Denver Based Restaurant Consulting Firm Announces the Expansion and Rebranding of its Organization

We’re excited to announce:

http://www.send2press.com/newswire/2011-10-1026-004.shtml

Business Plans - The Real Story

So why should you go to the trouble of a business plan?  Why not just move forward with your idea and take things as they come?  If you are starting a new business, the first thing to keep in mind is that it takes more than a good idea or a good product to make a successful business.


The first thing you need to do is validate if your business is feasible.  Will you make money at it?  How long will it take before you start making money?  Do you have enough funds to start your business or will you need outside funding? How will you take your product/service to market?  The list of questions goes on and on. 

Let's just focus on the feasibility of a new business.  You should have in mind some number as far as revenue or units you expect to sell in the first year.  You will need to compare that number to the market as a whole.  You can get a lot of information on the internet.  Just google your product/service and similar products/services to see what marketing analysis already exists.  It makes sense to invest in a good market analysis report on your industry.  From that you need to figure out what your total market is and compare that to your sales projection.  Is your sales projection reasonable?

For instance, you plan to sell 10,000 units in the first year, 15,000 units in year 2 and 20,000 units in year 3.  Your market analysis tells you the entire market for your product (or similar products) is 7,500 per year.  Obviously, the market doesn't currently exist for the product you intend to sell.  What if the market was 100,000 units per year?  You may say, "Great, let's go!", but you then need to ask yourself if you think you can gain a 10% share of the market in year one.  That's pretty aggressive even in a market that isn't competitive and if you are in a competitive market, then it may be next to impossible.  This doesn't mean you need to give up on your idea, it just means that you need to figure out how to penetrate the market and based on that, you need to come up with a realistic (tough, but not impossible) annual sales goal.  That along with price and cost information will start to give you an idea of how much money your business will generate and when. 

It's all about turning the unexpected into the expected!  So, go forth and research your market!

Is a formal business plan necessary?

Much has been written about the necessity (or not) of writing a business plan.  I will always advocate taking the time to develop a plan before you dive into any new business or opportunity and then on an ongoing basis (usually annually) as long as you continue the business.  I advocate this simply because you will have a greater chance of success if you think through the who, what, when, where and how of your business before you embark on it. This turns "the unexpected" into "the anticipated and prepared for".

Do you really need a bound, footnoted, discertation with charts and graphs to accomplish this?  Most of the time, you probably don't.  Your audience will dictate the formality or lack there of, of your final plan.

1. If you need traditional funding, then you will definitely need a formal well written plan to submit with your SBA loan application.  It should be professionally bound and follow the formal business plan format - table of contents, executive summary, business section, financial section and appendices or supporting documents.  The bank's biggest concern is how and when will you be able to pay them back?
2. If you are going after venture capital, you will also need a well documented plan, but you have more leeway in the presentation, content and format.  You will always need a thorough and detailed financial plan if you are seeking funding, but one of the things I really stress for venture capital is creating and building excitement around your idea and business.  The VC's biggest concern is what are the excepted returns for this business? The bigger the better!
3. If it's just for you and your management team, you have even more leeway.  It just needs to fit into your company style and culture, but it does need to be documented, used and revised on an ongoing basis.  Whatever format best achieves your biggest concern which should be success!

 But that just focuses on the presentation of the plan and quite frankly, that is not the real purpose of doing a business plan.  As with most things in life, it's not the end result that is the most important thing, but the process in getting there.   More on that in the upcoming weeks!