A Business Plan that Works

Field Work and Candor

There are a number of good reasons for crafting a first rate business plan. At the top of any list are the requirements that the prospective entrepreneur think things through before any serious money and time are committed and the necessity of presenting something solid and persuasive to family, friends, prospective investors and others who will be expected to back the effort.

Is getting all this information and constructing a business plan hard work? You bet it is. But not nearly as hard as being entranced by common myths about starting a business and finding out about the problems later. I listed a few of these myths in my book Careerpreneurs (pp. 150-151):

· I’m smart, I can just wing it.
· I can do it on a shoestring.
· No sweat, I have a great idea.
· I’ve got nothing better to do.
· Starting a business will help my personal relationships.
· With my experience, starting a business should be easy.
· A bad economy will mean fewer competitors.
· A good economy will ensure success.
· I’m mad as hell and I’m not going to take it anymore.

The formal, written business plan should include many items: an executive summary, the description of the business and its field, the uniqueness of your product or services, identification of the target market and potential competitors, a financial assessment, an assessment of risks and more. But even a business plan that seems to cover the bases can fall short when subjected to critical scrutiny.

Some of the clearest, and sharpest advice on writing a sound business plan, and an excellent introduction to the subject, can be found in the recent Wall Street Journal article by John W. Mullins (The full citation appears at the end of this blog entry.) Anyone planning to go into business would be well advised to read his entire article before getting into the specifics of business plan construction.

The main subject of a good business plan, says Mullins, is not the entrepreneur, the accumulated knowledge and experience of the people who will be running the firm, state-of-the-art or cutting-edge technology or why the product or service is the best--even if it is. The well thought out plan “starts with a clearly defined problem—something that’s really troubling or compelling—supported by evidence.” “If the pain,” the need for the business, “isn’t real . . . [t]here’s no need for a solution.” Who is the target market (who feels the pain)? Where are the customers who need the product or service?

It takes considerable research to define a target market, but the effort is absolutely necessary. The secondary data (market size, trends and the like) must be found and analyzed and cited in the business plan. But beyond this, Mullins says, the prospective entrepreneur needs primary data from interviews or a personal survey to demonstrate the likelihood that customers will buy what the business will offer. The plan must also describe how customers will become aware of the product and the distribution system that will allow them to buy it.

The sources of the expected profits from the business should be examined carefully, Mullins says. “Does the revenue model depend on making a large number of small transactions (think Amazon.com) or a small number of large ones (automobile manufacturing). Do its profit margins depend on high gross margins to cover high product-development costs (think Microsoft), or lower margins to cover slimmer operating costs (Costco)? Is a large investment in development or other fixed assets required (a manufacturing facility, for example)? Is the working capital cycle favorable or unfavorable (do you expect to be paid in advance), or will you have to carry inventory and receivables that can tie up scarce cash (manufacturing and distribution businesses)?” As Mullins states, “Some combinations of these factors are clearly attractive. Others are obviously flawed from the start.”

The business plan should place the background, education and experience of the operating team in the context of the critical success factors typical of the industry. “A business plan that identifies its critical success factors and shows how the team’s expertise and experience are suited to addressing them,” Mullins notes, “is much more likely to attract capital—or at least a second look.”

Finally, in describing the opportunities, candor is important. “Experienced entrepreneurs know better than to assert that everything is wonderful,” Mullins warns: “The facts are that most opportunities are highly uncertain. Most new ventures fail” Mullins advises, the business plan should identify and deal candidly with the fact that while things will probably not go according to the original plan the operating team will be able to cope successfully.

See John W. Mullins, “Why Business Plans Don’t Deliver: The five most common flaws and how to fix them.” The Wall Street Journal, June 22, 2009, R3.

News from the Council for Women Owners

Three News Flashes:

In Need of Short-Term Capital?

According to the National Women's Business Council Newsletter issued on June 16th, if you are in need of a loan you may be interested to know that on June 15, the U.S. Small Business Administration (SBA) launched a new loan program to assist small businesses in need of short-term capital. “The America's Recovery Capital (ARC) Loan Program will provide deferred-payment loans of up to $35,000 available through SBA's 7(a) participating lenders. ARC Loans are interest-free to the borrower, 100% guaranteed by SBA to the lender, and have no fees associated with them.”

Interested in International Markets?

