No business plan?

[faithib]

I have a friend who owns her own business but relies mostly on word of mouth to get sales or to get hired.
I am wondering if a business plan would help her expand her business and make more money?
I'm not even sure how to approach her about it but I'd like to help.

[corporatefactors.net]

A marketing plan might help her to make money. The business plan would help her to borrow money LOL

[faithib]

Well, that shows what I know.
LOL
Thanks for pointing that out.

I thought a business plan would be mapping out your goals and where you want your business to go including your marketing possibilities.

[corporatefactors.net]

Well what bothers me is that so many banks, investors, and development loan organizations focus on the business plan almost exclusively. A business plan is a must especially at the start up stage or any other stage in a business for that matter.

However businesses often fail because they took on too much debt, they became overwhelmed by taxes, they got introuble with their commercial landlord, they personally guranteed all their business debt.

Businesses often run out of money in the start up stage and fail because they could not market their way into success.

Many organizations lend on the business plan alone. I don't agree with this. People need to be taught some business basics before they run a business.

If I am given keys to a race car and I go on a track without any experience no written plan is going to keep me alive. I need hands on training with pros or I am certain to crash.

Lenders need to train if they want to get a return on their investment.

[faithib]

Originally Posted by corporatefactors.net

Well what bothers me is that so many banks, investors, and development loan organizations focus on the business plan almost exclusively. A business plan is a must especially at the start up stage or any other stage in a business for that matter.

However businesses often fail because they took on too much debt, they became overwhelmed by taxes, they got introuble with their commercial landlord, they personally guranteed all their business debt.

Businesses often run out of money in the start up stage and fail because they could not market their way into success.

Many organizations lend on the business plan alone. I don't agree with this. People need to be taught some business basics before they run a business.

If I am given keys to a race car and I go on a track without any experience no written plan is going to keep me alive. I need hands on training with pros or I am certain to crash.

Lenders need to train if they want to get a return on their investment.

What you say makes sense but I've never heard of a lender taking on the job of training, I think they expect the person to be responsible for that themselves and too often it never happens.
Thanks for the reply, you are helping me learn.

[ebonyeyez]

just pitch her a few of your ideas then be sure to give her suggestions on HOW to obtain a buisness plan, if you tell her to improve, tell her how so she can get it done.

[puchchu]

Do you have clear plan? If yes then talk to her. If you know someone who has run business with plan and achived success, tell her how plans work.

[Coda1108]

Originally Posted by corporatefactors.net

A marketing plan might help her to make money. The business plan would help her to borrow money LOL

Actually, a marketing is one part of a good business plan.

However, a good business plan will not only contain a marketing plan, but as time goes on the business owner will see what aspects of their business contributes most to their bottom line; and where his or her initial assumptions may have been off. This will yield new opportunities and, in fact help the business make more money.

[bubble]

I have a question following on these lines.

When it comes to predicting profits, how do you do it, what should your predictions be based on ? How can I be sure by the end of year 1 I will be earning a certain amount of money.

[Coda1108]

The first part of the answer is what NOT to do. Don't generalize by saying something like... "Well if I contact X number of people about my business and Y% of them become customers, then I'll make This Much Money."

It really depends on what you're selling. However a guideline is to be honest with yourself about your customer base. Usually there are different categories of customers. For example, a friend of mine makes soy candles. He sells to organizations in bulk for fund-raising and gift purposes; He sells to re-sellers who base their purchases on their own business plans; and he sells directly to consumers.

This information is used to set some basics about each category. How many new customers in each category will be gained in the next month; 3 months; 6 months. At what percentage will there be repeat business (20% of consumers will make another purchase within 9 months; 35% of re-sellers will make another purchase in 6 months, etc.)

Finally, each category will be paying a different price for what they're buying. In the candle example, consumers will be paying more than re-sellers. You need to do a little market research and determine at what price you'll be selling it.

Next, you must predict your expenses, both for the product or service you're providing; then overhead costs.

I tried to put a lot of stuff into this one post. Hope it helps.