Many small business owners dread the idea of cranking out a small business plan, but writing your business plan doesn’t need to be painful. In fact, it can be quite enlightening and give you a different perspective on your business.
Why Write a Small Business Plan?
A business plan is your road map to success. Think about it. We plan all our major life events: vacations, weddings, buying a house, retirement – even what will happen to our assets when we die. We plan so we and others working with us understand what we want to accomplish and have an idea of how we’ll go about accomplishing it. Why should your business be any different?
Your small business plan is your model for how you do business. It’s a document that anyone can pick up and understand where your business currently is, where you hope to be in the future, and what steps you’ll take to get there. That may sound like common sense, but many entrepreneurs get bogged down in the details of writing a 50 page plan with their business plan software, crank out a massive document, and file it away, never to look at it again.
Your small business plan should be a living document – one that you revisit and make changes to. Just as your business is dynamic, your business plan should be frequently updated to match. You’ll always have new costs to add to the financial section. You’ll realize that steps you thought of don’t quite work the way you thought and need to revise. Problems will come up that you’ll need to address to move forward. Your business plan is your commitment to action – how you plan to deal with opportunities and problems to achieve your goals.
How To Write A Small Business Plan
The best business plans are concise and focus on how your business is operating today, rather than speculating on all the things your business could possibly be. You can write one by tackling these five subjects:
- What is your business? What is it that you do, specifically? How do you explain what it is you do to others? You can add a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis here as well as detailing your goals for the business. This isn’t about jargon or philosophy. It’s about explaining in layman’s terms the core principles of your business and where you want to be within a specific time frame.
- Where is your business today? Look at where your business currently is. How successful is it? What do you offer? What do your competitors offer? Why would clients choose you over your competitors? How do you market your services to get new clients? How do you make money?
- How will you get to where you want to be? What are you doing to achieve your goals? Are you investing in research and development? Marketing? Hiring staff members? Training your team? Be specific and describe exactly what you plan to do and how it will impact your revenue and profits.
- Who will do each task? Even if you’re a solopreneur who plans to do each task yourself, state in the plan who will do each task and by when. As your business grows, you’ll need to hire employees, virtual staff, or outsource tasks to other firms simply because you don’t have the time or expertise to do everything, so incorporate that into your plan.
- What profits will you make? Your financials don’t have to be scary. They just have to portray an accurate picture of your business, detailing your expenses and how you plan to make money. How do you do that? Sit down and make a list of all the costs involved in running your business including rent, office supplies, marketing and advertising, insurance, membership dues, training, and the like. Then, figure out how many clients or customers you’ll need at specific price points to break even. At minimum, you need to include a profit and loss statement (which details your company’s cash flow) and balance sheet (which describes your assets, liabilities and owner’s equity).
Keep in mind, the best small business plans are those that provide a model for successfully running your business. If it can help you get funding or explain to others what you do, that’s great too, but those are secondary benefits. Looking for more help? Try reading 8 Steps For Writing a Small Business Plan.