What is it and why do you need a business plan?
Efficient planning, with accurate, low cost information, is essential to success in a_ny business. The economic climate for borrowing money and the business climate with regards to strategic planning require that business managers and owners formalize their plans in writing. Veterinarians are no exception.
The tool for capturing planning data is the business plan. Whether you are a solo entrepreneur or a multi-unit corporate entity, a good business plan is important for fulfilling several primary functions: 1) obtaining start-up or additional funding; 2) providing a strategy for the business owners to meet their objectives; and 3) acting as a guide for the business over the period of time for which the plan is written.
The business plan puts together the “how are we going to get there” and “needs” of a business into one tidy document. While it is not a mission statement per se, a business plan is a logical extension from one, and nonconfidential parts of it are commonly included in policies and procedures manuals and references for staff in veterinary hospitals that have them.
Investors or lenders, nowadays, are accumulating more horror stories and becoming increasingly reluctant to advance funds for start-ups or expansions without being convinced that the owners/leaders/managers of a business have thought through their plan carefully and have the skills and expertise to carry it out. Today, you have to give investors solid reasons for putting their money behind you, and the business plan is the place to sell your practice to investors. It essentially shows on paper how your business will be operated, it may include broad categories, such as a description of your business and the macro (economy) and micro (competitive) environment in which it operates; its products or services; its intended areas of growth; its marketing strategy; its current and prospective finances, including all important cash flow projections; its staffing; and its management and operations plans.
The business plan does not need to be professionally prepared or complicated, only complete, applicable, and informative for the reader. A business plan should be customized somewhat for the reader; for example, the information that a bank will be looking for (security and collateral) is very different from the information that a prospective partner/buyer/associate/employee will be looking for (risk assessment, direction, services, area demographics, etc.). Many excellent resource books are available for constructing business plans, and model plans for an industry often provide very valuable information, as they contain specific information to that industry and can be a valuable reference.
Framing the information in a business plan adds credibility and provides first hand data to and ownership of the plan. John Mayes, general manager of CIBC's Professional Program in Ontario, recently claimed that the more effective business plans for veterinarians that he has seen are those where the veterinarian has been involved in the creation and/or, indirectly, in the editing of the plan and has not simply outsourced the whole thing for somebody else to do on their own. Lending institutions will more than likely ask you to validate your plan before they advance you funds; “If they can't defend or don't know what is in their own plan,” stated Mayes, “we aren't building a lot of confidence in them.”
Besides providing a valuable sales tool, externally, the business plan allows you to evaluate and monitor all facets of your business, internally, and to respond to the ever evolving business environment by making adjustments in your strategic direction in the face of challenges in marketing, staffing, services, competitors, managers, and financing. It lends itself to increased efficiency and, particularly in bigger operations, makes sure that everyone is playing to the same tune.
Expect to spend several weeks to several months in writing a plan and in doing numerous revisions. In addition to the numerous literary sources available, assistance can be obtained through other industry members in veterinary medicine, outside consultants, and small business development advice from many lending institutions and organized small business lobbies and groups.
Content and organizational tips will be examined in Part 2.
