Lots of People Start Businesses but the
Best Ones Write Great Term Papers
Volume 12, Number 2
Issue 550
The first week of a new year brings more calls from new clients about starting businesses than any other single week of the year. My theory is that many people make New Year’s resolutions to become self-employed or to start a small business to supplement their existing full-time job. Some of the calls relate to businesses that have already been started without obtaining the proper legal and accounting advice first. I think that this latter type of call comes from a New Year’s resolution to get the help that should have been obtained in the first place, before starting a business. If only these people had slowed down and written a business plan. It is easy to start a business but it is very difficult to start one that will reach the expectations that the owners place on it before they started.
One solution to make sure that expectations are reasonable is to write a business plan over a period of weeks or even months. This is, perhaps, the best facilitation exercise to make sure that you have a business that will make you rich--both in money and in relationships. It’s especially important to also do everything possible to start a business that will not make you worse off than before and regretful that you started it.
Starting any business starts with writing a business plan. The plan should be written because it is far more likely that a business will not fail if the owners take the time to write a written plan that goes through multiple versions that are edited by important people (spouses, associates and professionals).
I liken the writing of a business plan to writing a term paper in college that has a thesis statement. For example, something like “William Shakespeare was the most important playwright in Elizabethan England.” If you had chosen this for your most important paper in an advanced English class, you would have written this thesis statement and then spent a few hundred pages setting forth your argument in a very methodical and logical way that was thoroughly researched and supported by hard evidence. You would have met with your professor several times over a number of weeks and would have gone through multiple versions, constantly writing and re-writing along the way. Whole passages and sections might have been added and deleted at various points. New theories and new arguments appeared and disappeared that supported your thesis statement. You would have had your friends and studymates proofread it as you worked obsessively towards the final version over a period of months. You didn’t just wait until the week before it was due to be handed in to start writing the most complex paper of your college career--if you did, you got an “F.”
Starting a business carries great financial and personal risk. About four of every five businesses that are started fail. For a long time I thought that that number was too high, but as I have thought about it over the years and met thousands of entrepreneurs from all across the county, that “four out of five fail” statement is probably about right.
The writing of a business plan in a style and fashion just like you wrote your most important term paper in college greatly increases your chances of success towards reaching the goals that you want to have with your new business. Your legal and accounting advisors are your professors and your spouse is the equivalent of the friend or roommate who kept proofreading over and over. The Internet should be your library of resources.
The business plan should be as thoroughly researched and indexed and footnoted as possible--just like that term paper. Especially important in your business plan should be the assessment of your competition and market share--just like you considered, cited and addressed literary criticism in the Shakespeare paper. Your plan’s target market should be as well defined as the scope of your Shakespeare paper--narrow but broad enough to support your assertions.
The thesis statement of every business plan should be the mission statement of what you desire to accomplish by starting your business. Recently, I edited a business plan that had the mission statement “I intend to start a residential plumbing service and repair (not original construction) company in Midlothian, Virginia that will be unequalled in customer service to customers in northwestern Chesterfield County, Virginia that will, over time, obtain approximately 25% of the total available market share, that will be debt-free at all times and will always provide at least $100,000 per year in direct compensation for the owner.” I provide this statement as an example that should be followed that concisely stated reasonable goals that can be quantified while, at the same time, states passion and enthusiasm towards business start-up. The writer of this plan has his work cut-out to develop a thoroughly-researched plan that supports and defends each word of his thesis statement.
David B. Robinson, CPA
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