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A Business Plan? Do You Really Need One? The Answer May Surprise You.

3 minutes Read

By Gene Marks

Small business influencer Gene Marks is a guest blogger for CAN Capital. He is a celebrated author, columnist and small business owner

If you’re applying for a loan, particularly if it’s a substantial loan, many providers will want to see a business plan. If you’ve never done one before, you’ll want to get some help (an attorney, a CPA, etc.). That’s because first impressions matter, and a poorly produced business plan that looks unprofessional and has unreasonable assumptions will not be received well. A business plan created for these purposes is more of a formality – it helps a lender get a sense that you actually have a plan, and that your projections are within some realms of possibility. But everyone knows that most plans are unrealistic and usually obsolete within 24 hours of completion. That’s why many lenders don’t even ask for a formal business plan for smaller loans, preferring instead to rely on other data for their due diligence.

But back to the original question: do you need a business plan? Though many lenders and financial services institutions may not require one, the answer is yes. You should have a business plan to help with your short and long term planning. Actually, not just a business plan. Two business plans. That’s what I have. But don’t fret – it’s not as hard as you think.

My business plan isn’t a detailed set of financial statements. There are no budgets. There are no footnotes. I don’t have long narratives, risk assumptions or five-year projections. I just have a simple spreadsheet. Actually, two spreadsheets. One for the quarter, and one for the year. That’s my business plan. And it works well.

My quarterly plan tracks a few metrics that are important to my business. At the end of each quarter, I take note of my cash, open accounts receivables, open payables, backlog of work and chargeable hours for that quarter. I also do a count of clients by the product lines we sell. I log in my current number of Twitter followers and Facebook fans. I also make note of my weight. Yes, my weight.

That’s because my quarterly plan is tracking information about both my business and me. For each of those metrics above, I then estimate/hope/predict what I’d like them to be at the next quarter (hint: cash up, weight down). In fact, everything with the exception of my weight, is slightly increased based on some reasonable assumptions. More importantly, I have a notes section at the bottom of the spreadsheet where I bullet out a few things I want to accomplish that quarter: a company event, the closing of a big, pending deal, an update of my website, the completion of a certain project. I also note personal stuff that I want to accomplish like cleaning out the garage or buying flowers for my wife (that’ll shock her!).

Most importantly, I keep adding columns. I’ve been doing this now for about 5 years and it’s fascinating to look back and see where I was and where I am now. It’s fun to look at what my quarterly “goals” were a few years ago vs. today. And it gives me a psychological lift when I’m feeling down, to at least make note that I’ve progressed a little over time. A business plan means nothing without having a benchmark to compare it to.

I’m pretty disciplined about this. I update the spreadsheet by the end of the first week following a quarter. It takes me about an hour. And then I schedule a task to remind myself to print it out mid-quarter just to check my progress. I don’t beat myself up if I miss the numbers or don’t accomplish a goal. I do my best. My batting average is pretty good. But I’m not perfect. However, it works. It keeps me grounded. It keeps me on track. It makes sure I’m on plan. I don’t forget important things.

And it’s not just quarterly. At the end of the year, I go through the exact same process on another spreadsheet. Same numbers, although this time I’m projecting out where I want to be at the end of the following year. Same goals, except I make loftier ones that I want to accomplish, too – a new employee I want to hire, a product line I want to launch, a capital investment I want to make, a vacation I want to take with my family.

So, no – you don’t need just one business plan. You need two – even if your source for working capital does not require one. A quarterly one and an annual one. But don’t panic. They’re not complicated. They’re just simple spreadsheets. However, if you commit to updating just a few pieces of key data and taking an hour to stop, look at where you’ve been and determine your goals, you’ll find that it makes a big impact on your business. Planning is what successful business owners do. And not for the lenders, but for themselves. All the time.


Photo credit: Manczurov/