Planning can help your small business

Pri Notowidigdo, The Amrop Hever Group, Global Executive Search, e-mail: jakarta@amrophever.com

A business plan can be a lifesaver. First of all, it's an exercise in strategic planning and business logistics. Taking the time and effort to think about your business provides a practical framework to keep you focused.

Its value is in making things clear for you and your team during the start-up stage of the business and as the business progresses. More importantly, the elements of strategy and logistics are not as important as the actual process of preparing the business plan itself.

Another reason for preparing a business plan is to have a measure of how you're doing or standards to work against. A business plan sets written goals for you and your team to refer to from time to time. Subsequent financial statements will indicate progress toward achieving those goals. The ultimate objective is accountability.

Surprisingly, the strategies contained in the business plan are not as important to knowledgeable bankers and investors as is its quality and professionalism. They know that events will dictate changes in those strategies, and that what is important is the entrepreneur's abilities to manage those changes.

Business plans can be simple or complex depending on the needs of the entrepreneur. A range of excellent books and business plan software are also readily available in the market. What I am offering here is simply the bare elements of a preliminary business plan for you, the budding entrepreneur, to get excited about and to help you get started on.

As your idea for a particular product or service begins to develop, try putting your thoughts on paper using the framework outlined below. Key questions are why, what, how, when and who.

Start with the company itself. Do complete profiles of your key people and focus on their accomplishments. Show your organization chart along with a statement of your management philosophy. On your mission, ask yourself why is it in business? What makes it different from the rest?

Then focus on what is your service or product. What are its benefits? What makes it special? How will it be produced or distributed? What will be the cost and projected selling price? How about guarantees and on-going service?

Evaluate your market by doing an industry overview. Size of market? Growth prospects? How competitive is the market? Who are your target customers? Why would they consider your service or product? Which of your customer's needs will your product or service fulfill?

A critical consideration is the financial aspect. Financial organization? Amount of investment? Sources of funding? Financial projections. Projected profit and loss statements and balance sheets for three to five years? Compensation? Salaries? Benefits?

Planning, as every successful entrepreneur has learned, is the antidote for bad luck. This means that if you want your small business (or any business, for that matter) to succeed, or at least have a high probability of succeeding, then you must have a business plan.