This is Part 2 in series of posts. If you haven’t read the first part check it out here: Part I: How Did We Get Here?
As I mentioned in my previous article, when we restarted our business we made a decision to be better business owners. To do this, we started from scratch. We went to the Bend Small Business Development Center for advice on the basic steps to re-starting our company. This may seem like it is way too basic but we wanted to start from the beginning and make sure we took each step in its proper order and did things right this time.
One thing that came out of our meeting with our advisor was to use www.liveplan.com to help us create our business plan. We have created business plans before but never really thought they would be useful for our company. We left our meeting feeling somewhat skeptical that a business plan is what we needed because we’ve operated a business before. But we wanted to give it a chance. So we decided to set aside some time to get familiar with it.
There are many other web-based business plan products out there that provide the same services as LivePlan such as Business Plan Pro, EquityNet and BizPlans. We chose LivePlan because it had a good set of features and, as a bonus, we received 6 months free from the Bend Small Business Development Center. How could we lose?
I’m not going over the features of LivePlan one by one in this article. You can get that in many other places. What I want to do is to relate to you how LivePlan has helped us and what we feel we are getting out of using it. With that info maybe you can decide if something like LivePlan is right for your business.
My first reaction was “Oh $%!#, there’s a lot to do for this! And what are we going to get out of it! This feels like a waste of time!”
After getting our account set up in LivePlan we were faced with the first screen. My first reaction was “Oh $%!#, there’s a lot to do for this! And what are we going to get out of it! This feels like a waste of time!” Not what I was hoping for. This first page shows all of the areas of our business plan that we need to create. Each section is basically a fill-in-the-text-area-with-your-content type thing. There wasn’t a lot of direction or helpful steps that we could see initially. So it seemed VERY daunting!
I have a tendency to want to skip over things that I think are either trivial or aren’t going to be useful and wanted to do just that now. My business partner, Lisa, on the other hand, is more patient and also really could see the value in doing this to help get is on the right track from the re-start. So we soldiered on…
With patience, we found that LivePlan has a lot of great information and helpful tips to get you started for each section. They show you examples of how other companies have worded their Executive Summary and Management Team sections (for example) as well as much more. This helped us to begin writing our own content for our company. It wasn’t easy and took a while, and several revisions, to get in place. But the work and patience paid off and we had a great start to our business plan.
Just doing this business plan made us feel like we are creating a real company that we can be proud of and that can compete with any of our competitors.
Using LivePlan, we have a basic business plan and additionally a revenue forecast, ideas of how and when we want to expand, clear views of when we might be having a cash flow problem, etc. All of these tools are things we didn’t have before with our company. Both Lisa and I now feel a lot more confident in our company and where it’s headed. Just doing this business plan made us feel like we are creating a real company that we can be proud of and that can compete with any of our competitors.
Here are 4 examples of tools and information that we now have at our fingertips to help us plan for our company’s future:
- Revenue Forecast – this shows us how much money we will make for each month in 2014 and 2015 as well as projections for 2016 and 2017. It’s a great snapshot of our basic cash flow so we can see if and when we might have a short fall coming. We know when we need to really focus on getting new projects and customers.
- Balance Sheet – a basic and standard balance sheet which shows our assets and liabilities. It breaks things down into basic categories such as Cash, Accounts Receivable, Short and Long Term Debt, and Earnings. Each of these is then broken down into monthly segments to see how each of them changes as time goes on. At the very least, we can use this to see if we will start losing money with our business and when. With this information we can begin to formulate a marketing plan for our company to help make sure we are getting new customers and hiring employees when we need them. We never had anything like this before!
- Benchmarks – we can see how our company stacks up against similar companies in the industry. Are our margins on par with what the rest of our peers are seeing? If not, we might need to change our business model, pricing, or something. This gives us a high level view of how we are doing compared to everyone else.
- Scoreboard – a very nicely organized dashboard with charts and graphs to show how different aspects of our company are performing. It shows Revenue, Expenses, Cash on Hand, Account aging, and much more. This is a great resource to quickly see how things are going. For instance, if you find invoices are taking quite a while to get paid you might want to be more aggressive in pursuing payment or maybe you can offer incentives to get paid sooner.
There is still a lot to LivePlan that we haven’t gotten to but what we’ve done so far has been a great help. I have to say that I’ve changed my mind and can now see how useful a business plan is for any company. Using LivePlan makes it a little easier because it’s an online application and helps show information without having to dig for it or create charts by hand.
LivePlan isn’t free; it costs about $20 per month. We were able to get the first 6 months for free from the Bend Small Business Development Center. That gives us a good long time to try things out and see if we want to continue the service and begin paying $20 per month. Based on how it’s gone so far I think we’ll continue!
The next article in this series will be about using Wave as an accounting tool.