The National Women’s Business Council, is cooperating with the Overseas Private Investment Corporation and the Minority Business Development Agency to promote two “Expanding Horizons workshops,” one on September 24, 2009, in Boston, MA, and the second on October 22, 2009, in St. Louis, MO. Both workshops are geared to obtaining assistance for minority and women-owned small businesses in participating in the global marketplace.


Check out the American Recovery and Reinvestment Act (ARRA) of 2009 for potential tax savings in 2010.

The U. S. Department of Energy website http://www.energy.gov/taxbreaks.htm is constantly updated on the array of tax incentives for consumers and business owners under the new revision of the “American Recovery and Reinvestment Act of 2009 which extended tax incentives originally introduced in the Energy Policy Act of 2005 (EPACT) and amended in the Emergency Economic Stabilization Act of 2008 (P.L. 110-343). Businesses, utilities, and governments are also eligible for tax credits.”

Information and updates at the Department of Energy site on tax credits based on information from ENERGYSTAR.gov and IRS.gov

Preparation for Legal Advice
Dr. Dorothy Perrin Moore

In these days of litigation and advanced search engines, now operated routinely by corporate sponsors to tap in to consumer opinion and product responsiveness, it becomes even more important for the small business owner and entrepreneur to know where to gather the needed information to conduct business in the most efficient way.

Two recent articles have a special meaning to those who share information on the internet and in other ways about their business.

First, I recommend that you become familiar with an article posted in the Small Business Advancement National Center (SBANC) Newsletter Issue 569-2009, entitled “Understanding How Lawyers Operate and Reducing Your Legal Costs.” Under the leadership of Dr. Don Bradley III, the Executive Director of SBANC, information is provided on how lawyers charge for their services and the importance of doing your homework in advance. The recommendations apply to those who serve on boards, whether public or private and manage or own their own companies. While the article suggests that many sites offer advice, a sampling is provided of sites considered to provide excellent preliminary information. The author of the column is careful to caution that these sites are not meant to replace the experienced legal council you will need in conducting business.

Sites listed in the SBANC Newsletter are:

American Law Source Online is a compilation of links to online sources of legal information for the United States.

Findlaw includes basic legal information concerning contracts, employment, and patents.

Internet Legal Resource Group links to over 4,000 Web sites and is an excellent source of legal forms.

American Patent and Trademark Law Center provides access to basic patent and trademark information.

Legal Information Institute provides access to constitutions, codes, court opinions, statutes, enterprise law, ect.

Nolo provides free information and an incredible list of legal workbooks and manuals to assist you.

More Business offers excellent articles offering advice concerning legal, marketing, and technology issues.

The resource book used by SBANC for this newsletter article is posted as: J.D. Ryan and Gail P. Hiduke. Small Business An Entrepreneur's Business Plan: Understanding How Lawyers Operate and Reducing Your Legal Cost, Dryden Press Series in Management, Pages 264-265, 8th Edition.

For those who post material on the internet I also recommend reading “Bloggers, Beware: What You Write Can Get You Sued,” by M.P McQueen, Wall Street Journal, Thursday, May 21, 2009, D1, D2. You will find this article at http://online.wsj.com/article/SB124287328648142113.html

Networks and Networking

The networks of a woman entrepreneur resemble a sphere. She is at the center, the essential core, connecting not only to subordinate managers but also to her employees on the organizational surface. In turn, they link to their neighbors and network to others more distant. The intricate links form a graphic; they are a means of unleashing the energy of all.


I began the network chapter in my book Careerpreneurs (p. 61) with this image for a reason. Networking is not an afterthought, something to be done after more important matters are attended to. It is a way to add value to your business. As Lois Weisberg, the Commissioner of Cultural Affairs for the City of Chicago said, it is the way to forge the links that allow one to stand “at the intersection of different worlds, connecting people, creating opportunities, and spreading ideas.”

There is abundant evidence of the benefits of cultivating value-adding networks. Some begin with the cultivation of everyday relationships with people who are skilled, informed, and rich in resources and connected to others. As Justin Lahart recently noted in a Wall Street Journal article describing innovative companies such as Accio Energy of Ann Arbor, the bright spot in the Michigan’s economy,

“Accio Energy got its start in 2007 based on plans two of the founders [engineers Dawn White and David Carmen] hatched at Zinger man’s Deli, Ann Arbor’s renowned gourmet-food destination.”
“Arco got some of the seed money for the three-person start-up from Mary Campbell, an area venture capitalist who met Ms. White in a running group. Jeffrey Bausch, a former General Electric automotive development manager, is Cacao’s general manager. Ms. White met him while helping shuck corn at an organic produce company that Mr. Bausch’s wife, another former Ford engineer, started and Ms. White helped fund.” (“Ann Arbor and Warren: A Tale of Two Economies,” WSJ May 26, 2009, p. A14)

Such joinings appear to be serendipitous accidents, but they are anything but. It is through networks that a businesswoman can exchange vital information about resources, potential partners, joint relationships and more.

