If you’ve been following this blog and my advice, you’ve done some of the necessary research to start your Business Plan.  But, do you need one?

I’ve written more than my fair share of business plans, and I do believe they are a beneficial exercise. That being said, I NEVER intend to write another one again.

I believe the main benefit of writing a business plan is the fact that it forces you to do your homework. It forces you to think about/define:

• your mission
• your market
• your competitors
• the “opportunity”
• your marketing plan
• how you make money
• how you fund the idea
• the team
• the financials
• your exit strategy

A business plan is also probably a necessary evil if you are seeking outside funding (which is highly unlikely in our current economic environment). 

But, writing a brilliant business plan also takes a LOT of time.  Time spent writing and re-writing, instead of taking the steps to actually launch the business.

So, I’m going to skip this step and instead I am going to write a one page executive summary, with a sentence or two about the above topics. 

My true intent for writing the executive summary is to provide me with focus and clarity of mission.  This will keep me on the straight and narrow when new ideas come up that may be distracting.

I have to be honest, at this point, if the idea is keeping me up at night, this step is more about figuring out what it’s going to cost me to build it, launch it, market it; versus how much money I’m going to make from it.

So, what’s it going to cost?  It’s time to build a cashflow statement.  Again, I usually use Excel or someother spreadsheet application and across the top I list the months/years.  Down the side, I list the monthly expenses and (potential/estimated) revenue streams.  I, then, calculate what my ending cash is. 

Expense Categories might include:

• rent
• salary
• taxes/benefits (if paying salaries)
• recruiting fees
• commissions (on sales/affiliates/joint ventures)
• credit card processing fees (for subscription or product sales)
• travel, meals, entertainment costs
• advertising, promotion costs
• conference, seminar costs
• consulting fees (accountant, attorney, other experts)
• dues/subscriptions
• equipment leases
• insurance
• postage
• repairs & maintenance (cleaning company)
• supplies
• software support
• telephone
• utilities
• capital expenditures (computers and equipment)

Income/Revenue

• Subscription Fees (based on estimated # of subscribers)
• Product Sales (based on estimated # of sales)
• Advertising Revenues
• Consulting Fees 

Lastly, document the assumptions that you use to calculate the revenue.  You may want to run both worst case and best case scenerios.  This is typically easy if you use formulas in your spreadsheet.

I usually do at least one year, just to see how it plays out.  If you are looking for funding, you need to do 5 years. (More about that next post.)