Much of the recent media attention devoted to business has focused on business failures, reduced tax incentives, inflation, and fierce competition. As they operate in the 1990s with an eye to the 21st century, small businesses do face obstacles. However, they also enjoy unparalleled opportunities for expansion and new ventures.

To seize those opportunities and sidestep the concurrent risks, smart managers and entrepreneurs are using business plans to guide them through the marketplace minefield.

The Best Laid Plan

A good business plan differs from the planning for business that most managers do routinely. A plan for business is often a general outline, created by one person and limited to his area of expertise. The business plan, on the other hand, is a collaborative effort that is supported by quantitative data supplied by all areas of operations. The business plan is a concrete goal-setting and motivating tool for the entire organization.

Preparing a business plan serves several important functions. It helps you to focus on the business as a whole, to "see the big picture." A business plan serves as a roadmap for expansion and change because it addresses primary areas of operations, such as production, marketing, administration, and finances. It also guides a business' direction through built-in controls and reporting procedures.

The Elements of Planning

Planning involves three basic steps. First, determine where you are (describe what business you are in and how you got there). Second, decide where you would like to be (create specific objectives that will require action). Finally, figure out how to get there (plot a course to reach your goals).

Last But Not Least

A strong business plan is both a management tool and sales tool, which dove-tails through the financial projection process. The projections should be the last step in the planning process. Only after gathering the information, setting the objectives, and assessing your needs can the projections be realistically formulated.

Never consider your business plan cast in concrete. Business, your industry and your company are dynamic, constantly changing entities. Continually and systematically update your business plan to take account of changing situations. It can then guide you on the road to success! As John Sculley said when he was chairman of Apple Computer, "The best way to predict the future is to invent it."

Paul A. Caiafa, CPA, MST, is the Tax Partner of Solakian, Caiafa & Company, CPAs in Branford, Conn. He has extensive experience with small businesses and individuals.