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Value Of A Business Plan

Business plans are for start-ups, right? Why would an established business need one? The fact is, the questions you have to answer as a start-up get forgotten in the daily hubbub of running a business. A little time spent asking some basic questions can trigger new opportunities, greater freedom or both.

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Business plans are for start-ups, right? Why would an established business need one? The fact is, the questions you have to answer as a start-up get forgotten in the daily hubbub of running a business. A little time spent asking some basic questions can trigger new opportunities, greater freedom or both.

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If you are reading Shop Owner, you are already in business. You have your business strategy well in hand and things have been running along just fine. And, besides, you are not a start-up trying to raise capital. Why would you need a business plan now?

Unless you invested in your business out of personal savings or took over the business from someone in the family, there is a pretty good chance you wrote a business plan at some point. Bankers want to see business plans (even if they don’t believe them) and sophisticated investors won’t even talk to you without one. It is also possible that, even if you did not need to raise capital to start your business, you were enlightened enough to prepare a plan just for yourself.

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Assuming that you did prepare a business plan at one time, odds are that it has not been updated since you wrote it.

Uncomfortable?

Even if you have never written a formal business plan, the questions often answered in such a plan will give you important things to consider. The questions may make you uncomfortable. Uncomfortable because you will remember all of the things you said you would do, but have not quite gotten around to completing. The numbers you so boldly forecasted may now make you wonder what you could have been thinking at the time. Don’t sweat it, many business owners feel the same way. But, there is good news for you.

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Your business plan represented your best hopes at a point in time. You now have something real against which to compare it. Rewriting a business plan is not nearly as daunting as starting one from scratch. If you have never written one at all, developing a business plan is actually pretty easy once you are in the business. There is a lot less guessing before you have experience and now your numbers will be a lot more realistic.

There is even software available to automate the process of developing a business plan. At the end of this article I will point you to some I respect and in which I have no ownership interest.

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But, you may ask, why would I want to write a business plan, or even update an old one? The answer goes less to planning and more to thinking. Using the business plan as a framework simply focuses ideas and innovation more easily.

A New Look at an Old Plan

In this article we are going to look at a few of the common components of typical business plans and restructure them into points of focus on current challenges you may be facing. By reworking the key elements of a business in your head, you will come away with a clearer awareness of your business. It will help you understand exactly what you need to focus on and help you develop a plan for growth.

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Typical Business Plan
Question #1:

Describe your business and the products or services you plan to offer.

How does the answer to this question today differ from the day you started? What have you learned in the interim that might have caused a shift, if any? How involved did you plan on working in the day-to-day operation of your store or stores?

As you rewrite this section of the business plan, try to focus on your role as the owner of a business that sells tires and service rather than someone who actively manages the process. It may not be possible for you to extricate yourself from the process right away, but remember this is a business plan not a contract. Plan what you want to do with your business – and your life – in this exercise.

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Typical Business Plan
Question #2:

Who are the players in your company and what roles do they fill?

As you list the players, make a note beside each name as to what percentage of their efforts requires input from you. If you have to tell them to do everything that you want done, you might feel important (indispensable) in your role as the head honcho, but it is a quick ticket to entrepreneurial insanity. You will be trapped in your important role and will have absolutely no freedom to do your own work (except after hours when everyone has gone home) or take a day off, or take a vacation or, some days, even be able to think!

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As you rewrite this section of your plan, think hard about those who require the most and the least handholding. If you can remember, make a list of the last five questions each of them has recently asked you. Then, for each question, ask yourself, if you had a policy or system to which the employee could have referred before the question was asked, would you have had to be involved at all?

As an interesting exercise, try to “price” each decision you made for the employee. How much would it have cost to have let the employee make his or her own decision – and be totally wrong? Rarely are decisions totally wrong, but to prevent even a small percentage, most business owners will not allow that chance. And, it consumes them.

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What policies could you put in writing that would eliminate a high percentage of your involvement with the kinds of questions you deal with daily?

It may not seem like much when you are running a single store, but what would happen if you opened a second one, or a dozen? To whom would the employees go for answers? This is the key to a growth mentality. It is the difference between owning a business and owning an asset.

Typical Business
Plan Question #3:

What is your growth strategy? How large is your market?

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Your review of this topic invites you to look at the subject with a different set of eyes than you did when you first wrote your plan. It is likely that your vision was narrow and focused. There is nothing wrong with that in a start-up. Few people are capable of broad vision at that phase. It is likely that Sam Walton never dreamed of the scope of his eventual empire when he opened his store in Arkansas. Somewhere along the line, however, he discovered that his style of management could be duplicated and that was the turning point.

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Whether you can develop an enterprise the size of Walmart or not, the pattern is the same. You, like Walton was a few billion dollars ago, have been in the business a while and it is time to do something different that will help you achieve a level of freedom. As you look at your growth strategy, what are the possibilities?

Can you duplicate what you are doing in other locations? This is the most typical expansion model, but it may or may not be the most profitable path for you. If you do this, you will need to have the systems down pat.

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Can you expand what you are doing and develop a whole new set of customers? For example, having a business where customers leave their cars and frequently do not sit and wait for them could open the opportunity to add a line of services made possible with a longer leave-time for the car. This might include washing, waxing or detailing, for example.

Or, if your location is close enough to the airport, offer a series of “while you are gone” services that include keeping the car safe while the owner is away. Allowing the cost of your services to offset the cost of paid parking, might generate more sales – and goodwill.

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With expanded profit centers, the need for written systems is increasingly necessary. Growth without systems can be very expensive.

New Eyes

Digging out that old business plan and looking at it with new eyes may clear a bit of the insanity with which you are living in keeping your business going today. Reviewing the plan with an experienced entrepreneurial mindset, thinking strategically, you are likely to see your business as potentially much larger than you ever have before.

Over the years I have seen dozens of business plan software systems. If you do not have a plan to dig out and think it might be a good time to put one together, I will simply suggest that the program put together by Burke Franklin at Jian Software is economical and very easy to use. To judge for yourself, visit rogermcmanus.com/business-plan.

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Article courtesy of Tire Review.

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