There are four general types. Personal networks are developed on the basis of personal bonds and relationships. Professional networks (the XYZ Business Association) have the advantage of offering renewed energy in your business field. Formal organizational networks (Chamber of Commerce) provide open ways of getting and receiving information. Opportunistic networks (the illustration above) are created when people come together and individually decide there is a payoff in continuing the association.

Because the value-added dimension of network affiliation comes from the quality and level of information exchanged, working to develop contacts with such strategic interest groups as customers, suppliers and investors is important. The beginning can be business roundtables, chambers of commerce, industrial councils and other loosely structured federations of business leaders or affiliations in economic development organizations or, as in the example above, simply mixing with energetic people in a vibrant community.

Researchers commonly; agree that networks are most valuable when one enters them without expecting an immediate benefit. But because time is a precious commodity, not to be easily relinquished, the entrepreneur must continually decide which networks are valuable and worth the investment.

Deciding which networks to cultivate and which to drop can be done by making a personal assessment (Careerpreneurs, pp. 86-87)

Is this network worth my time and energy?
Do I have time to cultivate key relationships in this network?
Can I take the risk of not developing this networking opportunity?
How attractive are the members and the businesses they represent?
What is the network affiliated with that I value?
What are the collective opportunities that I cannot acquire otherwise?
Is there a sense of exchange among members?
If the network contains competitors, what is their impact on my business?
What exciting programs does the network provide that are unavailable elsewhere?
What do I bring to the table?
What do I have to offer in exchange for what I gain?
What is the personal payback to my business and my profession?
Is this network too large or too small to be useful?
Is this the kind of network I need at this stage of my business growth?
Do I create connections with people in trade, professional and social organizations?
With how many people do I discuss business matters?
How much time do I spend developing and maintaining contacts?
Do I reach out beyond personal friends and people I have known for some time?
How frequently do I interact?

Finally, it is important to know the density and diversity of your present networks, meaning how many of the people you know also know each other? If the answer is 50 percent or more, there is too much in-groups activity. You can benefit from expanding your network options and leaving time for the chance meetings and random activities that can generate opportunities.

Lowcountry Women Entrepreneur’s Success Blog
Author: Dr. Dorothy Perrin Moore


Author Biosketch:

Dorothy Perrin Moore is an Emeritus Professor of Business Administration at The Citadel School of Business, where she held the title of Distinguished Professor of Entrepreneurship. She is the author of Careerpreneurs-Lessons from Leading Women Entrepreneurs on Building A Career Without Boundaries, which received the ForeWord Magazine Book-of-the-Year Gold Award in the field of Business. She is the coauthor of Women Entrepreneurs--Moving Beyond the Glass Ceiling, now in its seventh printing, and has published some 68 refereed journal articles, book chapters, proceedings and technical reports, in addition to numerous professional conference presentations and practitioner writings. A former entrepreneur, she received her Ph.D. in Management, Organizational Behavior and Human Resource Management from the Darla Moore School of Business, University of South Carolina. She is a recipient of the Academy of Management, Women in Management Division’s Sage Janet Chusmir Award for outstanding service as mentor, scholar, and role model; a recipient of the Division’s Sage Scholarship Award for outstanding contributions to research on gender in organizations; a Justin G. Longenecker Fellow in the United States Association of Small Business and Entrepreneurship and a recipient of a Certificate of Achievement as the Women in Business Advocate for South Carolina from the Small Business Administration. Her most recent book, coauthored, Island in the Storm, Sullivan’s Island and Hurricane Hugo, earned the Bronze Award in the 2006 ForeWord Magazine Book-of-the-Year awards for regional works. Professor Moore remains actively involved in developing programs and conducting research on women entrepreneurs and has served for the past eight years on the Center for Women Board. In 2010, her chapter on Women as Entrepreneurs and Small Business Owners, will be published by Sage Publications in the volume on Gender and Women’s Leadership. For more information see: http://faculty.citadel.edu/moore/.