The articles below demonstrate what leading business magazines advise their readers about.

15 Reasons You Need a Business Plan
by Tim Berry

Whether you're just starting out, growing your business or seeking outside help, a well-thought-out business plan is the vehicle you need to get you there.
 
Why do you want a business plan? You already know the obvious reasons, but there are so many other good reasons to create a business plan that many business owners don't know about. So, just for a change, let's take a look at the less obvious reasons first and finish with the ones you probably already know about. Think of this as a late-show top 10, with us building up to the most important reasons you need a business plan.

15. Set specific objectives for managers. Good management requires setting specific objectives and then tracking and following up. I'm surprised how many existing businesses manage without a plan. How do they establish what's supposed to happen? In truth, you're really just taking a short cut and planning in your head--and good for you if you can do it--but as your business grows you want to organize and plan better, and communicate the priorities better. Be strategic. Develop a plan; don't just wing it.

14. Share your strategy, priorities and specific action points with your spouse, partner or significant other. Your business life goes by so quickly: a rush of answering phone calls, putting out fires, etc. Don't the other people in your business life need to know what's supposed to be happening? Don't you want them to know?

13. Deal with displacement. Displacement is probably by far the most important practical business concept you've never heard of. It goes like this: "Whatever you do is something else you don't do." Displacement lives at the heart of all small-business strategy. At least most people have never heard of it.

12. Decide whether or not to rent new space. Rent is a new obligation, usually a fixed cost. Do your growth prospects and plans justify taking on this increased fixed cost? Shouldn't that be in your business plan?

11. Hire new people. This is another new obligation (a fixed cost) that increases your risk. How will new people help your business grow and prosper? What exactly are they supposed to be doing? The rationale for hiring should be in your business plan.

10. Decide whether you need new assets, how many, and whether to buy or lease them. Use your business plan to help decide what's going to happen in the long term, which should be an important input to the classic make vs. buy. How long will this important purchase last in your plan?

9. Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Develop new business alliances. Use your plan to set targets for new alliances, and selected portions of your plan to communicate with those alliances.

7. Deal with professionals. Share selected highlights or your plans with your attorneys and accountants, and, if this is relevant to you, consultants.

6. Sell your business. Usually the business plan is a very important part of selling the business. Help buyers understand what you have, what it's worth and why they want it.

5. Valuation of the business for formal transactions related to divorce, inheritance, estate planning and tax issues. Valuation is the term for establishing how much your business is worth. Usually that takes a business plan, as well as a professional with experience. The plan tells the valuation expert what your business is doing, when, why and how much that will cost and how much it will produce.

4. Create a new business. Use a plan to establish the right steps to starting a new business, including what you need to do, what resources will be required, and what you expect to happen.

3. Seek investment for a business, whether it's a startup or not. Investors need to see a business plan before they decide whether or not to invest. They'll expect the plan to cover all the main points.

2. Back up a business loan application. Like investors, lenders want to see the plan and will expect the plan to cover the main points.

1. Grow your existing business. Establish strategy and allocate resources according to strategic priority. You can find more information about growing your business with a business plan by reading "Existing Companies Need Planning, Too."

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is the president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.

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Hiring a Funding Advisor
By David Worrell  

If you're heading out on the fundraising trail, consider taking a guide along to keep your company on the right path.

Fundraising is not something most business owners do often--maybe only once in a lifetime--so the thought of doing it wrong, getting ripped off, or simply failing can give you heartburn. Fortunately, there are consultants and investment bankers who specialize in planning and executing capital campaigns. And while hiring an outside advisor can be a difficult decision for an entrepreneur who is used to doing things independently and on the cheap, an advisor's expertise can jump-start a process that might otherwise stop you in your tracks.

No Time to Stub Your Toe
There's no stopping Tori Stuart, president and founder of Zoe Foods, a $2 million natural-foods company in Needham Massachusetts. Stuart, 40, is anxious to raise nearly $3 million to fuel growth of about 150 percent in the next 18 to 20 months, but she knows from experience that she needs help with the process. "As a small-company owner, I find raising capital is a big time-sink," Stuart says. "And nobody's going to do my job if I'm raising money." So Stuart is already speaking with investment bankers, and plans to hire out the process rather than let it distract her from driving the company's growth.

