Business Plans and Budgets – Who Needs Them?

by Jay E. Leisner, Sylvina Consulting

Many people think that the sole purpose of a business plan is to secure outside investment capital. However, this is only one of the two purposes.

A business plan helps demonstrate that you have thought through the business in detail and can show convincingly that you have a viable, profitable model. Before you spend time convincing others, focus on convincing yourself.

Some folks think that budgets are only for big companies. “We’re bootstrapping the business. We don’t have much money and certainly we don’t have the time to create a budget. Our budget is to spend as little as possible to get this business off the ground.”

A budget helps to identify not only the costs but also the items that you may need to purchase (including those for which you decide to defer the purchase). Before you spend any of your money, take the time to identify the items that may consume your money.

Writing a business plan forces you to think about the seemingly endless collection of details about the business you plan to launch. The exercise of writing the business plan is key to the process of working through the plan as you write it. The pain is worth the gain. You’ll see what you know already, and you’ll also see what you have yet to learn.

Having a business plan gives you a concise document to share with those you’ll contact as resources to help launch your business.

If you have your business model reviewed by a qualified attorney, he or she may ask to see your business plan (and any other documents you’ve written about your business, such as your compensation plan).

If you choose to engage a business consultant to help you fine tune your business model, having a business plan will save you money in reducing the amount of time the consultant will need to spend to understand your business model.

When the time arrives to make decisions with respect to software, your software company will appreciate reading your business plan for it will help to identify unique requirements that may need to be addressed with software.

Don’t view your business plan as a static document, once written, that shouldn’t be changed. On the contrary, your business plan should change as you adjust your business model prior to and after the launch of the business.

Preparing a budget is first an exercise in identifying the major items that you’ll need to purchase to launch your business. The process of assigning costs to each budget item comes next.

Deciding when to purchase each item is also important. Some items will need to be created or purchased immediately, such as a compensation plan and hostess program (if you’ll be launching a party plan company).

During the excitement of preparing your business plan, don’t forget about the legal aspects of your business. For a long business life, you’ll want to make certain that both your products and your business opportunity don’t violate any laws, as there are many laws that apply to direct selling companies.

Unless you’re an attorney with experience with this marketing channel, don’t presume that you already know what’s legal. Engaging the services of a qualified attorney is a wise decision before you open your doors for business. While you may have a relationship with a general practice attorney, for your new business we strongly suggest you contact an attorney who has worked with other direct selling/network marketing companies.

Be sure to include the costs of legal representation in your business plan.

Other items, like software, sometimes can be delayed until the business is larger.

Working with a consultant can give you insights into what’s possible and practical when launching a new company.

Jay Leisner is President of Sylvina Consulting, a business and software consulting firm with more than 22 years of experience working with over 250 direct selling, party plan, and multi level marketing companies.

For more information on Sylvina Consulting or to request a complete information packet including several white paper articles about how to launch a direct selling company, contact Jay Leisner at 503.244.8787 or visit www.sylvina.com