Every good business starts with a plan

Artist Kathleen Meade of Freeport had a great idea for her own business. She had been teaching art for 20 years in a variety of settings like the Maine College of Art and Casco Bay YMCA. It was now time to open her own art school and to fill what she determined was an unmet need.

Her school would accommodate vacationers — 4.2 million visit Freeport each year — whose children wanted to drop into a class for a day or two while their parents did other things like shop or sail. Kathleen noticed that visitors sometimes paid an entire week's fee just to have their youngsters attend a course she was teaching elsewhere for only one day. In her new school, students could sign up for anything from a single day to multiple weeks.

"The idea had been jelling but suddenly it had to happen," says Meade about the recent and quick launch of her business, due to the availability of a rental space that she didn't want to lose. Within weeks of finding the space, her Maine Art Workshop opened on School Street in Freeport.

Now, Meade knows she needs to backtrack quickly. With 20 years of experience teaching in a variety of settings, Meade has considerable knowledge of her market but needs to commit that detail to paper for better analysis. She wants a better read on actual operational costs and potential revenues. She wants to determine whether she should pursue a business loan to advance her marketing efforts.

"The most valuable tool for entrepreneurs is the essential business plan," claims Greg Gould, a Maine SBDC certified business counselor. Gould, who recently coordinated the 2004 SBA Student Business Plan Competition at Lewiston High School, suggests "real world" entrepreneurs like Meade can take a lesson from these student competitors on how to tackle the sometimes daunting task of business plan writing.

The competition is noteworthy because preparing Maine students for entrepreneurial careers is of increasing importance. Currently in Maine there are 37,000 small businesses and 100,000 independent workers. A growing consensus recognizes the future well-being of Maine's economy rests not on the backs of large corporations that employ hundreds of people, but on small businesses with one, five, 20 or 100 employees.

That fact has not been lost on Lewiston teacher Wendy Russell, who has taught a course in entrepreneurship for the past three years and whose students participated in the SBA Business Plan Competition. Writing a business plan is at the core of Russell's course, and her students spend over 70 hours doing so. "My philosophy is that you can start a business without a business plan," says Russell, "but if it is going to work, you need something in writing to refer to as a management tool."

Gould agrees. "Writing it down helps you to logically think through each aspect of your business," he says. Acknowledging that the task can seem daunting, Greg suggests the approach that Russell's students took - tackling one piece of the traditional five-part business plan at a time and calling on community resources for help.

Gould directs his clients to www.mainesbdc.org where they click on the "information" button to find a step-by-step guide to preparing a business plan. Russell directs her students to www.sba.gov/me/, where they can find a section called "Startup Kit." Russell also invites people like Maine SBDC's Gould and representatives from the SCORE (retired business owners) to speak to her class. They also conduct research at the SBA's Business Information Center (BIC) at the Department of Labor's Career Center in Lewiston.

Russell uses a book called Entrepreneurship from Southwestern Publishing's Business 2000 series (www.swep.com). And when Jeff Butland, New England Region SBA administrator, presented the business plan competition awards in Lewiston last month, he told Russell about the new www.sba.gov/teens site, designed especially for young entrepreneurs. All of these resources and more are also available to entrepreneurs out in the "real world."

Gould says the business plan is a traditional business tool that has been used for decades because it contains all of the basic elements of operating a business. For example, Russell's students prepare an executive summary, the core plan, market research, three sets of financials and supporting documents including an SBA loan application.

While a business plan is essential to launching a new or managing an existing enterprise, Gould also notes that doing a business plan may show would-be entrepreneurs that they are not ready to go into business.

"We consider that a success, too," says Gould who each year helps dozens of Maine SBDC clients prepare business plans. For example, "Sometimes they find they don't have the market they originally thought they had, or they find they will need much more initial capital than they planned on," he explains.

Gould cautions that careful research is the basis for an effective business plan. He says that while the traditional business plan format has changed little over time, the ability to conduct research has improved greatly thanks to new technologies. However, the basis for much of that research is what's called a standard industrial classification code. Researchers find that at www.naics.com, web site for the North American Industry Classification system. "You've got to be sure that you use the correct code," says Gould in order to retrieve the correct detail when using U.S. Census or Bureau of Labor Statistics information, for example, or many other data bases.

It is that kind of research in which Lewiston High School students were immersed over the past few months. Russell calls the SBA Student Business Plan Competition "a lot of work," explaining that she is "asking students to look at some serious questions in life." In the end, the students were all smiles, proud of the intensive work they completed. Their process involved tackling one piece of the traditional five-part business plan at a time. Then they called on community resources like the Maine SBDC for help. And, finally, they found satisfaction earned at the end of a job well done. All of these are the lessons Gould says these students offer to others.

Katherine Arno is the Director of Training and Communications for the Maine Small Business Development Centers (www.mainesbdc.org) in its Portland center at the University of Southern Maine. Kate owned her own small business in Maine for eight years. Today, aside from working with small business issues at Maine SBDC, she helps her husband with the small business that he has owned in Freeport for 12 years. She can be reached at Karno@maine.edu.

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