writing a business plan, does not need to be a one-time sit-down experience. Rather it should be a work in process. You may start with a summary, reflect on it, change your mind and start again. You may sit down and estimate some information (such as on markets) and then later go back and fill it in more carefully.
Just late night I was at a business meeting, where the presenter explained how he went back and doubled his profit projections because the venture capital firm was disappointed he couldn't justify an expected $1 billion dollar valuation (the presenter actually needed a different venture capital firm, not new numbers).
Whatever you do don't go and raise money until you have your plan not only complete, but carefully thought out and polished. Bankers and venture capitalists will ask questions and expect you to justify your numbers and assumptions.