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					    Life Without a
    Business Plan:
Can I Survive Without One

       Dr. Alex White
  Ag. & Applied Economics
       Virginia Tech
     moneyguy@vt.edu
        What is a Business Plan?
• Comprehensive look at your business
  –   Goals
  –   Production
  –   Labor & management
  –   Legal & risk management
  –   Marketing
  –   Financials
  –   Contingency plans
• Helps you think big picture
     Why Prepare a Business Plan?
• Roadmap for your business
   – Where you want to go & how to get there
   – Potential opportunities & problems

• Evaluate the feasibility of a venture
   – Before committing funds
   – Consider the risks beforehand

• Reduces forgetfulness!
• Helps remove emotion
So, I don’t have a Business Plan…
• Can you survive ---        Yep!
• Can you be successful      ---   Yep!
• Is a business plan a necessity   ---   Nope
• Will I be a better manager if
  I have a business plan       ---   Probably
• Can it help me     ---   Yep!
              How Can It Help?
• Helps you
  –   Get organized
  –   See your entire business
  –   Think big picture
  –   Focus on your future
  –   Avoid common problems
  –   Reduce your risk exposure
  –   React quickly
                Big Picture

• Many focus on day-to-day issues
  – Production problems, labor issues
• Tend to forget about “rest of the
  business”
  – Overlook insurance needs
  – Lose touch with your customers
  – Growth
         Focus on Your Future

•   What are your goals for the business?
•   Do you want to expand or contract?
•   Change direction, enterprises, etc.?
•   Next generation?
•   Retirement?
Common Problems?
          Common Problems

• Relations with partners
  – Buy/sell, decision making, responsibilities
• Loss of focus
  – Side ventures
• Not reacting to industry or market trends
  – Too caught up in the day-to-day
             More Problems

• Labor issues
  – Not enough labor, no clear responsibilities
  – No clear labor policy – hiring, firing, rewards
• Gaps/Overlap in responsibilities
• Trouble attracting capital, partners
           Son of Problems

• No marketing plan
  – 4 Ps
• Disconnect with financials
             Let’s Have a Sale!
• Price = $5/unit VC = $3/unit
• Current sales = 25,000 units
  – Gross Margin = $50,000
• To maintain the $50,000 gross margin
  – “$1 off sale” - need sales of 50,000 more units


• Can you really double your sales?
           Son of Problems

• No marketing plan
  – 4 Ps
• Disconnect with financials
• Uncontrolled growth
• No contingency plans
  – “The Dreaded Ds”
             “The Dreaded Ds”
• Disease
• Disability
• Divorce
• Death
• Disaster
• “Dumbness”
So, I don’t have a Business Plan…
• Can you survive ---        Yep!
• Can you be successful      ---   Yep!
• Is a business plan a necessity   ---   Nope
• Will I be a better manager if
  I have a business plan       ---   Probably
• Can it help me     ---   Yep!
        Getting a Business Plan
• Should I pay someone to write a business plan
  for me?
   – Absolutely NOT
• Should I use these “do-it-yourself” plans?
   – Absolutely NOT
• Should I spend some time and do it myself?
   – It sure wouldn’t hurt!
         Where to Go for Help
• Small Business Administration
  – www.SBA.gov
• Local Economic Development Centers
  – aka Small Business Development Centers
• Industry Associations
  – PLANET
• Virginia Cooperative Extension
• My Small Business Mgt. course