Page 33 - Business Plans that Work A Guide for Small Business

24 • Business Plans that Work

these entrepreneurial ventures to earn large profits even if their gross mar-
gins are less than might be experienced in emerging industries.
The size and magnitude of these opportunities draw in professional
equity investors such as venture capitalists. An entrepreneur ends up with
a lower percentage of the equity, but if all goes well, a much higher re-
turn. That being said, you may decide that a high-potential venture isn’t
for you. Your passion may reside in an opportunity that doesn’t have the
large upside discussed earlier. You may not have the skills to manage such
an undertaking. You may be like the vast majority of America’s entrepre-
neurs who are pursuing what is called a “lifestyle” opportunity.
The difference between lifestyle and high-potential ventures is a
function of growth potential. Examples of lifestyle firms would include
single-establishment restaurants, dry cleaners, or self-consultant busi-
nesses. Although lifestyle firms may not make you a billionaire, many
can help you become a millionaire. In fact, owning a small business such
as dry cleaning has generated more millionaires than high-flying Internet
start-ups. Furthermore, many lifestyle entrepreneurs transition their firms
into foundation firms. An example of this might be expanding beyond a
single restaurant to five or more restaurants. The size of the opportunity
has become larger as well as increasing potential returns. Whatever size
of opportunity you wish to pursue is a function of your vision and career
objectives, but if you are interested in a larger opportunity, keep that in
mind from the outset.
Chapter 1 has provided background on entrepreneurship. You are
about to embark on a journey that will have you joining the entrepre-
neurial revolution that is sweeping the country. As you begin the business
planning process, keep in mind your goals, and work to identify oppor-
tunities. The subsequent chapters will go into preplanning and the actual
construction of the business plan in great detail. As you read the chapters,
we will be tracking Dan Hermann and his company, Lazybones. Put your-
self in his position. Do you think he has an opportunity? Would you shape
it the same way he has? Is his planning process giving him the learning he
will need to be successful? Every entrepreneur will reach different conclu-
sions, but the planning process is designed to help you pull together the
information you need to make strong decisions.