Business Plans Aren’t Just for Start-Ups
Many entrepreneurs think of the business plan as a document needed to get a business off the ground. It’s true that the business plan is a crucial document for start-ups and is often required by banks, loan institutions or investors before they will assist in financing a new venture. But the business plan is so much more than that. It’s a tool to help new and existing businesses alike assess their competitive advantages, articulate their business goals and map out a strategy for success.
According to The Hartford’s 2012 Small Business Success Study, 27% of small businesses have never drafted a business plan. Running a business without a plan is a bit like being in the woods without a compass – you may get to where you want to be or you may end up completely lost. The good news is that it’s never too late to formulate a business plan. And if you once had a written plan but it’s been a while since you’ve updated it, now is the time to dust it off and give it another look. The business plan should be reviewed and updated annually to account for the inevitable changes your business faces such as shifts in finances, employee base and market dynamics.
Creating a Business Plan
Writing a business plan may seem like a daunting task. Relax, it isn’t as difficult or as time consuming as you may think. To get started, ask yourself the questions below and jot down your answers.
1) Who am I?
No, this isn’t about a journey to self-awareness. It’s about who you are as a business. Describe your company and its mission. What services or products do you provide? What makes your business unique?
2) Who are my customers?
Think about the people that you’re serving today or would like to serve in the future. How would you describe them? For example, if your business is local, your customers may all reside in a particular geographic area. If you’re a veterinarian, then your customers would likely all have pets. Think about the needs and wants your target customers have that can be met by the products or services you provide.
3) Who are my competitors?
You should always know who your competition is and how they are positioned within the marketplace. Try to identify how they are different from you. A SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can also be helpful.
4) What value do I provide my clientele?
This question has to do with your sales and marketing efforts. Any good marketing plan starts with a value proposition. You must first identify what value you are delivering to your target customers. Then you can formulate a marketing and advertising plan to reach the target customers you identified earlier.
5) How am I going to attract and retain customers?
Now that you have your value proposition, you need to put a marketing and sales strategy into action. This includes identifying your distribution channels, communication tactics and growth opportunities.
6) How am I organized?
Describe the organization of your business and the functions you employ. Do you anticipate needing to hire more personnel in the future? If so, what roles would you need to fill? You might also want to include information on your strategy for attracting talent to your enterprise and the benefits you plan to offer.
7) What does my financial forecast look like?
In your business plan, you should include both historical and projected financial data. Historical data might include balance sheets, income statements, and cash flow analyses. You should also include monthly, quarterly and/or yearly forecasts that project how your business will perform financially in the future.
8) Am I protecting what I’ve built?
Building a successful business takes a lot of work. Make sure you protect your business by taking steps to prepare for a disaster, build a business continuity plan and talk to your agent about adequate small business insurance coverage.
Once you have the questions above answered, you can start filling in more details and building your business plan.