Time and attention are probably the main reasons entrepreneurs call on an intermediary when embarking on a fundraising campaign, says investment banker Patrick Vaughn of Triarch Capital Partnersin Charlotte, North Carolina. Triarch works with "small middle-market companies"--those with earnings of $1 million or more, "who are still too small to wrestle with the Wall Street investment banking crowd," says Vaughn.

"It's a significant distraction to [raise money] yourself," says Vaughn. "Once you publish your numbers to a prospective investor, they'll start tracking how you do. That's the wrong time to stub your toe. Having an advisor frees you up to focus on the shop; you need to be firing on all cylinders."

But having an advisor or investment banker on the job doesn't mean you can sit back and wait for a check, Vaughn adds. "You're going to be involved in the process. We'll do legwork and preparation of materials, but [the investors] want to hear what you think."

Who Does What
"I know I have to be involved," echoes Stuart, but she emphasizes that in addition to being a project manager, her ideal intermediary will bring a Rolodex of angel investors and VCs. "I need somebody to help with introductions," she says, "and then there's follow-up- constant outreach to the investors, all the way through the close."

Stuart is fortunate to have team members who can do some of the work that precedes investor introductions and negotiations. That includes putting together a "deal book" and a "data room." A deal book is the document that goes out to investors and explains all aspects of the investment opportunity. For a larger company, a deal book can be hundreds of pages long, while simpler investment opportunities may only take a few pages. The data room is simply a filing cabinet or online folder that holds copies of all the company's key records, from historical accounting statements to insurance policies and records on key personnel.

As all that information comes together, an investment banker or intermediary will help you decide whether the money should come from an equity investment (i.e., the sale of company stock), some kind of loan, or a combination of both. And finally, the intermediary will run the numbers to determine the right stock price or loan amount, and the potential return on investment.

Picking the Right Person
Knowing what help is needed is the first step to finding the right financial go-between. Whether they call themselves advisors, bankers, consultants, finders or intermediaries, each can help plan and execute a typical fundraising process. What differentiates them is whether or not they are licensed to promote the sale of shares of stock in your company to an investor. For help with that task, the law requires you to hire a securities dealer. Individuals and firms that hold a securities trading license will list themselves as an "NASD member," denoting their status in the National Association of Securities Dealers.

There are, of course, situations where you may not need an NASD member. If you're buying or selling an entire business (or a business asset), you may be able to do so through a business broker or corporate finance advisor. Likewise, if you've already identified the potential investor(s), you may want to hire a consultant or valuation expert just to help with negotiations.

"We act only as an advisor; we're not selling securities," says David Tolson, CEO of CapitalValuein Denver. Tolson is a certified valuation expert and advises business owners during negotiations with investors, purchasers, heirs or even the tax man. While consultants like Tolson cannot legally offer securities directly to investors, they can play a vital role on the entrepreneur's team during a transaction. Just as a lawyer is needed to draw up the proper investment documents, an advisor, licensed or not, can be key to pricing and structuring the best deal. And a valuation advisor, which is much less expensive than an investment banker, can provide you with an objective evaluation of the deal.

Ken Katuin, founder of Abbisoft House Plans Inc.in Novato, California, called on Tolson to advise him during negotiations with a buyer for his business. "I tried to negotiate the deal myself," recalls Katuin, 40. "But when they started talking financial details, [Tolson] could discuss those and back it up with the numbers. I didn't have that kind of skill." Katuin adds that having an intermediary helped him stay on good terms with the buyer, with whom he would have to work for some time. "You don't want to look like the bad guy," he says. "Let another party do the tough negotiations."

Since an advisor becomes a trusted member of your team for several months, Tolson says picking the right person for the job can be tricky. "You want a level of experience, but you also want a personality fit. Make sure you enjoy working with them," he advises. "Also, make sure the intermediary understands your objectives, both financial and nonfinancial."

References and Results
Stuart of Zoe Foods is busy looking for the right advisor, and results count. "I want to know their track records," she says. "What other companies have they raised [money] for, how much did they raise and how long did it take?"

Though licensed brokers typically charge from 5 percent to 15 percent of the transaction, Stuart says the expense would be worth it. "I look at the cost of not [hiring someone]," she says. "I'd do all the work, [so] I won't be doing other work, and the business won't continue to grow." If sales at Zoe Foods keep growing 150 percent every two years, the advisor she picks will have plenty to chew on.
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