The Business Plan

By Dr. Hagan and Josech Opula

A friend approached me recently excited about a business idea he had been developing. I knew that he had been thinking about for a while. It became apparent that he was talking with me about it again, with the hope of getting me to finance the project. With passion, he told me that I could trust him to work hard on the project to make it succeed and that he would do his very best. I kept listening for more detail and specifically the numbers that would tell me how the business would become profitable. So finally I asked, “Do you have a business plan?” Silence. I know that he knows what a business plan is, but he seemed to expect that I would agree to finance a new venture based upon nothing more than a good idea and lots of energy and enthusiasm.

Not every bright idea is a good idea. Lots of times we get excited about a business idea and start pouring time, energy and money into the bright idea, without first examining “the down side”. Once upon a time, I had a barn, and the money to renovate the barn, build fences and then to buy Rock Mountain Horses. I figured out that I would have the mares (females) bred, the foals (babies) would be born in the spring, and then we would enjoy riding them on trail rides during the summers. I would sell the foals to pay expenses and grow a business. After all, I had grown up training and showing horses, and I knew all about it.

BUT I DID NOT ALLOW MYSELF TO SERIOUSLY CONSIDER THE DOWN SIDE, which was that I had only 5 acres and not nearly enough pasture. The horses would have to stay in their stalls for many months over the winter, with little if any exercise. I would have to care for them with feed, hay and water and by keeping the stalls clean. I would have to hire someone to take care of the place if I wanted to go trail riding for a weekend, and there was the expense of the trip away. I loved the horse business for about 6 months, until I saw that there was a lot of money and time and energy going out, and nothing good was happening other than a little bit of enjoyment. Then the economy took a downturn, and I had to sell the horses, losing most of the money I had invested. And I lost a lot of money, because I had not invested it wisely. Not every bright idea is a good idea.

Before going into any business venture, a business plan is not only necessary, but it represents the emotional maturity that one should bring to managing one’s time, energy and financial resources.

A business plan is simply a formal list of objectives, and a road map which illustrates how you plan to achieve the objectives, with a budget for doing so. The plan can be simple but effective, or for larger venture, the plan should probably be quite detailed.

Basically, a business plan is an explanation of:

1. What you plan to do and the purpose of the business beyond just making money.

2. Why you think it will work given the market, competition and customer demand.

3. Why you are the right person to execute the business plan and bring the concept into reality.

4. How your business will make money.

5. When it will become profitable and then sustain its profitability.

6. How much money will be needed to finance the venture until it becomes profitable.

The content of the business plan will include:

1. The executive summary, which contains an introduction of your business, what you offer, your goals and your strategy in achieving those goals.

2. Company overview and strategy, which contains a detailed discussion of how you plan to achieve what you have set to achieve.

3. Product offering, which is a detailed account of your products and se