A Plan Helps a Business Navigate the Unexpected

All businesses have three main resources: money, time and people. Your business plan should account for all three in a way that is meaningful to you as the business operator.

“So many small businesses put together a business plan because the bank says they need one, but it’s not really useful,” said Debra Esparza, a former banking executive and head of the USC Business Expansion Network, a nonprofit project that counsels small businesses.

The business plan bankers want, a four- or five-page financial summary, simply tells them if the company will be able to pay back a loan, Esparza said. Bankers don’t want all the details and tactics about how the business will be run.

But a business owner needs to outline his or her business objectives and how to achieve them. A business plan is the ruler by which business owners measure progress, the sailing plan by which business owners navigate economic trends, industry forces, natural disasters and other variables.

“A business plan should be for you and your management team,” Esparza said. It should address five basic elements:

* Management and organization

* The product or service

* Marketing and distribution

* Operations

* Finances

A plan starts with an executive summary that briefly addresses these points. Although the executive summary comes first in the plan, it is written last, after all the other elements have been created.

Instructions for how to write a business plan are plentiful. Many books and Internet sites contain guidance and outlines on how to fashion the plan. But until you create the basic elements of a business plan, you have nothing to write. This chapter will instruct you on how to acquire the raw materials that make up the elements of a plan.

But why bother to even create one? Many entrepreneurs launch their businesses without a business plan.

“A lot of business owners say they’ve got it all in their head and don’t want to take the time to write it down,” Esparza said. “But it’s difficult to motivate a management team or employees without having it written down.”

A single-person company, such as a consultant or craftsperson, may not need a business plan. But if that business owner wants to expand the business, obtain outside financing or even find others to work with him or her, a plan is needed.

A successful business plan motivates others to be a part of the business, whether as an investor or employee. A plan can indirectly generate customers by forcing the owner to more accurately target and focus on them.

“Every day a business owner has 1,000 competing activities,” Esparza said. “A plan helps prioritize them.”

Without a plan, the unexpected can derail the business. Owners may give themselves tight deadlines yet lack backup plans if something goes wrong. Lost sales, loss of a long-term customer, disgruntled employees and increased costs can result, Esparza said.

With a plan, owners can surmount difficulties because they have allowed for time to deal with unexpected occurrences and still accomplish the same objectives. They have a Plan B if Plan A falls through.

Setting weekly, monthly or quarterly objectives allows owners to focus on business growth and stability. By having a timeline, owners can accomplish long-term objectives and still pay attention to day-to-day operations, accounting for money, time and people in an organized way.

All businesses need to account for these elements, but not necessarily in the same way. Business plans vary accordingly. They are generic in that they address the same basic things, but they stress different elements, according to the type of business or industry.

For example, plans for a manufacturing firm may focus on operations, while a high-tech company’s plan might focus on an innovative or unique technology. A retail business plan might concentrate on distribution or a new retail market.

A good idea before starting to write your business plan is to examine other business plans written for companies in your industry.

A good source is the “Start-Up Business Guide,” published by the Entrepreneur Group. More than 160 types of businesses in different industries are examined in separate, 150-page notebooks. Each book provides details about particular requirements in each category of business, gives a sample business plan and contains an appendix listing associations in each industry category.

Exercise: Look in the “Start-Up Business Guide” for the type of business that interests you and review the business plan. The guides are available at the Small Business Administration’s Business Information Center, 3600 Wilshire Blvd., Suite L-100, Los Angeles or look in a business library in your area.

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The USC Business Expansion Network is at 3375 S. Hoover Blvd., Suite A, Los Angeles, (213) 743-1726.

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Entrepreneurship 101

Chapter 3: HOW TO DEVELOP A BUSINESS PLAN

* Know the Value of a Plan

* Create a Management Team

* Define Your Products or Services

* Develop a Marketing Plan

* Master Operations

* Draft a Financial Plan

The Bottom Line

“Entrepreneurship 101” is a tutorial on how to choose, start, finance, plan and grow a business. The program, written by Times staff writer Vicki Torres, was developed by Debra Esparza, a faculty member at the Entrepreneur PrograM OF USC’s Marshall School of Business. Esparza also heads USC’s Business Expansion Network, a community and economic development project that has counseled more than 5,000 small-business owners in the Los Angeles area over the last six years. BEN provides help with financing, business planning, accounting, marketing and other issues. The tutorial can also be found on the Times’ Small Business Web site at https://www.latimes.com/smallbiz