Do I Really Need a Business Plan? – Kathleen O’Donnell

Do you really need a business plan to succeed and grow your company? If you are looking for funding or financing, those who invest in your success are going to require it. Even if you don’t need outside financial help, a business plan provides a blueprint for your success, and helps uncover stumbling blocks.

In today’s episode, Kathleen O’Donnell from SCORE shares with us why a business plan is important, the elements of a successful plan, and how you can create one that will work for your business.

Rich: Our next guest has 25 years of experience as an executive coach and business consultant. She has held executive and mid level management positions in fields as diverse as finance, insurance, high tech, healthcare, and education. She has a master’s degree in adult and community education from Indiana University of Pennsylvania. She and her husband have owned a business for 36 years which has enriched her skills as a volunteer SCORE mentor helping entrepreneurs achieve their business dreams. She has been a SCORE volunteer mentor since 2015 and has served the Portland Chamber as vice chair and director of client services. We’re very excited to have with us today Kathleen O’Donnell. Kathleen, welcome to the show.

Kathleen: Thank you so much. It’s great to be here.

Yuri: Oh, it’s a pleasure to have you with us. Kathleen there are SCORE chapters throughout Maine and the U.S. but what exactly is SCORE?

Kathleen: SCORE is a business mentoring organization, that’s the briefest way to say it. In Maine we’re actually the largest mentoring organization for businesses, for entrepreneurs at any stage of their business development. It could be a startup, it could be pre startup, it could be exits at the end of their business life and when they want to sell or close their business.

Yuri: Well, being the biggest sounds very ambitious. Is there a particular reason why we are the biggest in Maine?

Kathleen: Well, it might have to do with the longevity of the SCORE organization. It was started in 1964 by the Small Business Administration and it was done at that time simply to recruit volunteers who, and at that time it was predominantly retirees. But over the decades it has shifted and changed particularly in the last 10 to 15 years. Here at the Portland chapter we have volunteer mentors who are in their twenties, thirties because they want to give back now. They don’t necessarily want to wait until retirement as it used to be in the sixties and seventies. So, that’s a piece of it is it’s been around a very long time, it’s well known it’s an amazing opportunity for people to continue to share their levels of business expertise and the skills that they have acquired through their work.

Rich: Now, what does SCORE stand for though? Or do you guys not even do it? Is it like KFC where they don’t even mention the fact they have fried chicken?

Kathleen: We try not to mention it anymore? Well, the reason is it originally stood for a Service Corps Of Retired Executives and it just doesn’t capture what SCORE is today.

Rich: So it’s just like Kentucky Fried Chicken?

Kathleen: It is.

Rich: All right.

Kathleen: We’re the KFC of business mentoring. How’s that?

Rich: You can use that slogan that’s on us. So how did you get involved with SCORE in the first place?

Kathleen: I started gosh it was quite some time ago when I was in grad school and I took a gerontology course and as a project for that course I started a SCORE chapter in Indiana, Pennsylvania. The closest one was 70 miles away in Pittsburgh and I looked at that community and thought, “Boy, this would be an amazing opportunity to tap into the business resources here in this small college town.” So it took me several months. I learned about SCORE from the national organization and then from visiting the Pittsburgh chapter and got the, probably to start with maybe 10 or 12 volunteers in the town and started offering business mentoring opportunities for the small businesses that were springing up at that time. I thought at that time, “Gosh someday when I have more time in my career I’m going to do this.” So, here I was in 2015 and decided to investigate SCORE and I was amazed at the state of Maine and the professionalism that our SCORE chapters are really run like businesses and I really liked that coming from the business world. So, it’s been a great opportunity.

Rich: You mentioned earlier that SCORE works with businesses at all phases even pre startup so we’ve also spoken with people from the Maine small business development centers. Do you guys, I mean obviously you’re both serving Maine growing businesses is there one, what differentiates the two of you or if I’m a small business is there one that might be more appropriate for me?

