Tuesday, March 11, 2008

Do small businesses need a business plan? And how long should it be?

Yes. Businesses should have a business plan, regardless of their size; the reality is the majority of the businesses don’t have them. Why? Several reasons: procrastination, business owners don’t want to write a long plan and/or plain laziness.

Writing a business plan does not have to be complicated or long. I came across a recent article in The Wall Street Journal by Kelly Spors titled The 100 page Start-Up Plan – Don’t Bother


I agree with the article, as a business banker I believe a business plan is like a map or a GPS system, design to guide you and keep you focus on your goals but it should not be over 20 pages long. It should be concise and focus on your objectives and goals.

Here is a quick outline:

Mission Statement

Summary of the Business

Legal Description

Competitive Edge


Marketing: the industry at large, potential customers, benefits of your product or service, geography of your business, distribution, advertising, public relations, pricing: sales and credit policies.

Operations: Accounting, Employees, Compensations, Vendors


Financial Management Plan: P&L, Balance Sheet, Cash flow projections

A business banker, investment banker or any investor always want to know how soon they will get their money back plus interest. To quote the above article:

“Mr. Kawasaki recommends addressing three key questions: Who is going to make it? How are we going to sell it? How are we going to service it?”

If you like to contact Kelly K Spors the writer of the article you can email her at Kelly.spors@wsj.com

If you need guidance on how to write a business plan check out Small Business for Dummies by Tyson Schell a great reference book.

You can also find great information and most of it FREE by searching on the web. But beware of companies or individuals charging exorbitant prices to write a business plan. It is not worth it.

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