Why prepare a business plan?

Q: My partner and I are planning to start our own business in a field in which we are very experienced. We don’t need financing, so why should we spend time preparing a business plan? My father didn’t have a business plan when he successfully started and ran his business many years ago.


A: Starting your own business can be the most rewarding experience of your life or it could become your worst nightmare. Though the overall statistics vary, at a minimum, half of the small businesses fail within the first two years and 80% fail within the first five years.

Why do so many small businesses fail?

Business is risky, especially starting a new one. You may be risking your own, someone else’s, or borrowed money, but, at the very least, you are risking your own time, energy and self-esteem.

Many things have to go right for a business to succeed. You need the right idea, right market, right place, right time, right management and right amount of capital.

A well prepared business plan will help you answer these questions and reduce the risk. The value of a business plan lies in the thought process – not necessarily in the finished document. The disciplined, systematic approach helps you, and your advisors, to think things through thoroughly, to research to ensure all relevant facts are known and correct, and to look at your ideas critically.

So taking prudent steps to prepare an appropriate business plan which increases your chances of success would seem to make good sense.

A business plan does not necessarily guarantee success - you can start up successfully without one and you can fail with a good one. It simply increases your odds of success.

And, of course, business planning does not stop with a successful startup. Our business environment is always changing. The process of keeping your business plan current will provide you with a good decision making tool to deal with new challenges and opportunities when they arise.

Get help in preparing a business plan by attending SCORE educational events and using our free counseling services. Visit the SCORE website, www.scorehouston.org, where you will find training schedules, useful templates, links and other information to help you deal with many business issues including preparing a good business plan.