How A Business Plan Can Save Entrepreneurs From Costly Mistakes
This spring Nik Seet will teach “Intro to Entrepreneurship (Business Plan Development)” noon to 4 p.m. Fridays, Feb. 20 to May 1 in Room 625 at UNM-LA.
During the class, students will spend time creating a business plan. Many businesses make the mistake of not taking their business plan seriously, but then run into problems. During this interview, Seet explains what a difference a business plan can make.
Marksteiner interviews Seet about the importance of a business plan:
What is the purpose of a business plan?
A business plan is a living, breathing document that allows you to experiment on paper with things that would be too costly to experiment with in real life. You never know exactly how things will play out when you start a business, but you can use your business plan to put your best guess of what you think you’ll need, explore your ideas, and think through all the details of your business before you start spending money.
This written document is a safe, controlled environment that will allow you to get market feedback so you can make changes before you make a mistake. You can test your ideas by showing your business plan to different people, like business leaders, other small business owners and potential customers. The feedback you receive will allow you to see where your holes are. They may be in your marketing, financing, or inventory. You just don’t know what you will need until you write it down.
You won the Rice Business Plan Competition in 2004. What did that do for your startup?
The Rice Business Plan competition is the largest business plan competition in the world. Winning was rocket fuel for Auditude. It completely validated our idea and allowed us to get out there and start talking to customers. The prize money gave us the momentum that we needed to start the company. We received $100,000 in prize money. On top of that, the GOOSE Group (the angel investors who provided the prize money) also invested over $1 million into the company.
The process of writing our business plan helped us communicate. We had a compelling story tell. We went from speaking in techno-babble to truly solving customer problems, and providing them with what they wanted–which is what it’s all about.
Does every entrepreneur need to have a business plan?
In my opinion, yes. It’s much easier to experiment on paper then it is to actually do the work. If you’re expending personal capital and you’re on the wrong track, it’s hard to undo. Also, if you want to attract investors you need a business plan. When you talk to sophisticated investors, they want to know that you have a plan.
What pitfalls do people fall into without a business plan?
Without a plan the resources that it takes to run your business can surprise you. You can be unprepared for legal issues that may come up. Or you can be overwhelmed by your inventory needs. It gives you a chance to think through all the aspects of your business before you’re under the gun.
To enroll in Seet’s Introduction to Entrepreneurship (Business Plan Development), UNM-LA students can sign up through the UNM Lobo network. Non-Students should register in person at UNM-LA Student Services, 4000 University Blvd, or call UNM-LA Student Services at 505.662.0332. Space is limited, so register early.