Let’s start with what a small business plan is not.
- It’s not your doctoral thesis.
- It’s not a Pulitzer Prize winning piece of journalism.
- It’s not your great American novel.
- It’s not the deciding factor in whether your business will succeed or fail.
OK? Good. Take a deep breath.
No one expects you to crank out a 100-page document complete with 50-hours of market research and 20-pages of cash flow projections for the next five years.
A business plan is simply a written document that explains how your business will operate for the foreseeable future – and the specific action steps you will take to get there.
Why The Drama About Small Business Plans?
If you’re looking for big bucks from venture capitalists, then yes, you do need a formal business plan. Investors want to see solid proof your business has a good chance of making a profit within 1-3 years, so they want details about your business model, competitive marketplace, and financial projections.
But, if you don’t need capital – if you aren’t applying for a bank loan – then your business plan is solely for your (and your partners’) benefit. You can develop it informally, as you need, starting with the most relevant parts and modify or expanding it as things change.
Yes, things will change. As Dwight D. Eisenhower once said, “In preparing for battle, I have always found that plans are useless but planning is indispensable.”
Writing a business plan involves hammering out the details of how your business will work – so you’re clear about what you need to do next.
Why Bother Writing A Small Business Plan?
Even if you are the sole reader of your business plan, taking time to write a plan can help you see things more clearly. For instance:
- Is your business viable? When the idea is out of your head and down on paper, does the business make sense? Do the numbers work? Can you pay your bills with profit left over? How much do you have to make each month to reach the break-even point?
- What are your most important projects? Small business owners take on a number of different roles from strategic planning, to marketing, to accounting and finance, to working with clients, to making sure vendors deliver on time. When you juggle so many tasks daily, it’s easy to lose focus and stray from longer term priorities. Your business plan can help you decide which projects should be prioritized and which to put on the back burner.
- What needs to be done – and by when? Your business is just an idea or dream until you start setting measurable targets, assigning dates to tasks, allocating funds, and managing accountability. When you look at what needs to be done, do you have the time, resources, and staff to make it happen?
Your objective when writing a business plan is not to wax poetic about your competitors or market potential. It’s to come up with a viable way to improve your business in the short-term, which will lead to long-term success.