Kathleen: Sure, there can be. For example, the client may come to SCORE initially and they might have a technology idea. Maybe it’s for an app, development of an app. And so, we may work with them for a bit in flushing out their business idea. And then at some point what we may do is introduce them to MTI or to MCE Maine, I hate to use all of the alphabet soup that we all do in this so stop me if I need to spell it out, but or Maine Center for Entrepreneurs. I mean there could be another organization that it could be an ideal resource for them. So there’s an enormous amount of collaboration.

Kathleen: Sometimes we continue mentoring the same client jointly or we hand that person off and then the other organization may pick them up and work with them from that point. So, I don’t see it as a choice that an entrepreneur has to make. They either come to SCORE or to one of the other organizations. It’s, I think they’ll find that we share resources and every organization that I have had experience within the four plus years that I’ve been with SCORE really looks toward what’s in the best interest of that client, of that business person. What do they need? And we search through the state to find out what might help them.

Yuri: All right. Well, speaking about helping the entrepreneurs and business owners earlier before we started your show we talked a little bit about the business plans and the importance of business plans. So can you tell our listeners how important and do you feel a business plan is to a growing company?

Kathleen: It’s critical. What they need to do … Because when they started, if sometimes they had a business plan at the start of their business but things change. There may be new directions that they’ve taken. They may have taken on a partner. So there’s things in the growth of a business that have to be readdressed at various times. So coming back to defining the vision that they have at that point in time from then to the next X years whether that could be in some fields. If you can plan one year that makes a lot of sense because of the dynamic change of some of the organizations. In other fields it could be a five year plan.

Kathleen: So, the business plan is a critical document for getting down in black and white what the business intends to be. And also a critical part of it is really the financial projections. So, as any business is growing they’ve got to be able to figure out how successful is this, maybe it’s a new division, maybe it’s a new product that they’re introducing into that. How successful is that going to be? So they have to look at some market research. They’ve got to redo the business plan essentially in order to just feel more comfortable about what the growth opportunities really are.

Yuri: Are there any specific recommendations on when, outside of the elements that you already described, when the, the business owners or entrepreneurs should revisit or revive their business plans?

Kathleen: Gosh Yuri, I don’t think that there’s a necessarily a recipe for that, a model that you have to follow. It’s so individual and that’s what’s particularly powerful if somebody does have a business mentor at any point. They can come back and kick ideas around. They can ask for advice. If somebody came to me and I’d been … I have some clients that I’ve worked with for three and four years. So we may not meet monthly it might be once a quarter. Occasionally there’s somebody that says, “Well let’s do in December so that we can do some, a little bit of strategic planning for the next fiscal year.” So we would do something like that. So it just depends on the individual needs of that business and that business owner to really determine what’s the frequency with which you might need to do something like revamping a business plan.

Rich: Awesome. Thank you. So I’m probably a terrible business owner because I have been running a business for 22 years without any sort of business plan apparently flying by the seat of my pants. And then across the table we have Cody our sound guy who is thinking of his soon to be business as well. Neither of us have business plans. Is it ever too early or too late to create a business plan for your company?

Kathleen: No. There you have it.

Rich: That was a simple answer. So, I guess there’s probably different needs. Somebody like Cody who’s just starting out and me who have been running a business despite my best intentions for years coming at a business plan. What advice might you have about how to get started if you’re just getting started versus maybe if you’ve been doing this for a while and all of the sudden it’s like I’ve got 22 years of experience to pull from but I’ve never actually written anything down formally like in the business plan you seem to be describing?

