The key to the success of a business is planning, setting goals and tracking progress. An essential part of your business plan is developing a timeline (or even several timelines or milestone charts for each section).
Your start-up timeline lists all the tasks needed to get your business operating and to continue business for the first two years. In part, it includes your research of the direction your business is going to go into and projections for sales, but it also includes an accurate picture of where your business is right now. The temptation when developing your timeline is to offer the most optimistic picture possible, not necessarily the most realistic. Your timeline needs to reflect your capacity to accomplish the timeline. Any thing else is likely to raise red flags with potential investors or creditors.
Your timeline should include:
- Legal procedures – filing papers of incorporation, partnership, etc.
- Finding office or manufacturing space
- Expectations for research and development
- Product development
- Getting all necessary licenses and permits
- Purchase or lease of equipment
- Hiring of personnel
- Purchase of materials
- Start date for marketing activities
- Opening date for business
Another important element in the closing part of the business plan is a contingency plan. Earlier in the business plan you listed your assumptions about the business – expected sales, assumptions about the business climate, competition, costs of supplies and materials, etc.
As we said earlier, of course you begin the business with an optimistic outlook. But, you should consider how your assumptions may affect your timelines, and it’s helpful to develop a contingency plan if your assumptions do not prove to be correct.
Some of the contingency examples you should plan for are:
- What will you do if you don’t reach your sales targets?
- What will you do if you can’t find financing through your selected lenders? What if interest rates increase?
- What will you do if some major event (fire, earthquake, etc.) interrupts your cash flow?
- What will you do if an important employee quits?
It doesn’t matter how thoroughly you plan for your contingencies, it’s always possible (if not probable) that something unexpected may come up. Even with careful planning, there are some incidents that may arise that you couldn’t possible consider (such as September 11th). Don’t agonize over your contingency plans; just try to think of as many possible scenarios and what you would do in those instances.
Because you can’t plan for every scenario, it’s a good idea to review your business plan every six months. This gives you an opportunity to take the pulse of your assumptions – for instance, what if rising gas prices lead you to think that your production might be more expensive? Situations like this can best be addressed twice a year, and then you can begin to consider what changes you may need to make to your plan.
While your business plan is the document you’ll show lenders or venture capitalists, it doesn’t mean that the plan is carved in stone. Keep an eye on your plan and how it needs to change – you’ll find that it evolves just like your business does.