In the first of our ‘Small Business Hurdles’ series, we dived into the money matter. Although that’s a pretty big obstacle to leap over, there’s something else that’s just as important.
After you’ve got a concrete business idea and you’ve done the initial market research, the first thing you need to do is create a business plan.
What’s a business plan?
Simply put: “a business plan is a guide – a roadmap for your business that outlines goals, and details how you plan to achieve those goals… At its heart, a business plan is just a plan for how your business is going to work, and how you’re going to make it succeed”.
But why do you need one?
Any and every business needs a plan. If you have one, many small business problems can be prevented, or at least alleviated. Particularly when:
- Applying for a loan
- Presenting to investors
- Strategizing with partners, co-owners, and/or a management team
Don’t assume this is a big formal business plan document. Business planning expert Tim Berry recommends a lean plan at first, just big enough to manage your business, without formal descriptions and research until later, when you need them. He calls that a lean business plan. Then grow it organically as your business grows. And make it a document when you need it to be a document for outsiders.
Then what does it do?
A business plan (BP) details your strategies; defines objectives, milestones, and analytics; assigns roles and responsibilities; outlines financial matters; and much more. Here are some guidelines to help you along:
– PLAN THE PLAN –
i) If you’re completely lost on how to start one, there are tools to show you the way. BP templates, samples, and outlines are all available online. Research and browse through examples to get a good idea of what it entails.
ii) Learn about the different types of plans and see which one aligns with your company. Do you require a standard plan, a startup one, or an internal/operations plan that’s just for your team?
iii) Consider the format:
> A lean plan is in any format that works for your business purpose. Lists, bullet points, whatever. A formal Business Plan can usually be anywhere from 10 to 40 pages. It depends on the type of plan, who it’s aimed for, and what non-text elements it includes.
> Design the lean plan for your use only. For the formal plan, design it for readability – include relevant images, charts, tables, and other graphics; bullet points, numbers, and section headings; use a table of contents and appendices; and have reasonably-sized (and spaced) sentences and paragraphs.
– SELL YOUR STRATEGY –
Time to begin writing! We’ve found a comprehensive and very useful guide on a standard business plan outline.
*Quick tip*: “Build your plan, then organize it.” In other words, write it in whatever order you want, then structure it according to the sequenced sections. Here’s a simplified BP plan framework:
1. Executive Summary
A 1/2-page overview that emphasizes and summarizes key points. It can include a mission statement, main objectives, and the strategy for success.
2. Company Summary
This is all about your company: its visions and aims, its history, and its profile (as well as registration information).
3. Products & Services
Here is where you sell your products and/or services. Describe what you provide, why it’s needed or wanted, and how it’s different. Detail the cost, materials, platforms it uses, etc.
4. Market Analysis Summary
Now explain the industry you’re in, the market profile & trends, your clients/audience, your competitors and how you compare to them, and buying & distribution patterns.
5. Strategy & Implementation Summary
What’s your unique offer and why are you the best? How will you develop & maintain a loyal customer base? Include: value proposition, budgets, marketing program, and sales forecast.
6. Management Summary
Display the organizational structure (e.g. through a flow chart), key management personnel and their backgrounds, team plans, and attach full resumes to the appendix.
7. Financial Plan
A critical section. It should contain: projected profit & loss, cash flow, break-even analysis, and the long-term plan. Add a balance sheet, business ratios, and key financial indicators.
– REVIEWING THE RESULTS –
After you’ve completed your BP, here are 5 follow-up actions:
a) Strengthen/edit your plan and see if you’ve overlooked anything.
b) Make sure you haven’t committed these business plan mistakes.
c) Ask yourself: “Is my plan any good?”
d) Evaluate it from a professional’s point of view.
e) Learn how to use your plan.
– HIRE HELP –
You might find it difficult to make a BP, or else you might not have the time or resources to do one. In this case, you could consult a business planner.
Can you trust someone – who doesn’t care about your company half as much as you do – to create the most important business document?
– – –
However way you go about it, find the time to write a business plan. No matter how many other obligations you have on your plate, don’t delay with this one. It’s an important step that can’t be skipped; with it, you can reach your goals and achieve success.