Kathleen: Well, one of the advantages if you’ve been in business for awhile and it’s been successful is you have a track record, you have some historical information that you can rely on so it makes your financial projections much easier than a clear startup which has either no ideas about what the possibilities are. That’s often the reaction that we get a lot with a startup and that is, “Well am I just picking these numbers out of the air?” And you kind of are at a certain point and yet you can also …

Kathleen: In fact just yesterday two mentors and I were helping a particular client and they are getting, they’re purchasing, they purchased a business but they didn’t purchase the name. So they are starting out with not having that historical positive brand recognition. So we just gave them some recommendations about talking to other people that had had similar food product experience and she said, “Well, a lot of people aren’t going to share that they’ll feel that we’re too competitive.” And we said, “Go outside Maine. Go to Seattle. Call up, Google some other kinds of similar businesses. Give them phone calls.” It is amazing with again the cooperation and collaboration that some people especially other small business people will feel towards a newbie, a startup and they will be willing to share some insights that they may have had.

Rich: Well and one of the recurring themes on this podcast has been the fact that Mainers, Maine business owners seem to be very kind when it comes to other main business owners. People from out of state told us that it’s like, “I’ve never experienced something quite like this where if my oven breaks that the restaurant down the road will be like, ‘Come bake your stuff over here.'” People come and they say, “That doesn’t happen in a lot of the rest of the country.” So I would say that there’s probably a lot of local people who would be willing to help out a competitor as well.

Yuri: Yes, I think there are absolutely. And what we can often do is tap them into some of those areas because of the breadth of businesses that SCORE has worked within Maine over the years. The other thing that we often do too is our mentors are, I think I mentioned that there’s a 170 statewide, and so we also communicate through Slack. We use that platform in order to be able to shoot out a question and say, “Hey, I’ve got a new client who’s trying to get into the field of X, whatever it might be, does anybody else have somebody who could maybe arrange a phone call or a visit and help them out?”

Rich: I’m feeling very un-hip that all of these not always retired executives are using Slack and I have yet to use it for more than three minutes before throwing up my hands so.

Yuri: Kathleen, quick question. You mentioned that there are 170 mentors that are the part of the Maine SCORE or SCORE Maine. So can you tell us a little bit more about the ways these mentors help the businesses and how does SCORE grow Maine businesses?

Kathleen: Sure. That’s obviously one of our key goals is that we want to add to the economic environment in the state of Maine. So, how do we do that? It’s by speaking engagements, it’s getting the word out about SCORE, it’s letting them know that there are free business mentoring services that they can address. We just contact individuals. It’s mostly referral, it’s word of mouth that we get new clients and how we do it is just in an initial online request. So there are some fields that they fill out to give us an idea about what they’re looking for. Then we match the client with the best mentor that we can find.

Kathleen: I’m with the Portland chapter, although we also cover Androscoggin County, York County as well. And if there’s a new area that I don’t have any experience in I might then shoot out word and ask for a co mentor who could join me who’s more of a subject matter expert in this particular field. So together then we may manage the process to help to get this person doing the concrete things they need to do like perhaps a business plan and then the business financial projections. And then the additional help that they need for different aspects like marketing.

Kathleen: So, it might be an eCommerce business and I might not have a lot of experience in that but I can again reach out to the other 169 mentors throughout the state or any of the 10,000 nationwide mentors that are in the national SCORE organization. So, I can send out an email request and just say, “Who has expertise?” So there have been North Carolina clients, I had a Florida client, I’ve had Chicago clients, because another SCORE mentor in one of those locations reached out to be able to ask, “Who else could help me with this particular area?”

Rich: So I want to get back to the business plan piece because you mentioned business plan, you mentioned all these experts that you have and some on the financial side. I recognize that the financial piece is definitely part of a business plan but what else makes up a business plan? If somebody is sitting down today listening to this podcast and they’re like, “I want to write up a business plan for my business,” what are the things they need to consider?

Yuri: You’ve got to be able to the, it’s a pretty structured format that any lending organization or venture capitalist they want to be able to see these very generic sections in a business plan. So there’s an executive summary and that’s always advised to write that last because you’re pulling together, it shouldn’t be more than two type written pages. Then the other sections are company description so that you’re giving an overview of what your company is intended to achieve. What do you intend to do? What do you sell? Who is your target market?

