You’ve heard it a million times: You must have a business plan to succeed.
It’s a no-brainer in the world of small business.
A business plan precisely defines your business, identifies your goals, and serves as your company’s resume. But more than that, your business plan should have a way for you to track progress and to identify tactical steps to that your plan is more than just words on paper, it is actually a document that is a part of your living, breathing business.
Sure, it might seem like a boring exercise to define the business you are in. But, many owners have gone broke because they never answered that question. Or, they never quite knew why they should or how to develop a business plan.
Let’s start with the basics.
A business plan is a tool with three basic purposes: communication, management, and planning.
As a communication tool, it is used to attract investment capital, secure loans, convince workers to join and assist in attracting strategic business partners. A complete business plan shows whether or not a business has the potential to make a profit. It requires an honest look at almost every phase of business and allows you to show that you have worked out all the problems and decided on potential alternatives before actually launching your business.
As a management tool, the business plan helps you track, monitor, and evaluate your progress. The business plan is a living document that you will modify as you gain knowledge and experience. By using your business plan to establish timelines and milestones, you can track your progress and compare your projections to actual achievements.
As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify obstacles so that you can avoid them and establish alternatives. Many business owners share their business plans with their employees to cultivate a broader understanding of where the business is going.
All three of those purposes are important, but be sure to particularly remember the management and planning aspect. That ensures that you are actively involved with executing your business plan and tracking the goals you’ve set out to achieve.
In Focus: The Useful Business Plan
In order to be a truly usable tool, a business plan should be a work-in-progress. Even successful, growing businesses should maintain a current business plan. It doesn’t need to be fancy, complicated or difficult, it just needs to be clear and manageable.
Remember, your goals are to show your expertise in your business, to “sell” your business to prospective customers (such as investors and employees), and to design a management tool that works for you.
Every successful business plan should include something about each of the following areas:
- Executive Summary
- Market Analysis
- Company Description
- Organization and Management
- Marketing and Sales Management
- Products and Services
- Financials
A solid business plan is more than just a few paragraphs on what you want your business to be, it is a step by step plan for how to get there. Start by brainstorming and recording everything you know for each of these areas of your business. Then, identify where you need more information in order to complete the sections.
Finally, include a checklist or table at the end of each section that highlights the main components of the section and allows you to track how you’re performing in each area. Commit to reviewing the plan monthly – either on your own or with other management employees – to track your progress.
For more information on developing your business plan, visit: http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html
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Nice article Andrew.
I particularly like the 3 tools approach but I do take issue on several things.
1 - I find it useful to separate the idea of planning (thinking about the future and making decisions) from the plan (a written document).
2 - I have always favoured having several plans rather than one. OK they need to be consistent but a business plan for a third party to raise finance has to be different from a business plan for internal use. Your outline that you provides supports the business plan to raise funds and sells the organisation to potential backers.
3 - the Guerrilla Marketing 7 sentence marketing plan is one of tehh most powerful techniques I know for being really clear and precise about exactly what is required and expected for marketing a particular offering. Its brevity is one of the strengths of the approach.
Inevitably lots of us have our own ideas about what makes an effective business plan and there are several posttings on the Business Coaching Blog.
I do like to see a plan as a working document. Referred to often, actions ticked off and the plan updated when circumstances change.
Some people say to me that they have their plan in their head. I explain that the beauty of writing it down is that something special happens between brain and fingers.
You start noticing gaps that you missed. You notice inconsistencies in your thinking when effectively you are asking for something to be big and small at the same time. But best of all, the thoughts charge through your brain because the act of writing forces you to clarify exactly what you mean.
The other big advantage of writing the plan is that it is a record. It is there to remind you what you thought at the time, the assumptions that you made. It is so easy to think that you are being consistent and staying with your current plan, when in reality it gradually transforms into something else. Fine if that is deliberate, not so good if you have allowed possible opportunities to divert you from your chosen path.
I will come back and have another good look at your blog and you may be interested to see the Business Coaching Blog. I would like to thing that we can help each other.