148 | HOW TO WRITE A BUSINESS PLAN
The following discussion outlines risks
small business owners typically face. Once
you’ve analyzed these factors, you’ll be
ready to write a summary of the risks that
apply to your own business.
Competition. Most businesses have
competition. How will your business
differ in significant and positive ways from
your competition? If your competition is
strong, don’t minimize that fact, but figure
out ways you will adjust to or use that
strength. For example, if you plan to open
a restaurant next to an extremely popular
one, part of your strategy might be to
cater to the overflow. Another might be to
open on days or evenings when the other
restaurant is closed.
Pioneering. If you anticipate no direct
competition, your business probably
involves selling a new product or service,
or one that is new to your area. How will
you avoid going broke trying to develop a
market?
Cycles and Trends. Many businesses have
cycles of growth and decline often based
on outside factors such as taste, trends, or
technology (discussed in Chapter 3). What
is your forecast of the cycles and trends
in your business? For example, if your
forecast tells you that the new electronic
product you plan to manufacture may
decline in three years when the market
is saturated, can you earn enough money
in the meantime to make the venture
worthwhile?
Slow Times. Every business experiences
ups and downs. Is your business small and
simple enough, or capitalized adequately
enough, to ride out slow times? Or do you
have some other strategy, such as staying
open long hours in the busy season and
closing during times of the year when
business is dead?
Owner’s Expertise. Nobody knows every-
thing. How do you plan to compen sate
for the knowledge you’re short on? For
example, if you’ve never kept a set of
books, you may need to hire a part-time
bookkeeper and an accountant to make
sure the bookkeeping system is adequate.
Or you may need to buy a computer and
an accounting program and devote some
time to mastering your new tools.exAmple:
Doreen Cook wanted to establish her
own restaurant. She had cooked for
other restaurant owners for years and
knew the practical side of putting
good food on the table. However,
she had little patience with financial
matters and was honest enough to
admit she didn’t want to learn how to
keep books. To solve this problem,
she invited George, her CPA, to be her
junior partner, with full responsibility for
financial management. She and George
emphasized this connection in her
business plan and loan package, which
George designed. In addition, George
was invaluable in lining up a list of
potential lenders.