Yuri: Then of course there is a marketing section so you have to go into a lot of detail about what aspects of traditional and what may be more digital marketing. What applies to your field so that it’s going to increase the likelihood> you can’t just say, “Well I’m just going to put an ad in a newspaper.” Because a lender might look at that going, “Well they’re very expensive and what’s the frequency that you’ll run those? And I’m not sure that that’s really going to reach a large enough audience.” Particularly with newspapers declining somewhat or magazines, the physical hard copies of that medium isn’t as prevalent anymore. So, the marketing section really has to have a lot of specific detail.

Yuri: And then of course there’s the just operating plan, management plan. How are you going to be operating? That’s where you spell out what kind of a legal structure will your company have. Are you going to be a partnership? Are you going to be a sole proprietor? Will you be a limited liability company? What about an S Corp? So there’s choices that people have about that and it has to be spelled out in a business plan because they want to know how are you protecting the business.

Yuri: The other pieces of it really are the financial projections. That’s a huge stumbling block for many, many entrepreneurs because it is pretty detailed. Most lending organizations are asking for a minimum of two years of financial projections, and sometimes very commonly three years, and once in a while you may get somebody that wants to see five years. The other thing is that when people get into doing the financial projections they’re often very discouraged to see that in the first year it can show negative cashflow but that’s not terribly unusual. And again lenders will understand that but that’s why they want to look at those subsequent years and what supporting documentation do you have about why the growth will increase and your revenues will exceed your expenses.

Rich: Now I never took out a loan when I was starting my business. I was funded by family, basically free rent and stuff like that. But if I’m understanding you if I’m going to go to a Machais savings bank, or my local bank, or anybody else who may fund my business, they’re expecting to see this business plan and they want some pretty detailed forecasts on what I’m going to do. But again, if we’re just starting out where do those numbers come from because I don’t think we’re just plucking them out of the sky. How can we start to come up with some of the numbers that say the population that may purchase this product is this big in Maine? Or are there resources whether through SCORE or other organizations that can help us with some of that?

Kathleen: Yeah, absolutely. One incredible resource is the Portland public library and that’s not limited just to the Portland area because any of the libraries in the state of Maine can reciprocate with a library card and you can get it instantaneously online but with a library card you can access their amazing database. What SCORE does here in the Portland chapter is almost once a month, occasionally around the holidays it may be every other month, but it’s a one hour workshop that’s free. It’s at the Portland public library and Will Bandoma is the head of that department, the business research department. And so, he leads this one hour workshop on teaching people how to access their extensive database. So they could get census data, they can get thousands of samples of other business plans. So you can just key in if it was a food truck business plan or a bicycle shop business plan you can key that in and you could see some examples of other business plans to help you to get an idea about how to run this.

Yuri: Fascinating. I would never have guessed that the public library can be that kind of resource. So, if you’re listening to this show pull out your library card and make a trip.

Kathleen: Well, and the amazing thing about that is once they have the access to that database it could be 2:00 AM when you’re sitting worrying about the startup of your business or the next growth spurt and you can be accessing their database and working on things at that time. So that’s where, to answer your question Rich is that you can pull a demographic information, specific other business industry trends in that particular field that you’re in to be able to prove to a lender that this is viable, this is legitimate info.

Rich: I didn’t make up these numbers I actually went to the public library and they gave me all this data.

Yuri: Well you know with all the insights that you are sharing with us I’m sure some of our listeners would like to engage with SCORE and have a little bit more in depth conversations surrounding their specific issues or the businesses that they’re trying to grow. So how does the business approach SCORE? How do we get in touch with you?

Kathleen: We certainly, the is a website that anybody can access or even just the national website. And if it’s someone that is interested in finding a mentor they just key in their zip code and then that accesses them to a region in which their zip code applies to.

