Many Business Owners I know shy away from a Business Plan. Most often it is because they see them as complicated, difficult to write and see little value in them. Yet, as I pointed out in my article “Why Are You in Business”, According to Burke, A., Fraser, S., & Greene, F. J. in the Journal of Management Studies, “…those businesses that plan are 30% more productive and grew faster and were more successful than those that didn’t plan.” A simple and comfortably short Business Plan isn’t that hard to develop if you understand its parts and how to use them for your business.
All Business Plans contain a Mission and Vision Statement. I discussed how to write those short pieces in “Why Are You in Business”. But in order for you to have a plan that not only tells how you will accomplish what you want with your business, you will need to have a bit more. That “bit more” will not only show what you need to do and have to do to be successful, it has the added advantage of being a strong document to tell Banks and other potential lenders that you have a good idea of what you are doing. The existence of this plan helps you significantly in getting the financing you need should that be necessary.
What Should Your Simple Business Plan Contain?
This simple plan will give you everything you need to manage your strategy, tactics, execution (VERY IMPORTANT) and the critical numbers of your business. You only need 4 parts. These parts are:
- Strategy – Just a few sentences, numbered or with bullet points that identify things like your target market, strengths, what makes your business different from your competitors and your goals (vision)
- Tactics – Your strategy is but one step. Tactics tell how you will execute your strategy. This is information such as your marketing plan (not an advertising plan), how you will price your product or service, staffing your business, and so forth.
- Key data – This is where you define who will do what inside your business. What goals, short and long-term, how you will measure success, etc.
- Numbers – Your budget is the primary thing. What your expected sales or revenue is, how you will manage your cash and related financial management issues.
Getting that information together does require both a commitment and an effort from you. Reading this article or hiring someone else to do it for you will not make it happen. Even if you hire a Consultant to help you, there are still things you must do in order for this to become a reality. It is important to remember that this is not a formal business plan. It is short, a summary if you will, that gives you everything you need to make your business successful. Further, it may be sufficient, depending on the effort you put into it, to meet the needs of a Banker or Lender in order for you to get necessary funding. Conversations I have had with these individuals suggest that unless you are looking for huge sums of money, the important thing is that you have a plan, it be well thought out, supported by facts and that you actually use it. While it doesn’t require in-depth research on market analysis or specifically what you intend to do and when to promote your product or service you still have to know who will buy from you as well as demonstrate that the business decisions you make are consistent with your plan.
You Have a Plan – Now What?
Your plan should always be updated and kept current. Situations change and your plan has to reflect that not only are you aware of the change but that your business adapts to them through your plan. One way to do this is to use PDCA. That is an acronym for:
Plan – This is where you show the opportunity you are using to have your business address. Here you will develop that idea. This can be accomplished, in part, by using your Mission and Vision Statements.
Do – This is simply the execution of your plan. Without actually doing it (executing) your plan is just words on a piece of paper.
Check – Are things happening as you thought they would? Why or why not. Knowing the real reason things happen or don’t happen according to your plan is what happens here.
Act – Based upon what you learn in the Check step, this is where you make the necessary adjustments to your plan so that you can actually get the results you identified in the Plan step.
This process of PDCA is ongoing
Your business is only as good as the efforts you put into it. Having a plan helps ensure that you know what to do now, next and afterward. Having a plan and executing it makes your business successful.