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Start with a plan-‘A business plan is the best management tool an owner can have’
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Jake Zander says the most valuable lesson he learned by assembling his business plan is that Great Falls may not be ready to support the kind of business he wants to open.
By BETH BRITTON
Tribune Business Editor
Zander, 22, is one of five Montana State University-Great Falls College of Technology students currently enrolled in the school’s entrepreneurship class, taught by instructor Marilyn Besich. Writing a business plan is the key focus of the class.
A business plan is a thorough description, or outline, of a business, including information about its product or service, marketing plan, financial projections and management.
According to Besich and many business professionals like her, a business plan requires extensive research and is an essential tool for any entrepreneur — especially those just getting started.
"A business plan is a road map," Besich said. The plan forces a writer to examine minute details of his or her business, and it points a business owner in the right direction, she added. And although not all of her students will pursue the idea they have outlined in their plans, Besich said they are learning just how important the planning process is.
And as Zander discovered, a solid business plan — especially the financial section — can help potential owners avoid mistakes. His goal is to own and operate a high-end climbing and outdoor gear store with a large climbing wall.
"It’s an idea I would like to pursue, but I’ve learned that Great Falls may not be the ideal place for my business," said the 1999 graduate of C.M. Russell High School.
But Zander is by no means discouraged — he said the exercise allowed him to test his idea and put the numbers together before jumping into ownership head first, and he may someday pursue the idea elsewhere.
The plan
After meditating on her business idea for several years, Cool Beans Coffee Pub owner Michele Rispens approached the planning process like a full-time job.
"It took me about one and a half months of solid eight-hour days — it’s all I did," she said. "I didn’t wake up one day and say I wanted to do this. It’s been brewing for a long time."
Rispens uses her 80-page plan as a guideline to help her determine where the 3-month-old downtown business is going.
"This is something I’ve wanted to do all my life, and I poured my heart and my soul into that business plan," she said. "It’s like a child — I became that attached to it."
It’s that kind of commitment and work that results in a successful plan, said Suzie David, the director of the Small Business Development Center in Great Falls.
"A business plan is the best management tool that a business owner can have, especially for start-up owners," David said. "A well-thought-out plan forces you to look at different scenarios and situations that can have an impact on your business."
A business plan, David said, should include the following sections:
# Executive Summary: A concise description of the key elements in the plan. The summary should give potential investors an overall picture of the business before they read the entire plan.
# The Business: The history of the business idea, including descriptions of industry trends, the products and services, location and hours.
# The Marketing Plan: A market analysis and strategy, the competition, pricing and sales and the advertising and public relations plan.
# The Management Plan: A description of the management and the personnel involved in the business.
# The Financial Management Plan: A description of the loans and investments needed for inventory, working capital and supplies.
Mistakes
The greatest mistake, David said, is "not doing the research and the planning."
Another mistake, according to Nancy Snow, the local instructor for the NxLevel business training program, is when business owners fail to consider the worst-case scenarios.
"They tend to estimate their sales high and expenses low, and they need to do just the opposite," Snow said. "The business plan is extremely important; it’s the road map of where the business is going and where you want it to go."
Entrepreneurs should put their business mission in writing, hang it on the wall and read it as a way to keep focused on why they are in business, she said.
A business plan, however, is not written solely for business owners. Plans provide vital information to financial institutions and investors, too.
"I require a business plan. They’ve got to have their ducks in a row," said Basin State Bank President Mike Zacher. "You can tell in the first five minutes if they’ve taken the time to put together a business plan."
Basin State Bank, with locations in Stanford and Lewistown, wants to see detailed financial information, including an assessment of potential sales.
People too often have an unrealistic approach to their business, Zacher said, and they need to not only plan how they will start their business, but also how they will exit it if necessary.
Local experience
When Allyson Dimke, owner of Diamonds by Design, and Kathy Q. Jones, owner of Financial Information Systems, opened their businesses, they turned to the NxLevel program to help organize their ideas and get them down on paper.
"I think too many people think running a business will be easier than it is," Dimke said. "You’ve got to get it down on paper, because if it doesn’t work on paper it won’t work in the real world."
Dimke’s 17-page plan took her about three months to write, but the ideas and the research had been floating around in her head for years, she said.
