The Truth About Creating Business Plans
Business plans have a bad reputation in the small and independent business community, whereas the large corporate entities treat them as part of their culture..
How do you feel when you hear the words ‘business plan’? Do you feel bored at the prospect of writing one? Guilty because you feel you should have one, or just downright terrified at the prospect of starting one? Or like me do you see it as an exciting opportunity to deepen your understanding of your business, your clients and your USP? No?! That’s just me then..
You probably won’t be surprised to know that out of the all the workshops I run, my business plan workshop (called ‘Learn to love your business plan’) is by far the most popular. This is because most people who start an independent business don’t go out and get a qualification in business studies first, so they often lack confidence in their business skills and approach business plans with some trepidation. While conducting research for this workshop, I came across a book extolling the virtues of a business plan and what needs to go in one, and on the very first page it read; If you run a small business, there is no need to write a business plan!
And therein lies the rub. If a business plan is seen purely as a route to investment (as it is by many people in the wider business world), or something that you need to have for shareholders, then indeed for a small independent business it will be hard to see why you need to invest time in writing one, and what it can do for you and your business.
In this article I will explain what a business plan really is, make a compelling case for why as a small business owner you need one, and break down what it really needs to contain.
What is a business plan? And why do you need one?
In general, people come to see me for one of the following reasons:
- “I know what I want to achieve and have a clear vision, but I’m not sure how to get from where I am to where I want to be, and the steps along the way.” (Strategy)
- “I have been in business for a while, but I’m confused what to do next.” (Goals/Strategy)
- “I’ve been in business for several years and want to diversify and break into a new market. How do I find the time to do that and still continue to run my business?” (Product/Service Diversification/ Delegation/Market Research)
- “I’ve been in business for a while but the nature of what I do has changed and I feel confused about my brand identity." (Branding)
- “I’ve recently expanded but the current infrastructure hasn’t caught up with this growth, so consequently things aren't in place and I’m working all the time!” (Strategy/Sustainability)
- “I’m a start-up business and don’t have any experience in business, but I have a great idea and don’t know how to execute it.” (Business planning/Strategy/Market research)
- “I’ve been in business for a long time but I’ve never felt like I earn enough money and recently I’ve noticed I’m not getting as much new business.” (Goals/Sustainability/Market Research)
- “I’ve got a potential investor that is interested in my business and they told me I need write a business plan.” (Investment/Strategy/Market research)
If you feel like any of these describe you, then you probably need a business plan, or need to update your existing one. A business plan is essentially a road map for your business and if you don’t have one, then you might find yourself grappling with the same issues on a daily basis, which can zap your energy and make you feel like you're wading through treacle.
What goes into a business plan?
At their best, business plans are living, breathing things that provide a repository for everything you need to know about your business on every level. They provide answers to the ongoing questions that you have about your business, and what problem it solves for whom. They also:
- Provide a template for the copy you will use in your marketing.
- Provide the copy for what you say about yourself and your business on your website – your brand story (and your elevator pitch).
- Clarify who your competitors are and what distinguishes your business from theirs.
- Clarify your USP (Unique Selling Point).
- Gives you a logistical and strategic plan.
- Hone and refine your brand values.
Not only this, but it also provides the opportunity to set goals around income and profit, and provides that information to a potential investor, if you are looking for one. When you have a plan for your business, you are much less likely to waste time and resources as you are clear about your strategy and which activities you need to focus on, day-to-day. All it will cost you is an up-front investment of your time.
Years ago I had a client who ran a creative business. He loved what he did, but he didn’t feel like he was earning enough money, and wanted to raise his profile so he could find an agent to help him take things to the next level. At the end of the first session, after we had spent some time getting to know each other and finding out what was important to him, I said I was going to send him some questions from my bespoke business plan template to start to answer some of the questions he had about his business. He immediately replied with; I f***ing hate business plans!" Now, while this could have been disastrous for our coaching relationship, it was actually a great place to start the process.
Business plans come with a lot of baggage for all the reasons I have already mentioned, but they are in fact nothing more than a way of telling our story to the people that need to hear it, in a compelling and concise way. When we re-frame writing a business plan as purely a way of telling our business story and providing a narrative for the community of people we wish to help, then it starts to take on a new meaning. We can see it not only as a process to help us achieve the things we want, but also as a way of saving precious time and money so we can avoid trying to take on running every aspect of our business with no strategy in place.
As I explained this to my client and encouraged him to see a business plan as a process rather than being about the end product, it took on a new meaning for him and made it something that was much more fun and enjoyable than he had anticipated. It provided answers to the ongoing questions that he had about his business, and what problem it solved for whom.
So if you agree that sounds pretty good, then what are the next steps and how do you begin the process? What does a good business plan really need to contain?
How do you write a business plan?
If you Google search “business plan” you will bring up innumerable templates and advice about how to fill them in, and to be perfectly honest, a lot of them look pretty dull. They tend to focus mainly on the finances which, while being extremely important, are not the whole picture of your business and do not bring out any aspect of storytelling, which is so important for deciding how to market ourselves. It is for this reason that over many years in business, I have developed my own bespoke template of what I feel a business plan needs to contain to answer the questions that the owner of the business has and what they need to know to move forward:
- 1. Describe your product or service – this section is about your customer and the describing the journey they go on when they start thinking about using your business. (Avoid jargon!)
- 2. Describe who your target market are and provide evidence that there is a need for your business.
- 3. Research the competition – look at who they are and how your offer differs from theirs.
- 4. Marketing and promotion – what activities are you going to undertake to reach your audience and how are you going to monitor that activity?
- 5. Pricing and costing – How have you arrived at your selling price and does it allow you to make a profit once your overheads have been paid?
- 6. Operations/logistics – How will the service be delivered, by whom and for how many hours a week?
- 7. Sales and cash flow forecast – How have you reached your forecasted sales figures? How are you going to monitor cash flow? (This will also require a spreadsheet)
- 8. Admin, legal requirements, insurance, taxation – Show that you understand what your legal responsibilities are and what taxation you will be liable for.
Lastly, a few words about what is called the Executive Summary. This is usually the first section of your business plan, where you set the scene for your audience, but it should be the last thing you write, once you have worked through all the other sections and have a deeper understanding of your business.
So that’s it in a nutshell. But before you roll up your sleeves and get started, remember these three important things:
- It is going to take time, so don’t rush it. If you do you may wish a vital learning opportunity.
- A business plan is not linear so don’t worry about jumping between sections.
- Tackle it in small chunks rather than trying to fill it all in at once.
The best business plans aren’t long or complex with loads of jargon. They are punchy and concise and contain precisely what you need to know. And they are never a waste of time.
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