I was sitting around a table with other faculty from a business development center recently and they began to talk about the TV show “Shark Tank”. They asked if I had seen it. Since I don’t have cable (and all the shows they had been talking about prior to that were cable shows, I assumed this was another one.) I explained that I didn’t have cable TV. Then they enlightened me that this show was on broadcast television… on ABC, in fact, on Friday nights.
Based on what they were saying I decided that I had to catch it, even if for only one time. So, I looked it up on the schedule and made sure to watch it.
Only one time and I was hooked.
If you haven’t seen the show, here is the explanation of it from Wikipedia:
Shark Tank is a reality television series that premiered on ABC on August 9, 2009. The show is based on Dragons’ Den, which has been licensed in numerous countries and was derived from a Japanese show, Manê no Tora (Money Tigers). The series stars five “Sharks”–multi-millionaire business tycoons–who hear investment proposals from entrepreneurs and consider whether to invest in the businesses.
What amazed me about the entrepreneurs was how clueless about business they were.
They had a great idea. (At least in their minds it was a great idea.) They had enthusiasm for their idea (a product or a service). They had primed themselves to sell these investors on the potential of their idea.
Every one of these people had started a business around their idea. Some had been trying to move forward for a couple of years. Others had not even gotten to the product manufacturing stage, yet.
Apparently, none of them had a business plan. How do I know? Because these potential investors asked questions that a business plan answers. And when the questions were asked, the entrepreneurs were surprised and didn’t have the answers.
Let’s take a brief look at business plans and why your business should have one. (Bear with me, it won’t be painful. I promise.)
Why should you care about a business plan? Isn’t that just another one of those big, long, boring documents that you have to create if you are trying to get a loan from the bank or if you are a big company and are trying to go public?
It can be a big, long, boring document. But it doesn’t have to be. In fact, for some businesses, it can be a one-page document (albeit with very small type.)
The business plan can be complicated if you have a complicated business. If you have a simple business, it can be quite simple. Additionally, you can start out with a simple business plan and add to it as you go. If you do that, you might end up with a complicated business plan — but it won’t be as painful if you do it that way.
If you are not familiar with a business plan, at it’s core and purpose it is really very simple . The purpose is to get you to answer a series of questions (usually unspoken) about
What your business is
Why you are in business
Why you are qualified to be in that business
Who your customers are (or will be)
How you expect to get customers
Who your competition is
How much you will charge
How much you expect to sell
How much you expect to net
The long term goal for the business (a lifetime of income, build it up and sell it, franchise it, etc.)
The plan can be a sentence (or a short paragraph) that answers each of these questions. Or might take pages to answer each one, depending on your business and how detailed you are willing to be.
Take a look at that list again. Do you know the answers to the questions they ask? If you do, then it is a simple matter to create your business plan. If you don’t, the task will be more challenging. But imagine the challenge you have for your business not knowing those things.
There is more that you could put in a business plan (and you would need to if you have a complicated business.) However, this is more than enough to get started.
If you don’t have a business plan, I strongly encourage you to create one. If you do have one, make sure you review it periodically because things change. (Hint: you are never really through with a business plan… only through for the moment.)
What’s your experience with a business plan been?