Should You Write a Business Plan for Your Company?

Posted by admin in Running Your Business, Trade/consumer shows on December 27th, 2009


By Dave DeWitt

The author with Paul McIlhenny at the Tabasco Sauce®plant on Avery Island, Louisiana, 1994

The author with Paul McIlhenny at the Tabasco Sauce® plant on Avery Island, Louisiana, 1994

[Author's Note:  The first part of this article was written a few years ago. Near the end, I have updated it as an example of how even the most carefully conceived and written business plans sometimes don't work the way they are supposed to.]

“Grow or die.”  This phrase is commonly used to describe the development of a business. As expenses of doing business increase, it only makes sense that a company should continue to expand just to keep up. Does it really make sense to stay in business if your company will be the same size five years from now? Only if you are satisfied with the amount of profit you are making–and most business owners are never satisfied. So, how do you grow?

It’s easy to answer with the line “sell more stuff,” but sales increases come with their own challenges. To sell more stuff, you have to manufacture more stuff and market it. This takes an investment of money, time, and effort. And one more thing: to expand, you must have some ideas about how you will accomplish this goal.

I faced all these challenges recently and received some advice from my banker. He told me to write a business plan. I protested that my company had been operating since 1988 and I hadn’t needed a plan except for the one in my head.

“Is you business more complicated now?” he asked.

“Sure is,” I admitted.

“More employees now?”

“Yes.”

“How will you grow your business?”

“I’m not sure.”

“You need to write a business plan,” he insisted. “At the very least, it will give you a firmer grasp of what your company is becoming. At best, it will be your most useful tool in helping you to expand. Think about it: you will have a written plan that explains what your business is, where it came from, and where you want to take it. By adding past and projected financials, you can show it to prospective investors, partners–or even your banker.”

I had never written a business plan before, so I needed an outline. I went to the Internet, did some research, and located a suggested outline for a business plan. So far, so good. Then I started to work on writing the plan and was blindsided by the most obvious question of all: what does my company want to be when it grows up?

In order to answer that question, I had to consult with my partners and employees. In an ideal world, I postulated, where does our company want to be in five years? How do we get there? And another big question came up: do we stray from our core business? For example, our company publishes a magazine and a Web site, and produces events such as trade shows, contests, and seminars, all for the Fiery Foods Industry. Did we want to expand into other areas in the Industry, such as manufacturing or distributing? This was immediately ruled out because we didn’t want to compete with our advertisers and exhibitors. Did we want to expand into, say, producing shows in other industries? After all, in my career as a show producer I have produced custom car shows, truck shows, antique shows, home shows, and even an indoor flea market (my first show, in 1972). I decided that the past was the past, and if we were going to produce additional shows, they would probably have to be food shows. But I knew that we couldn’t have a Fiery Foods Show every month in a different market–the Industry is not large enough to support such a concept, as evidenced by competing shows that have failed or been canceled.

Likewise, in the publication field, could we launch another magazine? Well, I wasn’t about to attempt such a feat in an unfamiliar industry. Can you imagine us publishing Knitting Industry News or Gerbil Lovers Digest? But perhaps there was an allied food industry that lacked a trade publication and we could fill yet another niche. We identified just such an industry but realized what an enormous investment it would take to launch a magazine and show in that field, so that idea became a long-range goal rather than an immediate one. (No, I’m not going to tell you what it is–remember to keep your business plan confidential until a non-disclosure agreement is signed!)

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