Don’t let the idea of developing a business plan intimidate you – it is the foundation of successful entrepreneurship. A plan serves as a road map, enabling you to recognize and think through critical issues. Every small business owner should have a written plan, yet many do not.
Business plans do not have to be elaborate or long. They should be legible and lasting. (So, if you compose one on the back of napkins, make sure they are sturdy and dry!)
A business plan starts with a good outline that will:
- Help you focus on the most important aspects of your business in order to grow.
- Establish a reasonable measuring stick of progress.
- Provide a viable document that could be shared with a bank, possible business partner, or some other outside entity.
Let’s start with a basic outline:
Strategic Business Plan
- Mission Statement
- Strengths & Weaknesses
- Next Steps
- Financial plan
Although each of these will be discussed in depth in other blogs, a brief description might be enough to get you started.
- Objectives: What are the big goals for your business? See the Formalizing Business Objectives blog for more details.
- Mission Statement: One succinct sentence or two which describes your entity. It is the equivalent of an “elevator speech”, or your concise answer to “tell me about your business.” See the Mission Statement for The Entrepreneur’s Friend.
- Strategies: What you need to, and want to, focus for the long-term in order to accomplish the Objectives. Sample strategy: for a new child care center, one strategy would be to understand the local competition.
- Tactics: The very specific tasks that need to be accomplished in order to carry out one or more strategies. Sample tasks: to understand child care competition you might talk to 1) parents of children in centers, 2) parents who are looking for child care, and 3) child care workers or preschool teachers.
- Strengths & Weaknesses: Include evaluations of the necessary skills, talents, employee pool, financing, competitive advantages and more. Be honest with yourself, so you will know what needs to be addressed in order to reach your goals. For instance, if you are not comfortable with numbers, that should be identified as a weakness. Or, you might be a superstar with spreadsheets, but need help with in other areas.
- Next Steps: What do you need to do next? Include a specific list based on everything you’ve discovered so far.
- Timeline: What is the best order for accomplishing the most important tasks? Look into external requirements first, especially legal, financial, zoning & licensing. These can become stumbling blocks that slow or halt progress in other areas.
- Financial Plan: Start simple and grow as you learn more details. For child care: 1) How much will you charge per child? 2) How many kids can you handle? 3) What will your expenses be? 4) If the income from that number of children at your weekly rate will not cover your expenses, you’ll need to go back and re-work the problem. Start with a minimum of one full year, then add two more.
Once you have something down for each element of the outline, go back and make sure that everything in the plan fits together. Keep re-working until you have a plan you feel can help you achieve your goals.
For some, this process will show that the business is not viable. In that case, the plan will have served its purpose. It would be better to find out that you have insurmountable problems before significant investments are made. Or, perhaps a significant change can identify opportunity.
By following these steps, you will save yourself time, energy and headaches in the months and years ahead. Avoid every problem you can by addressing it in your plan, saving energy for the challenges still to come.
Until we meet again –
The Entrepreneur’s Friend