If you’re planning to start a new business, it’s imperative you first gain some working knowledge on crafting a sound business plan. Why is a business plan so important? What are the steps you’ll need to take to create one. How will you make changes to your business plan as your company grows, and its needs and objectives change? Read on to find the answers to these questions and more.
What is a Business Plan?
A business plan is, essentially, a road map for you to follow as you take your business from the idea phase into the reality phase, and beyond. This plan spells out the tangible steps that will need to be taken for you to meet your ultimate objectives. It helps keep your focus in the right direction and protects you from running off course into unnecessary territory. It focuses on all the key components your company will rely on, from funding to strategy and more.
Why is it Important?
Implementing a sound business plan is important for myriad reasons. It helps you to stay organized as you grow your company to fruition, allowing it to potentially become even more than you’d ever hoped for. Your business plan also enables you to prepare for unexpected scenarios that might arise. Examples could include financial setbacks, growing at a rate slower or faster than anticipated, and unexpected costs or developments with your company. Creating a plan can also help you take a step back and see where there may be flaws in your thinking. Additionally, it will help you notice any untapped potential you hadn’t previously noticed.
How big or how small your business plan needs to be will depend on what type of business you are starting and what you intend to accomplish by doing so. A company, for example, that intends to bring in investors and apply for grants, loans, and additional funding, will require a much more detailed plan than one that doesn’t intend on taking these actions. As a general rule, the simpler your plan, the better. Forbes reminds us that, “Traditional business plans can be big beasts of a project that suck time, money and mojo at a vital moment,” so get clear on what you intend to achieve with your plan before diving in head first.
What to Include in Your Business Plan?
If you do choose to move forward with a business plan (which we highly recommend), you’ll have to know where to put your time, energy and focus. The Small Business Administration recommends nine key areas that should be included in your plan. They are:
- Executive Summary: This portion of your plan will give a general overview of what your business is all about.
- Company Description: This area is intended to provide a more detailed depiction of what you do.
- Market Analysis: This will include well-researched documentation on your industry and provide a snapshot of your competitors and overall market.
- Organization & Management: This section will help to clarify how you intend to manage your business moving forward.
- Service/Product: Here you will dive into greater detail about what products or services you are offering.
- Marketing/Sales: This section will explain how you intend to market and sell your product(s) or service(s).
- Funding: How will you afford to successfully run your business over the course of the next few years? Offer some detail here.
- Financial Projections: This portion of your plan will clarify where you see yourself heading and should include supporting documentation such as balance sheets and P&L statements.
- Appendix: Although not always necessary, this section is great to include any permits or resumes that might be pertinent to your business plan.
It may also be wise to include, somewhere in your plan, an exit strategy. Although it’s certainly never a business owners’ hope that their company won’t make it, creating an exit strategy helps to assure both yourself and any potential investors that you’ve planned for the worst and have included some sense of protection for both your investment and theirs.
Steps to Take When Creating a Business Plan
Obviously, all this information won’t be readily available at your fingertips, which is why it helps to break the construction of your business plan into feasible steps.
- First, is the research phase! You’ll need to know your business, industry and competitors inside and out!
- Next, you’ll want to determine what, exactly, is the purpose of your business plan. Are you simply trying to map out a framework for yourself or are you writing your plan to interest potential investors? Your answer will impact how much time and energy you will need to put into the process.
- Create a business profile that succinctly conveys who you are, what you do and how your service or product is unique in your market. This will be useful in many different ways going forward.
- Keep track of EVERYTHING! Even if you aren’t seeking out investors now, the time may come where you are, and you will want to have all your steps documented.
- Next, create a marketing plan. Your marketing plan is, perhaps, the most important step you will take. It will work seamlessly with your business plan to help you achieve your goals.
- Make sure that the information you are compiling will speak to a broad audience. Whoever is funding your project, for example, will have different objectives and require different information than somebody on your management team.
- Make sure anything you create for your business reflects the passion you have for what you are doing. Infusing your business plan with some enthusiasm will help it keep working for you long after it’s completed. It will also continually remind you (even in the moments it may be tempting to forget) what your goals and objectives are.
SCORE offers some great resources and business plan templates that can help you to avoid missing any steps. Additionally, there are many resources available, via the internet, that offer sample business plan templates and examples for you to sift through.
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What if My Company Objectives Change?
One of the best parts about writing your business plan is that once it is done, the framework exists. You can always go back and change anything that needs to be modified, as your business objectives shift and grow. The process of doing so will be exponentially less time-consuming if you already have this starting point.
Overall, there’s not really a downside to writing a plan for your business. With technological advances as they are, there are millions of tried and true templates at your fingertips. It makes sense to invest a bit of time and energy into crafting up a plan for your company. Coming up with a solid plan doesn’t have to slow your down or decrease your productivity. In fact, it will likely prove to be a valuable resource as you bring your idea to life.
*** Note from the managing director: We strive to provide high quality and accurate content that centers around marketing concepts. While this blog post is not specifically about marketing, we believe it is incredibly important and relevant to our audience. In order to be as effective as possible, it’s wise to have both a marketing plan and a business plan. Be sure they seamlessly and cohesively work together. Though we do not provide “business planning” services, we do provide digital marketing services. For help with your marketing, or creating a marketing plan, please message us via the contact form below. ***