Do you have a business plan? I don’t mean a vague idea that you want to grow your business or make your first million by the time you hit 40. I mean a proper formal document that outlines the why, who, how and what of your business.
As a small business, taking the time to formally set out a business plan may seem like a waste of time, unless of course you need one to take to potential investors.
If you have been in business for years, you may think you already know everything there is to know about your market and audience and that a business plan has nothing valuable to add.
But, maybe not.
Plan B Marketing has now been in existence for just three months and, I suspect like many small business owners, my feet have barely touched the ground as I juggle the client work with the day-to-day admin stuff that keeps the wheels of my business turning.
But in that limbo land time between Christmas and New Year, when I felt guilty for taking my foot off the gas of my fledgling endeavour, I decided to sit down with a sharpened pencil and my bullet journal and draft a formal business plan.
I don’t expect that anyone else will ever see it, which is probably just as well, but I found it a very valuable exercise.
In my previous blog post, Planning for a Successful Business Year, 12 Weeks at a Time, I outlined how I had used The 12 Week Year book, by Brian P Moran and Michael Lennington (Buy It Here) to drill down on the actions and tactics I was going to take between January and March to reach a goal I had set.
A business plan gives you a new perspective
The work I had done on my business plan was instrumental in helping me work out what the goal was for my business by the end of March when Plan B will have been going for six months – and what the goal is for its one year, five year and ten year anniversaries.
The exercise helped highlight what I bring to the table, in terms of skills and expertise, and the strengths and weaknesses of the business, the competition it faces, its unique selling points and who its customers are.
It forced me to look closer at the financials and where I needed to focus my efforts to achieve the income I need each month to keep me and my daughters in the manner to which we have become accustomed.
A business plan gives you new ideas
It also threw up a slew of new ideas of what I can do to drive my business forward in 2019 and I now have a workable and usable elevator pitch, which I intend to practise so I can succinctly explain what Plan B is all about when it comes to all those networking events I intend to attend in the coming months.
It definitely gave me a fresh perspective on what I’m doing, what I need to do and where Plan B is going, so whether you are just starting out or have been in business for years, I honestly believe drawing up a business plan – or dusting off your original one and redrafting it – will be a few hours well spent.
You never know, it could be the impetus you need to make 2019 your best year yet!
If you think you could benefit from drawing up a business plan, here’s the structure I used to write mine. It works just as well for a businesses of any size, whether you are just getting started or have been operating for years.
How to write a business plan
This is where you explain the basics of your business in a way that gives the reader a good understanding of what you want to achieve and how.
It should be relatively short – a maximum of two pages – and should explain what products or services you will sell, who to and other relevant details such as the legal structure you have chosen for your business, eg sole trader.
It should also include details of your short, medium and long term goals and a financial summary, such as your projected turnover for the first year and start-up costs.
As the summary pulls together information from the rest of your business plan, the best idea is to leave it until last to complete.
Your elevator pitch is a short statement summing up your business. The idea is that this is how you would describe your business to someone if you only had the duration of a ride in a lift (elevator) to do so.
So, it needs to be just two or three succinct sentences that get to the crux of your business.
Again, it’s a good idea to work through the rest of your business plan first to concentrate your mind on the important details before writing your elevator pitch.
Your business plan is as much about you as it is about your business.
Include a section which explains why you want to start a business, why you have chosen this kind of business, why you think you have the experience, ability and commitment to make it a success.
WHAT ARE YOU GOING TO SELL?
What products or services (or both) will you be providing.
Explain your products and services clearly so that a layman could understand. Avoid the use of technical or industry jargon where possible and use plain English.
WHO ARE YOUR CUSTOMERS?
Identify who your customers are going to be. Include detailed information about your target market.
If you are just starting out, you could also include details of any customers who have already bought from you or whom you have lined up to do business with you.
Your business may look good on paper, but proper market research is the only way to test your assumptions.
As well as researching your competitors, you should look at how big the market is and trends, such as is it growing or shrinking?
HOW WILL YOU SELL TO YOUR CUSTOMERS?
This is the section where you need to outline your marketing strategy.
You need to outline how you will let your potential customers know about your business.
Will you be relying on word of mouth or using other marketing methods such as advertising, direct marketing, email marketing, social media, trade shows or exhibitions?
WHO ARE YOUR COMPETITORS?
Explore who you will be up against to attract your customers’ business. Choose about five competitors who are offering similar products and services and carry out a SWOT analysis.
STRENGTHS – What makes your business better than the competitors?
WEAKNESSES – Where do you come up short against your competitors and what will you do to mitigate?
OPPORTUNITIES – What external factors can you take advantage of which will help your business succeed, eg a growing market.
THREATS – What external factors are a black cloud hanging over your business, eg a new shopping complex near your new retail shop. How will you overcome the threat?
Use this section to explain your Unique Selling Point (USP). What makes you different to the competition, eg cheaper, faster, better (in what way)? If you can’t think of one, you need to go back to the drawing board and rethink your business.
HOW WILL YOU DELIVER AND GET PAID?
Explain the process of providing your product or service. If your product is coming from a third-party supplier, how long will it take to deliver to your customer?
Include some information about your supplier.
When and how will you get paid? Will you accept credit cards or cash only. How long will your customers have to pay? Do they pay when they order or within 28 days of being invoiced, for example.
Include information about your business “base”. Are you setting up an office at home or buying a shop? What equipment will you need to buy? What transport will you require and are there any legal requirements or insurance cover you need to enable you to trade.
HOW MUCH WILL IT COST?
You will need to have a clear picture of the costs involved in setting up and running your business. This information plays a crucial role when you are looking at how much to charge for your products or services. If you are to make a profit, the amount you make on sales has obviously got to be greater the amount you are paying out.
It is important to be realistic when you are looking at the cost of running your business. There is a lot to take into account and it’s often the “small” things which can make or break you.
When you know how much you need to charge for your product/service to cover your costs, compare it with what your competitors charge. Is it in the same ballpark? If it’s much lower, have you overlooked some costs or are you setting your profit margin lower as your unique selling point?
On the other hand, if your prices are much higher, will your customers be willing to pay the extra for your unique selling point?
Now you have given some thought to your costs and potential sales, it’s time to create a cashflow forecast for your first year,
Have the months as your headers and list your predicted sales and then costs to work out the “bottom line”.
Bear in mind seasonal changes in both your sales cycle and in costs, such as heating in the winter.
If you have annual or quarterly costs, divide them to include in your monthly costs.
And that’s it – you have a business plan, and maybe a new perspective.
Be Concise – Keep your plan to the point and use simple language that everyone can understand.
Be Specific – Give details specific to your business, don’t generalise.
Know Your Market
Know your Finances.
Do you want more?
Did you know that Tracey Sweetland also runs the Impetus4.com website, aimed at leading new entrepreneurs through four stages of building a successful business.
If you need more helping writing your business plan, visit the Impetus4.com resource centre to download your copy of the Step-by-Step Guide to Writing a Business Plan and your Business Plan workbook, or buy the Starting a Business Bundle for the discounted price of £5.99 – that’s 50% off – until the end of March 2019.