Sure, you can be successful without one. But a good plan can make a big difference.
You have an idea,
a passion and a product. You know it will be a success. You do some research and decide to start a business.
Now what?
Conventional wisdom says this is the time to sit down and write a detailed business plan. But what if you don't know how or don't want to take the time? What if you think it won't make any difference?
You would be right--and you would be wrong.
We passionate entrepreneurs are eager to get our companies up and running. Details get in the way when our eye is on the pot of gold at the end of the rainbow. Besides, we hear so many stories of successful companies that started without a firm plan in place.
This column will shine a light on three businesses with annual sales in the $1 million range. Only one of the three companies has a business plan. Yet that third example will illustrate the difference a business plan can make.
Linda Remeschatis, founder of WisconsinMade.com, is an attorney with great pride in the artists and artisans of her home state. Ten years ago, she and a group of friends came up with the idea of promoting products from Wisconsin as part of their then-governor's cross-country motorcycle trip. When it became apparent that they didn't have time to pull it together, everyone but Remeschatis dropped out. Over the next year, Remeschatis and her husband visited artists and food producers all over the state. Convinced she had a good idea, she formed a company with 38 vendors. An early adopter of online technology, she unveiled her internet store in 1999.
Even with her legal background and her husband's skills as a financial planner, the couple did not have a formal business plan, she said. They financed the operation themselves and haven't gone to outside investors. Clearly this approach has been successful, as WisconsinMade.com achieved annual sales in the $1 million range nine years after startup.
Susan Knapp of A Perfect Pear from Napa Valley also used her own money to start her business. Knapp has developed an award-winning line of gourmet food items, all containing pears. She did her research and determined that she had a unique market niche. She had experience in the food industry as a caterer and a cooking school owner, but manufacturing was new to her. She tried three times to create a business plan. She spent a lot of money and never developed a plan that worked for her. Nevertheless, after nine years, her business reached the $1 million-plus range in sales.
Pam Pressel and Kathryn Arbour of Capabilities opened their lifestyle retail store in 2005 after a year of intensive market research. Pressel has owned a home health company, and Arbour has extensive corporate experience in organizational development and change management. Following the advice of Stephen Covey, Pressel and Arbour "began with the end in mind."
They wrote their initial business plan to accommodate expansion financially, technologically and spatially, taking into account the dimensions for their store and warehouse. They continually refined their unique proposition based on other stores in their industry. Though they have rewritten their plan to accommodate changing requirements, they refer back to the original plan frequently--both to keep them moving forward and to benchmark their progress. After only 2½ years, they, too, are in the $1 million-plus range.
Each of these businesses is undeniably successful. Capabilities and WisconsinMade.com were both researched for a year. A Perfect Pear took less time, but it was nearly a year until first shipment.
The difference is the time it has taken each company to reach the magic $1 million number. Investing the time at the earliest stages to plot the opening of your business as well as its future can help move your business ahead more quickly.
By taking into consideration all the areas that comprise a good plan--product development, technology, marketing, staffing and finance needs, along with possible contingencies--it's easier to make decisions as the business evolves. Having definite goals and a plan to attain them can help you reach that pot of gold in record time.
