Why write a business plan? You are going into business with your brother-in-law, you both know exactly what you're going to do, you get along really well together, and you don't have to borrow any money from the bank; so why go to all the trouble of writing a business plan?

Successful businesses have been started without the formality of a business plan and you may become one of them, but don't count on it. A business plan is designed to help you become successful, and is not constructed as an exercise for the banker or something to enrich an accountant. You need a business plan. Here are the basic three parts any business plan requires.

MARKET PLANNING
It is customary to see beginning entrepreneurs with no formal plan jump from product to product or from service to service in their search for profit. When there is no clear destination in view, fear of losing business prompts the answer, "Of course I can do that," even when doing so is completely different from what you originally envisioned. A marketing analysis or plan will help you select the right merchandise or service to provide to your identified customer, aid you in attracting that customer, and most importantly, will help you stay focused.

The marketing section of your business plan identifies your customer base, outlines the competition you will encounter, identifies the risks involved with entering your selected market, and sets the parameters of pricing, profitability, selling tactics, advertising, promotion, and public relations.

FINANCIAL PLANNING
The financial pressures on a new business are tremendous. Vendors tell you, "Buy our line of merchandise and we'll throw in this new gadget, it will only cost ‘this much’ a month." A financial section can help you stay focused in your spending so you use your limited funds on items that serve the market you identified in your marketing plan. A financial plan will help you resist the lure of a get-rich-quick pitch from a salesperson dedicated to selling you his or her latest product, whether it fits or doesn't fit your market. You can say, "It's not in my business plan for this year."

Your financial plan should consist of a list of start-up requirements, a section showing from where the money is coming for each product or service you offer (cash-flow projection), a 12 month budget, a 5 year potential income statement, a pro-forma balance sheet, a break-even analysis, and a source and use of funds summary. These sound formidable, but a few hours with your accountant can make all of these clear and understandable. Oh yes, and don’t forget how much each of you gets paid, when, and how.

MANAGEMENT PLANNING
You just think you can work with your brother-in-law! Who takes out the trash? Who controls the checkbook? Who buys lunch? Who says, "Yes," to salespeople? Who agrees to a customer request, and then who does the work to make it happen? Can your brother-in-law bring his sister-in-law into the firm? How about his cousin? How about both of them? Who then runs the business? More businesses than you can imagine are broken-up over items even more trivial than these. What makes you think your business will be different?

A management section outlines the duties, responsibilities, and most especially limits of all persons involved. Even if you have a one-person business you need to outline your duties. Getting off the main track is easy, getting back on may be impossible, and business failure could be the end result.

OTHER PLANNING
Each business is different, and each needs a business plan. Yes, you might succeed without a plan . . . just like you might win the multi-million dollar lottery next month. Buy a book, or software, or hire someone; but get a business plan in place before you spend a nickel on anything else. There’s help out there, some of it free. Ask.

(NOTE TO EDITORS: PLEASE INCLUDE THE FOLLOWING.)
Paul Tulenko is a Small Business Success Consultant based in New Mexico. Additional tips and suggestions are available at www.tulenko.com or call (toll-free) 1-866-TULENKO.