Starting a venture is all in the details

Entrepreneurs eager to set up a new business would do well to first write a business plan. It could save them time and money in the long run.

"One reason we have so many businesses that fail is because [the owners] don’t have business plans," said Steve Price, assistant district director for economic development for the U.S. Small Business Administration in Utah. "They don’t know what’s expected or when, how much money they’re going to need and when they’ll need it," he said.

By Kathy Gurchiek
The Salt Lake Tribune

http://www.sltrib.com/2004/Jan/01062004/business/126473.asp

Plans help business owners make decisions before problems arise, Price said. "You have alternatives and options open to you."

While plans vary from business to business, even in the same industry, they are tools that help project costs, expenses and cash flow.

"A business plan helps you build flexibility and realism into your passion," and forces you to ask the tough questions, said Anne E. O’Brien, who will teach a course on business-plan writing Jan. 26 at the University of Utah. A business plan is to the point, she said, and outlines:

* the business’ purpose,

* the founders and possibly shareholders,

* the company’s structure — partnership, limited liability corporation, etc.,

* the background of those running the company,

* a market analysis — who will buy the product or service, the expected growth,

* advertising plan,

* financial information — balance sheet, cash flow, profit and loss statement,

* short-term plan — objectives for the first 90 days or six months, for example, and how to reach them,

* exit strategy — Merge? Sell it whole? Close it and sell it off in pieces? Go public?

"It’s an ongoing, breathing document that you’re going to go back and revisit," O’Brien said. It helps the owner think ahead to various scenarios, such as how he or she would deal with a competitor moving in or how a change in the market would affect expenses.

"I would never tell anyone they won’t be successful without a business plan," she said, but it helps identify any components the business is missing that are needed for success.

For example, the owner of a sandwich shop that is doing more catering than lunchtime service will retool the plan to reflect the customer base and how best to capitalize on it through different marketing.

"It trickles down to everything: your marketing strategy, your sales strategy," O’Brien said.

A business plan typically is 20-30 pages written in the third person. It can be overwhelming because it is a comprehensive overview, said Suzane Yoshimura, manager of the Business Information Center (BIC) in Salt Lake City.

BIC works in partnership with the SBA, Zions Bank and Service Corps of Retired Executives (SCORE) to help small businesses get established.

A common mistake is to write in general terms, she said. Instead of saying you have experience managing a previous business, give specifics such as whether you were in charge of inventory, sales or managing employees.

Another common error is to say that your product or service will appeal to everyone.

A sandwich shop on Salt Lake City’s Main Street, for example, likely won’t target customers in Ogden.

Provide the demographics of your target audience. If targeting business customers, will they be commercial-, industrial- or service-oriented?

The market analysis is one of the most important aspects of the plan, Yoshimura said. The Internet is a rich source of statistics — age, gender, ethnicity, income level, physical area you plan to serve — for the population your product or business will target.

A component of market analysis is a survey — informal questions or a written questionnaire — of individuals and surrounding businesses to discover if there is a need for the business you have in mind.

Resources for writing plans are widely available through books, workshops and organizations such as the SBA, BIC, SCORE, Utah Small Business Development Centers and Women’s Business Center.

Below are some resources available to small-business owners looking for help in writing business plans. Books, classes, a trusted adviser and the Internet are also avenues to consider when seeking assistance.

* Business Information Center — Visit the office at 310 South Main St., Salt Lake City, or call 801-746-2269. Its Web site is http://www.utahbic.org/

* Service Corps of Retired Executives (SCORE) — The nationwide organization has five chapters in Utah. Resources include a library of start-up guides and volunteers who may act as writing coaches by appointment. There are 22 SCORE offices in Utah. For more information on an office near you, go to http://www.score.org/ or call the Salt Lake office at 801-746-2269. The Web site also provides templates, including business plan templates for start-up and existing businesses.

* U.S. Small Business Administration — Go to http://search.sba.gov/query.html for more information on writing a business plan and sample plans by type of product or business. Call 801-524-3209 for more information.

* Utah Small Business Development Centers — This network of nine centers in Utah has resources that include sample business plans, counselors, a 14-week business plan course and assistance with market research. A list of the centers throughout Utah and the contact information can be found at http://www.slcc.edu/sbdc/

* Utah State Tax Commission — There are offices in Salt Lake, (1-800-662-4335 or 801-297-2200), Ogden, (801-626-346), Provo (801-374-7070), St. George (435-652-2925) and Cedar City (435-586-2532). The general Web site is http://tax.utah.gov/. For information on the free tax workshops for business owners, call or visit the Web site at http://tax.utah.gov/training/index.html.

* Women’s Business Center — Located at 238 S. Main St., Salt Lake City, the center has staff members available to help with business plans. There are also business plan templates and a library of material. For more information, call 801-328-5051 or go to http://www .saltlakechamber.org.

© Copyright 2004, The Salt Lake Tribune.