The Small Business Plan Defined & Its Purpose
What Is A Small Business Plan & How Is It Used
Before I answer those two key questions let me establish the foundation for being a small business owner, the small business plan and this article. If you want to or have started a small business, are you prepared to be its leader? I hope the answer is yes. If it is no, then please by all means go, get a job you love and make that your career. As the business leader, your main role is to direct the business towards a goal. That goal should have a monetary measure. Simply, that goal should be worded in terms of money. If you don’t want a goal like that or that notion makes you uncomfortable then consider working for a nonprofit organization. You are in business to make money, everything else is secondary.
The Business Plan Is Important
As the leader and CEO of your small business endeavor, you need something to help you achieve your goal. That something is a business plan. The business plan is a necessary element when starting and growing your business because it’s your map to success. Think of a business plan as the simple how to bake directions found on the back of cake boxes.
Writing a small business plan doesn’t have to be difficult. However, it is my opinion that you must create it but you don’t have to write your small business plan. Again, the business plan is the road map for your entrepreneurial enterprise. You need a guide, a map or a compass to reference while on your journey to the land of making money. The small business plan is that guide, map and compass combined.
Here are two examples. Let’s say your business’s goal is to profit $200,000 in one year thru selling children’s clothing. In order to achieve this you need a plan of action that you can reference periodically. After the three months in business you evaluated your efforts and learned that you exceeded the amount anticipated as profit. You accomplished in three months what was planned for six months. Without a small business plan you would be unsure if you realized your goal and operating in the dark.
In this second example, you evaluated your efforts and learned that you only profited half of what was expected. Your take home was half of what you wanted. With that information you can determine what changes are necessary in order to achieve your goal of making a profit of $200,000. With your small business plan you know that you are headed in the right direction, because there is profit, but you know something has to change.
Feasibility First, Plan Second, Then Write A Business Plan
You have an idea but are not sure if it will work as a small business. Writing a business plan isn’t what you need to do, you need to determine the idea’s feasibility. You need to find out if your idea will work and be profitable as a business. Organizations like SBA, PACE (a small business development center) or a small business consultant can help you figure it out.
The exercise of business planning has to be thorough and it must be comprehensive. If the business plan will be used to secure funding from a bank or an investor then it needs to be detailed, a professional business plan consultant can help. Ultimately, the level of detail is determined by who the intended reader is and what the anticipated use of the plan is.
When it comes to writing your small business plan those same organizations and people can fill in some of the gaps, like market size and cash flow projections. However, if you need an out source to fill in a lot of the gaps in your idea’s business plan consider if you should start that small business or if you should remain in that business. Relaying a lot on an outside influence and information only increases the risk associated to being a successful small business owner.
Business Plan Outline
Below is a summarized business plan outline with the six main elements. A complete business plan format can found in another post I wrote called, “Elements of a Great Business Plan”.
- Who: Describe the skills required to make and sell the product or provide the service. Are they full-time, part-time or contractual?
- What: Is this a service or a product based business? What will you do to make the money?
- When: Outline your operating days and hours. Is this a seasonal or internet based?
- Where: The location where you will provide your service or make and sell your product.
- Why: Discuss the need in the market are you filling? Who is your competition and how are you different than them?
- How: Explain the business cycle from the beginning to the end.
Using A Small Business Plan Template
If writing is intimidating or if you want guidance along the way, but can’t afford a consultant, then consider a using business plan template. There are a several software based templates available. For example, I found a business plan template in Microsoft Word.
A basic business plan template is provides an outline and description for each section of the business plan. A good business plan template will supply writing examples for each section and offer suggestions for your writing. Some software programs have several small business plan templates that can be accessed by sorting through categorizes, industry or types of businesses.
Hire A Business Plan Consultant
Typically people want to outsource the creation of their business plan. I say no. Don’t have someone to plan your business. The business plan is your plan, even if it is documented by someone other than yourself[i].
However, a small business consultant can be of assistance. They can provide relevant information on the market and industry. They can assist you with fine tuning your entrepreneurial idea and put it on paper, especially if you are not confident with your writing skills. However, you plan your small business and the activities that will realize your idea.
Finally, not having time to plan your business is a guarantee of meeting future failure. To maximize what can be achieved as an entrepreneur and small business leader create your business plan. Remember it doesn’t have to be difficult, it can be a one page business plan.
[i] Financial Resource Manual Chapter VI. The Business Plan