Jones, whose plan won third place in a statewide NxLevel competition three years ago, said the class helped her focus and prepare for the role of business owner.
"The business plan really is a reality check," she said. "Even if you don’t do a formal plan, put something down on paper with the steps to get where you’re going."
Jones is a CPA who works with local businesses, and she said most of those businesses have no formal business plan.
"I think a lot of small businesses grow out of a hobby or a passion, and they think because they love it they can make a living at it," Jones said.
The entrepreneurship class
Zander and his fellow students — Sherri Sweeney of Great Falls, Caroline Cole of Choteau, Monte Schlepp of Big Sandy and Sonny Schlecht of Great Falls — are preparing their plans in anticipation of the 14th annual John Ruffatto Business Plan Competition, which will be held at the University of Montana in May.
Sweeney, 42, is writing a plan for a carpet-cleaning business. She is not convinced that she wants to open such a business, but "I’ll know what to expect if I decide to pursue it," she said.
Cole, 48, recently opened a self-storage business, Milwaukee Road Storage, with her husband and another couple. It was an idea they had had for years, and even though no business plan was written before opening day, Cole said her work now will help the four partners run the best business possible.
Schlepp, 50, may pursue the agriculture power wash his plan outlines. The business would cater to the ag community in northcentral Montana, offering a place for farmers, custom cutters and truckers to wash their equipment.
"It makes you become aware of every aspect of your business," Schlepp said of his business plan. "I think about it all the time and make little changes."
Schlecht, 28, dreams of opening a microbrewery. The Great Falls High School graduate said the idea stems from his appreciation for great beer and the experience he has had making his own beer.
"I was surprised by the amount of detail required in the different sections of the plan," he said.
http://www.greatfallstribune.com/news/stories/20030330/localnews/21975.html
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Step No. 1: Research
Before Joe McKenney wrote the formal business plan for Legends Sports Pub & Grill, he says he researched the sports bar industry and traveled to cities where he could visit with business owners who already run successful operations.
"What I’ve learned is that anytime I seek out the owners, I am able to get the private information I am seeking; everyone likes to talk about their business," McKenney said. "That’s the first step — the research gives you a starting point."
McKenney said once the research was done, including information from potential suppliers and contractors, he set out to write a formal business plan, including details about revenue projections, customer base, product pricing, marketing — the things he said "you need in your business plan before you go forward."
The business plan not only helped McKenney organize his thoughts and ideas, but it also was something he said the bank wanted to see before considering any financing package. And despite the time invested in the plan, McKenney admits it is not perfect.
"Sometimes it’s embarrassing to look back on. The projections were so far off," he said, laughing. "It’s a matter of adjusting the business plan. It’s reviewed and changed; it’s a working document."
A business plan is not set in stone, he added.
"Once you open the doors and customers come in, it’s always different than what you anticipated," he said. "The key is flexibility."
— BETH BRITTON
NOTE: Rep. Joe McKenney, R-Great Falls, owns Legends Sports Pub & Grill, 1121 5th St. S. McKenney, who has owned and operated several businesses during his career, will share his thoughts about various topics throughout the 11-month small business series.
http://www.greatfallstribune.com/news/stories/20030330/localnews/21976.html
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Need help? Check these centers
Small Business Development Centers
There are 10 centers in Montana, including:
Great Falls: Suzie David, 710 1st Ave. N. 453-8834.
Havre: Tracey Jette, 48 2nd Ave. (406) 265-4945.
Helena: Ross Johnson, 1015 Poplar St. (406) 447-1512.
Wolf Point: Jay Boysun, 233 Cascade St. (406) 653-2590.
Service Corps of Retired Executives (SCORE)
The SCORE program offers small business counseling and information on various topics, including business plans.
710 1st Ave. N.
761-4434
Great Falls Area Chamber of Commerce
710 1st Ave. N.
761-4434
http://www.greatfallschamber.org
U.S. Small Business Administration
SBA Montana District Office
(406) 441-1081
The Internet is home to a wealth of business planning information. The following sites are just two of the many sites aimed at entrepreneurs who want information about business plans.
This Web site offers everything from business plan outlines and research tips to sample business plans from various industries.
This site includes links to various business planning resources, examples of business plans and information about business planning tools, including software.
http://www.greatfallstribune.com/news/stories/20030330/localnews/21977.html
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