Of Loose Threads and Business Plans

When you think all the bases are covered, step back and consider how an outsider might react. Chances are you'll spot some holes

By Karen E. Klein

Q: I am writing an in-depth business plan, including focus-group data, market data, and strategy. But I'm having a tough time finishing it because of the "projected expenditures" section. The key aspects for my business are a solid Web site, machinery for production, fabric, a payroll budget, a utilities budget, an advertising budget, and a company vehicle. Should I have the companies in mind that will provide these services for my business before I tackle the projections portion of my plan? -- R.V., Denver


As you create your projections, you need to document your assumptions and locate your critical suppliers. Be sure to note that you have received confirmation on costs for production materials, and then list alternative suppliers as a part of a contingency plan. This kind of detailed research and documentation will give your plan enormous credibility with potential partners and investors, says Kylon Gustin, of Business Resource Software, which specializes in support for business-plan writers.


  The requirement to line up suppliers in advance obviously depends to a certain extent on their abundance, or otherwise, in each category. For instance, there are myriad Web site designers and hosts available to set up and maintain your site, and they are not geographically sensitive. For that category, you would want to list a general idea of the cost required, but you won't necessarily need to name the specific provider in your plan.

The fabrics, however, are a different issue. "I'm assuming that the fabric is required for production. Its cost, quality, speed of delivery, and availability is very much dependent on the suppliers available," Gustin says. "Your business does not want to be in a situation where you cannot switch to another vendor if necessary."

Find out now which suppliers will be reliable and make a point to include that information in your business plan. If you are a small company, it may be that one supplier will not value your business as much as another. Therefore, it may not be as attentive to your needs as you would wish or require. So make sure that you identify alternative suppliers in your plan as well, to show that you will be able to continue production in case you need additional sources of material in a pinch.

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