Talk to any entrepreneur, and you’ll get a different opinion on whether or not a business plan is important to a company’s success. When we ask our clients if they have business plans, we often hear, “Yes, I have one — in my head.” Often the idea of writing that down and putting some numbers and strategy behind it is a foreign concept. But would you start on a road trip to a new destination without a map?
According to small business lore, for every successful business WITH a business plan is an equally successful one with the plan in someone’s head. But that may not be reality.
Recently Palo Alto software did a survey (that was later independently validated by the University of Oregon Department of Economics) that asked thousands of users of their software about their businesses. One question concerned business planning. The responses indicate that companies with a written business plan were nearly twice as likely to successfully grow their businesses or obtain capital as those who did not write a plan.
To be more specific, 36 percent of the respondents who had written business plans were successful in securing a loan. Only 18 percent of those without a plan secured financing. 36 percent of the business plan writers secured investment capital; only 19 percent of the non-writers could say the same thing. Finally, 64 percent of the businesses with written plans had grown their businesses. Only 43 percent of those without a written business plan had experienced any growth.
Simply put, writing a business plan appears to be a critical component of small business success.
Which brings to mind something General Dwight Eisenhower said about the D-Day invasion: “The plan is worthless; planning is everything.”
We encourage clients to write business plans not so they can produce a nicely bound document. Our purpose in encouraging that is to ensure the client does the thinking that is necessary to start an ultimately successful business. Answering the questions necessary to create a solid plan is the only way to help ensure you have thought of all of the opportunities — and the challenges — inherent in starting your company.
Seems the research backs us up on that.
Many people considering business ownership are attracted to opening a franchise. They see franchising as an easy way to enter self-employment as the opportunity comes pre-packaged with a business model, processes and procedures, marketing and product already proven in the marketplace.
However, franchising is not for everyone. To begin to assess your fitness for franchise ownership, ask a few simple questions.
- Can I accept guidance and direction, or do I prefer to chart my own course?
- Can I give total commitment to a product or service not of my own design, and which I may perceive has some flaws?
- Can I accept that part of my profits must be paid to the franchiser?
- Will I resent having to send information on sales and other documents from my business to the franchiser?
- How will I feel about the franchiser’s representative visiting my location to check up on the quality of my product or service?
- Am I proficient at following operations manuals, implementing prescribed processes?
- Can I accept that my franchise ownership may be for a fixed term, with an option to renew for an additional fixed term? (more…)
The April issue of Entrepreneur magazine includes a list of the top 50 new franchises of 2007. Franchising can be an important part of the entrepreneurial experience, and many new business owners opt for franchising as a strategy for business start-up. The list of America’s top franchises generally includes household names like Curves or Subway or McDonald’s. You probably haven’t heard of many of the companies on the list of top new franchises, but their businesses offer a unique look at what’s hot and trendy for American consumers. If this year’s list is any indication, eBay-related businesses and gourmet food are hot. The list of 2007’s top franchises are (in rank order): iSold It (eBay drop-off stores), United Shipping Solutions, Massage Envy, Super Suppers, and Dream Dinners.
“Rising Starts: Introducing the Top 50 New Franchises of 2007″ appears in the April 2007 issue of Entrepreneur magazine and is available on-line at www.entrepreneur.com.
From: The National Dialogue on Entrepreneurship. Check out: http://www.publicforuminstitute.org/nde.
Not long ago, I had the pleasure to visit the Central Missouri community of Glasgow to speak to the area Chamber of Commerce about the services the University Center for Innovation and Entrepreneurship offers to area entrepreneurs.
The UCIE is responsible for a 14-county service area, and Howard is one of those counties. I had to shamefully admit to the membership that in my more than 50 years in Columbia, I had never traveled to Glasgow. That has surely been my loss, as Glasgow is a welcoming community. (more…)