Crafting your business plan with LivePlan
An entrepreneurial scenario
One of the most important aspects of starting a business can also be the most tedious: the business plan. We all know it’s important, but we don’t always know where to get started.
Here’s one common scenario: An aspiring entrepreneur goes to the bank to ask for a loan to start her business. The bank asks for a business plan and the entrepreneur hands over a couple of pages with an outline of the business idea and some numbers. The bank official looks it over, scratches her head and tells the entrepreneur to contact her local MO SBTDC and get a full business plan with three years of financial projections together before they do anything with a loan application.
The entrepreneur then approaches her friendly neighborhood MO SBTDC counselor for help writing a professional business plan to convince the bank to approve the loan. It is now up to the MO SBTDC counselor to figure out how to help with the business plan.
But before we jump to the business plan, it’s good practice to review the 5 Cs of credit: Character, capacity, capital, collateral and conditions. Without these in order there is rarely much point in writing a business plan to get a bank loan application. (See No. 3 in this related article, Show me the money.)
The business plan process
And that’s where LivePlan comes in. It’s a cloud-based business plan software that walks entrepreneurs through the entire process. We’ve found that LivePlan provides a great way to help manage this often cumbersome process.
Let’s review the typical steps and common considerations in using this unique system:
You, the aspiring entrepreneur, sit down with a MO SBTDC counselor to look at LivePlan. A couple of things will become apparent very quickly:
- Is getting started on your business plan interesting and exciting? A “No” doesn’t necessarily mean you aren’t serious. Many entrepreneurs feel overwhelmed and simply don’t feel confident in their ability to write, do research, develop a forecast, etc. This is where the MO SBTDC counselor can figure out in what areas you need the most help.
- The cost is $20/month — a pittance for what you’ll get. If you don’t have $20 to invest in getting your idea started, how do you intend to finance your next steps? Bootstrapping is real enough, but it still takes cash on the table to turn an idea into reality. And if you need the plan to apply for a loan, the bank will expect you to have enough cash and collateral to put 10-20 percent down on the loan.
You set up a plan on LivePlan and add the MO SBDTC counselor as a contributor. A couple of things usually happen at this step, notably that you very quickly realize you need input and help. This is an opportunity to evaluate the business’ potential. Keep in mind that private services often charge several thousand dollars to develop a business plan, whereas your MO SBTDC provides services that are often subsidized by the U.S. Small Business Administration and its host partners. Most importantly, the MO SBTDC counselor can do a lot to help with the plan, but the ideas and concepts must come from you.
You put together a phenomenal business plan and review it. This last step usually adds a couple of opportunities for you and the MO SBTDC counselor:
- Some entrepreneurs will write one sentence for each section and think this is all the bank will need. That won’t be good enough! This is where the counselor can demonstrate the importance of understanding and communicating your value proposition, defining target segments and developing a strong marketing plan based on a realistic budget, reach and impact.
- Identification of which business areas you’ll need continued help with from the MO SBTDC. What parts of the business plan did you struggle the most with understanding? How can your MO SBTDC counselor continue to add value in your working relationship?
Some of the major benefits we have found using LivePlan include:
- Easy online collaboration and interaction
- Easy to track progress and impacts
- Each section of the plan can be used to counsel on important areas of business
- Better business plans = happier bankers = better odds of success
- Every commercial lender we’ve shown it to has loved it
If LivePlan sounds like what your business needs to move to the next level, contact your local MO SBTDC today.– Contributed by Jakob Pallesen, Southeast Missouri State University SBTDC, Cape Girardeau. Pallesen is an expert in LivePlan and will be delighted to give you a guided tour. Contact him at email@example.com or 573-651-5156.
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