UlTImATE SUccESS GUIdEthat you will need to complete the different parts of the plan. But the
contribution it can make to your success can be decisive.
Inc. magazine reported on study of 100 start-ups a few years ago. Fifty
of these new businesses had created detailed business plans before they
began. Fifty of them had started on the back of an envelope or with little
more than an idea in the mind of the entrepreneur.
After five years, they returned to interview the business founders and
evaluate the results. They found that most of the companies that had
started without a business plan had gone bankrupt, ruining the founders
and usually their families and friends in the process.
On the other hand, virtually all of the companies that had started with
a written business plan were flourishing. Many of the company owners
made up complete business plans again every year, sometimes spending
several weeks per year putting them together.
PlAnnIng ReveAls the PItFAllsBut here was the most important point. They asked the company found-
ers how important the business plans had been in actually running their
businesses on a day-to-day basis. The answer they received was surpris-
ing. Almost all the successful entrepreneurs said that once the business
plan was complete, it was usually put in a drawer and hardly referred to
again throughout the year. They said that it was the exercise of thinking
through the ingredients of the business plan prior to starting work that
was more important than anything else.
By creating a business plan, you are forced to think honestly and objec-
tively about every part of the business before you begin. The business
plan requires that you project sales and revenues, and then back up your
projections with research and analysis. It forces you to think through all
revenue and expense estimates for the year, and determine if they are
realistic and achievable. The business plan will end up saving you an
enormous amount of time and energy in executing it. It will do more to
guarantee your success than any other investment of time you can make.
Time is money, but money is time as well. If you have to work for five
years to assemble $20,000 to invest in your business, that $20,000 rep-
resents five years of your life. You must invest this piece of your life
very carefully, and a business plan enables you to do it.