Yuri: There are only, I believe seven locations in Maine. Do I have to be a resident of one of those locations to gain access to your resources?

Kathleen: No, not at all. As I mentioned I have an Augusta client, I have a Rockland client. In the past I had a Fort Kent client and we did things through video chats and phone. So it can be anywhere. But all they need to do is to spell out their need and that takes them right into just a drop down menu and then there’s an area to just freely write whatever they are hoping to find and what kind of help that they need. So it’s a really easy process. Then we take it from there and we read that information and then try to match them up with a statewide resource or as I mentioned earlier it could be a national resource that could help them to be able to meet their needs

Rich: And flipping it around a little bit because now that I know that people do not need to be retired executives to actually volunteer their time. If someone is interested in contributing, volunteering their own time, first of all what are some of the things you’re looking for in that person and then also do they just go to to start the process or should they reach out to a local chapter? What does that look like?

Kathleen: They could do either. They could certainly just do or volunteer as a mentor is one of the easy menu items right on that website or Or phone, they could phone any one of our local chapters and just express an interest. We do have an application process and we’re looking for people that have some generalist business expertise and or some special subject matter expertise so it can vary. They can then talk with us about what their interests are and how they see themselves being able to share their skills and their levels of expertise. We need people who are great listeners that they are willing to engage others in this mentoring process. Because as I said it needs to be very collaborative. No one mentor can necessarily fulfill all the needs of an entrepreneur because they’re often just so diverse and so varied. So we want people that are interested in giving back in people and in assisting the economic growth in the state of Maine.

Rich: Is there a time commitment? Like you talked about the fact that you have a few different clients and I’m just concerned like for myself if I want to do this I would be happy to sit down with somebody and give them a few hours here and there but I don’t know that I could take on a mentee at this point. Is there a role for somebody with my time constraints right now in SCORE or do you really need to commit to helping specific people all the way through?

Kathleen: No, in fact what you just described is often the description that we have for subject matter experts. So there’s people who say, “Yeah, I would like to.” So we would partner you Rich with someone like me as a lead mentor. And so, that I manage the other pieces of the process and I know that whenever I come to SCORE and I say, “Here’s what I’m interested in.” So I sometimes then can fill in some of the time, additional time that this person might need, do more of the hand holding or holding them to task and having them complete some assignments or commitments. And then we would bring you in. Because we are very respectful of the time that people have who are subject matter experts and are currently fully employed. They can’t necessarily always meet as with the frequency that some clients may have a need for.

Kathleen: So it’s again, it’s an incredible opportunity to be able to give back, to share expertise. And there’s a lot of flexibility. Even some of our lead mentors will say, “You know what? I’m only ever going to take maybe three to five clients just because of my other interests,” or because maybe they consult or they have family commitments, whatever it might be, or they vacation and travel a lot. So, it’s a very flexible arrangement. We’re thrilled to have people that have the interest in helping others and they have a skill and an expertise that is needed by our entrepreneurs in Maine.

Yuri: Well speaking about [inaudible 00:27:22] Kathleen we heard that SCORE Maine just won something. Could you tell us what it is?

Kathleen: Yes. It was the Portland chapter in SCORE Maine that we won the national chapter of the year. There are 300 other chapters across the country and we were absolutely thrilled that little Portland, Maine actually won chapter of the year. So there is this trophy that we have for the whole year that is in the office. It’s almost as tall as I am. I mean it’s amazing.

Rich: That is fantastic. It’s like the Lombardi trophy of business.

Kathleen: It is.

Yuri: Congratulations.

