Sunday, December 17, 2006
If You're Making Money, Do You Need a Business Plan?
From AllBusiness.com *
Tom Sherburne
FounderShred Ready
Auburn, Alabama
Sherburne quickly found that he couldn't take the service concept of the kayaking school and apply it to the manufacturing-based operations of Shred Ready. Cash-flow problems were a recurring issue: During the company's first year of business, Sherburne dipped into his personal checking account more than once to help his fledgling company through rough spots.
So in Shred Ready's second year of operations, Sherburne, despite his doubts about the usefulness of or need for a business plan, sat down and wrote one. The plan helped Sherburne immensely, and he has stuck with it ever since. Sherburne says by putting everything in writing he pays closer attention to the company coffers and doesn't have to worry as much about whether he'll have enough money to purchase supplies or complete production.
With a business plan under his belt, Sherburne doesn't have to fly by the seat of his pants that much these days. By doing the numbers, Sherburne says, he's almost eliminated cash-flow problems. He also says he has a much better grasp of what needs to be done when: "I just feel like I know what's going on now.
Tom Sherburne
FounderShred Ready
Auburn, Alabama
When Tom Sherburne started manufacturing composite kayaking helmets, he didn't think he needed a business plan. His Auburn, Alabama-based helmet business, Shred Ready, began as an offshoot of his kayaking school, the Southern Outdoors Center, which had done just fine without a business plan since opening its doors in the summer of 1996.
When it came to writing a business plan, "I didn't really feel like I knew what I was doing," Sherburne says. "I thought if we were making money and the checkbook was fine, then we didn't need one."
Sherburne quickly found that he couldn't take the service concept of the kayaking school and apply it to the manufacturing-based operations of Shred Ready. Cash-flow problems were a recurring issue: During the company's first year of business, Sherburne dipped into his personal checking account more than once to help his fledgling company through rough spots.
So in Shred Ready's second year of operations, Sherburne, despite his doubts about the usefulness of or need for a business plan, sat down and wrote one. The plan helped Sherburne immensely, and he has stuck with it ever since. Sherburne says by putting everything in writing he pays closer attention to the company coffers and doesn't have to worry as much about whether he'll have enough money to purchase supplies or complete production.
Now Sherburne says he's not 100 percent sure why Shred Ready didn't have a plan from the start. One possibility: numbers. Sherburne has always avoided running the numbers, even when he was finally sitting down to write the plan. "I avoided the budget parts," he says.
"Things are always changing," he says. "That's the really frustrating thing about a business plan." To address the constant change inherent in running a business, Sherburne said he updates Shred Ready's business plan almost on a weekly basis. While he doesn't change the structure or mission of the company, he tweaks the numbers frequently to adjust for things such as late customer payments or unexpected manufacturing delays.
With a business plan under his belt, Sherburne doesn't have to fly by the seat of his pants that much these days. By doing the numbers, Sherburne says, he's almost eliminated cash-flow problems. He also says he has a much better grasp of what needs to be done when: "I just feel like I know what's going on now.
"-- Kevin Casey
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