Why to Avoid a Stong Business Foundation
By: NOAH MARCONI

Have you ever heard of a business having to increase revenue within 3 months or risk closing?

The reason is generally the same: revenue is too low and cannot cover the cost of staying in business.

A small startup that religiously follows a business plan, with success dependant on $1K+ or millions+ in revenue, is often doomed from the start. Basing success on one outcome means that one mishap can spell disaster.

The Value of a Plan

A business plan is a vital element for success in any small business. The plan can help to budget sufficient start up capital and can identify obstacles in advance. Finding an investor who will fund a business without having a properly developed plan would be nearly impossible.

A well planned business model gives business owners the confidence to invest their time and resources in their startup, while providing a blueprint to keep them on track.

Try finding an expert who will recommend not having a business plan; chances are good that they don't exist.

The Bad News

Once the business plan is complete, the real work begins.

Unfortunately, many business plans rely on assumptions, and all business plans rely on some form of prediction. Whether it's estimating operating costs or initial market share, business plans are set up as a guide for success.

The moment a business plan is put into motion, its assumptions and predictions are put to the test. Failure comes quickly when the plan is not flexible.

For example, buying a downtown property will surely help increase retail sales over a remote location out of town. On the other hand, locking a business into a high priced mortgage, without knowing what the actual sales volume will be, can put the business in a difficult situation.

Finding out the hard way, that the assumptions and predictions will not come to fruition, is cause for immediate planning revisions.

The Silver Lining

Adapting the plan for the real world will put a business ahead in an instant. Starting the plan with a loose foundation, or a contingency/exit strategy incase assumptions prove false, makes success rewarding and losses insignificant.

The best way to do this is through a small scale test. Why start an offsite daycare facility when an in-home operation can quickly prove, or disprove, the business plan before real money is at stake? Why open up a restaurant when a small booth at a local festival generates poor sales?

Online business models also offer the flexibility to start any professional firm, without the cost of renting office space. If the company grows, the web based operation can be abandoned for a brick and mortar model or it can continue to serve as a cash generator for future projects.

Aim for the Stars/Plan to Get There

A loose business foundation provides startups with the room needed to properly adapt to every situation that comes their way. Business owners should put their time, effort, and money into a business and work to make it profitable. Investing in one outcome only is not a recipe for success.

Business expenses serve one purpose; to generate revenue. If an expense will not generate immediate revenue, do not invest in it until a) there is money to spare or b) the expense will generate revenue.

There are many ways to get started, and even more ways to succeed. A business needs to be flexible enough to adapt to whichever model suits them best, at each stage of their growth.

Noah Marconi, Director of Business Development, Upright Business Services (http://www.uprightservices.com/). Noah specializes in the field of small business planning and consulting and helps small business owners focus their energies in areas that have the largest impact. Noah says "business owners need to be experts in their business however; business owners do not need to be an expert in every facet of their operation". Visit Upright Business Services for small business planning and advice.

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