Kathleen: Yeah, it was terrific. And it was generally because of the growth that we have shown, the community commitments, the surveys from clients. We use a net promoter SCORE survey nationally and it’s those results that clients said about the services received through their Portland chapter mentors and it’s also the community engagement. So for an example, we co sponsor a program that’s in existence now for I think we may be starting our fourth year and that’s Focus ME, the ME is capitalized for Maine. This is a networking and support group for female entrepreneurs. So, it’s been something that SCORE has again collaborated with the women’s business center, with new ventures and some other organizations that are looking towards supporting and growing female entrepreneurs in the area. So it’s all of those kinds of factors put together.

Kathleen: And then the volunteer engagement. So, we do surveys every year and it’s about our chapter and what are things that we’re pleased with, what are the areas of need, and growth, and improvement that we might have. And we have scored amazingly high for consistent, the last several consistent years. So it’s client engagement, it’s volunteer engagement, it’s the community engagement that we reach out to, and it was the growth of the number of our mentors as well. We added 24 new mentors in that year which we have over 70 just in the Portland chapter alone.

Rich: Outstanding. Well congratulations. That’s awesome.

Kathleen: Thank you.

Rich: Kathleen, if you could change one thing to improve the business ecosystem in the state of Maine what would it be?

Kathleen: Well, I think I could speak for the Portland chapter in some ways and in my chatting with our chapter chair Nancy Strone who’s been an amazing leader for our chapter we talked about the fact that what would be potentially beneficial, and this is very pie in the sky, but if the resources that are available to business people and small businesses in the state of Maine if they were physically located at least in the Portland area all in one location wouldn’t that be amazing? Because of the ease of collaboration and connection.

Kathleen: And I could take my client and run down the hall and say, “Rich has some time in between his clients and he can provide some input for you. He’s offered to share his subject matter expertise.” So if there was literally a physical location that all of the resources were centered in because I mean there’s an enormous number of them. And perhaps if Portland worked that out then that could be a model for our other six SCORE chapters throughout the state to look at ways in your communities that you could make it easy for a client to find those resources that they need.

Rich: That’s great advice because there’s definitely amazing amount of resources for Maine business owners and Maine businesses but sometimes it’s the trick of you don’t know where to look.

Kathleen: Right, right. And I will say that’s one of the advantages to SCORE definitely because one of our jobs is to learn about. So we train in our new mentor orientation as well as we bring in speakers to our monthly chapter meetings and we actually do our chapter meetings virtually as well. So, any of our other six centers around the state, any of those mentors can join the Portland chapter. Just because Portland with our size and with the number of businesses gathered in this geographic area we have a lot of easy resources that the Portland chapter can tap into. But our other chapters throughout Maine can also just video in to our meeting to be able to hear those speakers.

Kathleen: So, it’s amazing that the number of resources are available and all because we share information among MCE Maine Center for Entrepreneurs, MTI, Women’s Business Center, CEI and their Start Smart program which is for new Mainers that we share information constantly. So that’s why you’ll often hear about another resource. If one of these small business resources can’t help the client they will refer them to another because they know that there’s a wealth of resources that are available for business people if only they know about them. There’s also documents, there’s a mountain of materials that we keep at any of our SCORE chapters about resources in Maine for small businesses so they can easily access that information just by contacting us and visiting any of our sites.

Yuri: So speaking about visiting and contacting where where would you recommend our listeners to go to to connect with you with SCORE or any other chapters?

Kathleen: I would say that that’s going to have telephone numbers, that’s going to have resource information on it, that’s going to have certainly the request for a mentor. So that’s the best place probably to go. And then they could phone us which will be right on the website, the number for the different locations. That’s again, because we’re a a fairly big state and of course a rural state when you get away from the coast. So then, an arrangement can be made to meet with any mentor and be able to talk about what their needs are and then what possible referrals could be made or what services the SCORE mentor could literally provide.

Rich: Awesome. Kathleen O’Donnell thank you so much for coming by today. This has been great. Learned a lot about business plans and SCORE so I appreciate your time.

Kathleen: Thank you so much. It’s great to have an opportunity to be able to get the word out about SCORE.

Yuri: Thank you for coming.