Should You Have a Business Plan?

When I founded my private practice a decade ago, I tapped the wise counsel of my local Small Business Development Center in Burlington, VT. I’d managed million dollar budgets as a college dean but had never put together financials for a small business. I’d chaired strategic planning committees but had never written a formal business plan. I was a self-starter but had never worked solo in a small business. The SBDC’s services were free (and still are) and it was one of the best choices of my startup period.

The SBDC director gave me two pieces of advice that I still stand by today. The first was to write a business plan. Now, writing a business plan was a daunting notion for me at the time, because I’d never done one before and couldn’t completely comprehend why some of the material in a typical business plan was necessary for my venture. But the SBDC director was right and the process proved to be one of the most valuable activities of my first months in business.

Here’s why I recommend that all new ADR business owners write a business plan (and existing owners if you’re not yet having the success you want), even if you aren’t seeking financial support from a bank or other entity:

• The act of writing a plan will force you to think methodically through critical aspects of your ADR business and create a foundation for all your other activities.
• The act of creating a plan will give you written language you can use later for marketing and other efforts.
• The act of completing the financial components of your plan will not only teach you the basics of business accounting, but will guide you through the process of determining your likely billable hours and your fees.
• The act of writing a plan will require you to research your competition and identify where there are holes in the market—holes you may be interested in filling.

I learned in the process that writing a formal plan didn’t need to mirror everything the books told me to include. The sections most useful to me, then and now, have been:

• Vision and mission: Why am I doing this? What community needs will the business meet and how do I know that?
• Goals: Why am I choosing to be in business? How will I know I’m successful? What are my short-term and long-term success goals?
• Support: In what business ownership areas do I need support and resources to be successful (financial, technical, strategic, etc.)?
• Services: What specific services will I offer and how do I describe them? How do I know there’s both a need for and interest in those services?
• Competition: Who are my three primary competitors and what are their strengths and weaknesses? How will I differentiate myself from them? What are my business strengths and weaknesses as compared to my competitors? What does my competition charge for services?
• Markets: What are the characteristics of my target markets? Size and location? How will members of my target markets learn about and buy my services?
• Marketing and promotion: How will I promote my services? How will I use print, audio and digital media most effectively? What will those efforts cost in terms of financial outlay and my time?
• Financials: What are my proposed fees and how do I know they’re in the market range and sustainable for my business? What are my overhead expenses? What are my financial resources for backup during the startup phases of my business? How many monthly billable hours do I need to cover expenses and earn my desired income?

I update my business and marketing plan annually and believe strongly that this methodical and reflective look at my business has made the difference between scraping by and having a thriving, full-time ADR practice.

I recommend you get in touch with your own SBDC if you’ve never run a successful small business before. To find the center closest to you, visit the SBDC website.

In the next section I’ll discuss the other piece of sage advice the SBDC director offered my 10 years ago. I follow that marketing advice to this day and attribute my ADR business success in large part to it.

Copyright © 2006-2007 by Tammy Lenski. All rights reserved.