035: Peter Mehit – You Need a Business Plan

Peter Mehit is the co-author of Killer Business Plan, and owner of Custom Business Planning and Solutions. Helping small business owners since 2004, he’s written over 500 business plans.

Peter has raised over $138 million dollars for his clients.  Peter tells us why a Business Plan is necessary.
The Killer Business Plan White Paper

What are the three times that a person needs a business plan?

•  When you’re going to start. If it’s a bad idea to begin with, you really shouldn’t even start.
• If your market is changing, or you’re going to expand your business.
• When you’re getting ready to exit – sell, leave it to kids, shut it down, etc. you need to figure out how to do it most cost-effectively. Getting a business broker and hoping for the best doesn’t work. do this 5 years before you want to get out.

What are the ways you can get a plan done?

• Write it yourself.
• Use software.
• Get coaching.
• Have someone ghostwrite it.

What are some important things you need to do when creating a business plan?

• Financial modeling. Forecasts need to be clear and need to make sense because anyone who might invest in you wants to know how they’re going to get their money back. Numbers make sense.
• Identifying your customer. If you say you can sell to everybody, or to anybody, you’ll actually sell to nobody. Social media has changed the game. You need to understand who exactly you’re selling to.
• Executive summary. Keep it brief, one or two pages, but make it excellent, it’s the hook that gets people to read your entire plan.

Do you have to create a formal business plan?

• No! You can use a spiral notebook, 1,000 sticky notes, whatever, as long as you’ve put thought into it. The most important thing to do is to visualize your business 1 year later, and 5 years later.
• Don’t just plan for the wedding day. Plan for the marriage.

 Why don’t more people write business plans?

• There is a cult of entrepreneurship that has emerged. Chase and Goldman are running ads about startups, but people don’t seem to realize that running a business is not an event, it’s a process. Schools aren’t helping prepare people, either, and we aren’t teaching our kids about money, credit, or accounting, because it’s “boring.”
• Rumsfeld summed it up nicely; there are known knowns, known unknowns, unknown unknowns. A lot of people just don’t know what they need to know about running a small business.

Here are some final thoughts from Peter:

“Ask for advice! Business owners are lonely people, ask them! Did you make a mistake? What did you do to get out of it? Commit to learn what you need to learn.”