A Giant Step Toward a Sure-Footed Start-Up
A Contest for Women Promotes a Vital Task: Writing a Business Plan

By Michael S. Rosenwald
Washington Post Staff Writer
Thursday, February 2, 2006

In the early stages of starting her own business, Jennifer Thorp Hemann had a lot of ideas about how to make it successful. The problem was that she frequently lost the ideas, a predicament caused by a tendency to jot her great thoughts onto scraps of paper.

"I had all these totally random pieces of paper," she said. "I had spreadsheets and Word documents. The ideas were just scattered everywhere."

For her scattered problem there was a focused solution: Buck up, bear down and write a business plan, a suggestion made in an entrepreneur's class she took. A headache, to be sure. A three- or four-month headache, actually. But a necessary headache. A headache that could culminate in dollar signs.

"I finally realized how complicated everything was, and in order to keep all of these moving parts organized, I needed to have a plan that I could actually follow," she said. "It has made me pull together all of my ideas and made me really realize what I needed to do to get this business going."

Now Hemann likes her business plan so much -- she is opening a Rockville franchise of Dream Dinners, where customers can cook 12 dinners in two hours, then take them home to freeze -- that she is entering the third annual StartRight! Women's Business Plan Competition. The contest is organized by Rockville Economic Development Inc. to encourage the careful and successful opening of businesses by women.

The competition has grown from a handful of entries the first year to what organizers predict will be "gobs and gobs" of entries this year -- a reflection, they said, of the entrepreneurial interests of women in the county.

Montgomery County is home to more woman-owned businesses with paid employees than any other county in Maryland, with nearly 4,000 firms employing more than 34,000 people, according to 2002 Census figures. Twenty-one percent of the state's woman-owned businesses are located here. Though the number of firms owned by women in the county is roughly the same as in 1997, economic development officials predict significant gains will be seen in the next count.

"There's no reason why women shouldn't own businesses and create businesses and have a much larger share of the wealth in this county," said Sally Sternbach, executive director of Rockville Economic Development.

The ideas in the contest include a plan for helping families navigate care for elderly loved ones and a home health monitoring business that would alert patients from afar when, say, their blood pressure goes up. The organizers are expecting professional service ideas, Internet ideas, biotech ideas. Lots of ideas.

And the first, most important step for all of the ideas, the very foundation of a successful business, is a successful business plan.

The business plan is a way of testing an idea to make sure that it will make money not just over the long haul, but also enough to pay the bills in the short term, before profitability. It's a way of identifying customers, sizing up competitors' strategies and making plans to deal with inevitable surprises. And just try raising money without one. Your family will give you money without a business plan, the saying goes, but no bank will.

The only problem with writing a business plan, Sternbach said, "is that they don't just fall out of your sleeve." Translation: They are difficult to write. Sternbach said the process should take four to six months, which is why her organization has been offering business plan classes monthly for the past year to help women gear up for the competition.

There's the executive summary, which gives a history of the type of business that's being opened, along with information about the amount of funding needed, the amount already invested and how the money will initially be used. A separate section should then go into more detail about the business structure, the products, how the business idea is different from that of competitors and the overall goals.

A market analysis section should identify likely customers, their demographic makeup and what the market area is, among other considerations that show a mastery of the ins and outs of creating demand and meeting it. Other sections should detail advertising plans, staffing levels and, of course, the most important part, financial data, including cash flow projections and a budget analysis, right down to the monthly cost of office supplies.

The winner of last year's competition -- Susan Bowen, co-owner of Thrive Yoga on Rockville Pike -- recalls noticing something interesting as she began to work on her business plan.

"We knew we had to have a strong plan to raise money," she said. "The more I wrote, the more interested I would get in the business. The more interested I would get in the business, the more research I would do. The more research I would do, the more ideas that would come for the business."

The circle made the business better in the long run. Bowen's storefront studio, which will celebrate its first anniversary next week, already is cash-flow positive -- a testament, Bowen said, to her ability to create a strong plan and to continually refer to it.

"The thing I look at most are the numbers," she said. "Are we keeping costs down? Are we meeting projections?"

But she also looks for broader themes. "Our business model is dependent on people sticking it out" for the long run, she said. "Are we being true to our vision of a high-quality environment? Are we planning the programming we want to plan? Every time we go away from doing what we intended, this keeps us honest."

The deadlines for the contest, which is open to Maryland, District and Virginia businesses, are approaching. The executive summary, along with a $25 application fee, is due tomorrow. Business plans need to be postmarked by Feb. 8. The awards -- which include $5,000 for first place -- will be presented March 10 at the Women in Business Conference and Tradeshow at the Montgomery County Conference Center.

The rewards for the county, Sternbach said, are more long-term. In five years, she said, "I hope this competition is on every calendar of every woman who is thinking about starting a business in this region."