Business Planning 101
by Betsey Martin, Information Specialist
Ask anyone even remotely connected to small business the importance of business planning, and you're liable to hear a multitude of affirmative reasons for having a written plan. After all, "statistics indicate that about 80% of all small businesses fail within the first year, and of the 20% that do survive, about 65% - 60% have a written plan"*.
One rationale for writing a business plan is to foresee and solve problems on paper before making costly mistakes. The whole process forces the entrepreneur to assess his strengths and weaknesses. Also, a plan is proof of commitment to investors or partners; from how the entrepreneur plans to use the money he raises to how much cash he plans to inject into the project.
Business planning may be the truest test in determining whether the entrepreneur is merely tinkering with a hobby or is in fact dedicated to building the value of a business by fully exploiting his ideas or products. For this reason, the plan should be written by the owner, not delegated to a technical writer, attorney or other professional. The inability or unwillingness to formulate a written plan is surely a predicator of the venture’s ultimate success.
For more on the subject, try:
* "For Entrepreneurs, It's All About Good Planning", Business First, June 27, 2003. Vol. 19, Iss.40, Pg. 6.
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