Why you need a business plan for your small business
Every small business needs a business plan. It’s important to create one for your business if you don’t have one already and keep it up-to-date.
Writing a business plan for your small company is not always an easy task, but there is a multitude of reasons that you need to have one, nonetheless. It’s a myth that the only times you will need a business plan are when you’re going to ask for a loan, pitch for an investment or launch a start-up.
This article focuses specifically on how to create a business plan for growth, rather than for investment pitches or finance and loan applications.
A good business plan for growth includes your goals, strategies, sales, marketing and financial forecasts for the future, and is a living roadmap that helps you keep your business growing and developing in the direction you want it to go.
The process of writing your business plan also helps you to clarify your thinking, identify potential issues, articulate your goals and decide how you are going to measure and track your progress.
Plus, a business plan is a great communication tool to help engage the support and commitment of your employees, suppliers or customers.
Business plan template
I’ve created a high-level free business plan template download to help you get started. Strategic planning is something that will aid your business when it needs to grow and expand, which will open up your options rather than keeping you closed off in a small box in one corner of the industry.
I ran a poll a short while ago on social media (nothing statistically robust – just a temperature check) and asked two questions:
- In these fast-changing times, do you think it is still important for your business to have an up-to-date business plan? Yes / No
- Does your business have an up-to-date business plan? Yes / No
100% of the admittedly small sample answered Yes – it is still important for the business to have an up-to-date business plan.
And 100% also said they didn’t have one for their business.
Talking to my clients I understand how challenging it can be to find the time to sit down and think about your business plan, never mind having to write it all up.
I help my Idea Time clients to create realistically ambitious, practical, motivational and useful business plans in a time efficient way.
Real Result: 300% Growth in Turnover
Deborah Carr is awesome. She’s the founder and director of Total Spa Solutions. Her business was growing really well and Deborah wanted to take it to the next level and achieve accelerated growth. Deborah joined my Idea Time programme and used our one-to-one coaching sessions and business growth tools to exceed her original goals, achieving 300% growth in turnover.
Here’s what Deborah has to say:
“Jo’s passion for helping businesses succeed and grow was obvious from day one. The support and tools that were provided whilst working through the Idea Time programme are relevant to all businesses, no matter how established they are or the size of the business. Since I have been working with Jo and Idea Time, the results in my business growth have been phenomenal. The approach I have now adopted has resulted in 300% growth in turnover.”
My 10 Top Tips for Writing a Business Plan for Your Small Business
I wanted to share some quick wins with you, so here are my top 10 ten tips that you can use to write a business plan to map out your growth roadmap for your small business. By the time you have finished reading this, you should know most of the things that you are going to need to create a strong and successful business plan.
In order to save time and ensure that you are covering all the key areas, download my free business plan template here to get you started. It helps to get you thinking about where you want to take your business, is super easy to complete, takes about 60 minutes, and will give you a head start for the rest of this process.
1. You don’t actually need to write that much!
Because your business plan is for you, you don’t actually have to write that much! I find that the thought of having to write a lengthy, important document is one of the biggest, most off-putting reasons why business owners procrastinate when it comes to creating their plan. Use my free downloadable business plan template, just work through the questions and it will be a breeze compared with what you might be imagining!
If you would like to develop your writing skills for business, however, there are some great tips here in my article Do your reports make your business ideas shine?.
2. Be clear on what your business actually does
You may think that what your business does is obvious. In reality, though, when I ask clients to define it very few of them can. Describe your business in a few sentences. Write it down. Keep improving it until you’re happy with it.
Just a few examples from Idea Time clients to inspire you are:
3. Look upwards and outwards before you look inwards
My next tip is to begin by looking upwards and outwards rather than diving straight in to your business.
The reason for this is that for our businesses to survive and thrive in the future we’ve simply got be in tune with what’s going on in the world, what changes are emerging and how they are likely to present an opportunity or challenge for us business-wide.
The MBA-type jargon for this is macro-environmental analysis, which you may know as PESTEL, PESTLE or STEEPLE. Unnecessarily fancy-pants jargon aside, all this means is that it’s important to consider what effects changes in these areas are likely to have on your business:
Social – How are people behaving differently? What are the consumer trends? How is the population changing?
Technological – How is new technology, such as digital, affecting your industry?
Economic – Is a downturn / upturn likely? Could exchange rate changes impact you if you import / export?
Environmental – We have all seen the rapid response to reducing single-use plastics. This an example of how a change in environmental awareness means that businesses need to respond.
Political – Brexit. Trump. Enough said…
Legal – I will eat my hat if there’s business that hasn’t at least heard of GDPR! What other changes are expected in your sector?
Ethical – For example, in The World in 2019, The Economist’s correspondent John Parker stated that 2019 is set to be the “year of the vegan”.
Some of these categories will overlap. For example, veganism is social and ethical, as well as environmental. Don’t worry about that, though. The important thing is to use these as a prompt to help you think more widely about the future of your business. Which ‘box’ things sit in won’t affect your business either way. The reach and quality of your thinking are what matter.
4. Dig deeper into what your customers want
I know, I know. We haven’t even started with your business properly, yet, have we? Creating a great business plan reminds me a bit of a fantastic sales pitch. You ask all the right questions first and then tailor your pitch to meet and exceed the requirements and then seal the deal.
You’re going to come back to thinking about your customers later, so this is a first go.
You will have touched on customers in the Social part of step 2, but now it’s time to hone in on your customers specifically.
If you haven’t already, identify each of your current customer segments. These are groups of customers that share similar needs, aspirations and characteristics so that you can develop your products, services and marketing to specifically target them.
Segmenting customers is good practice. It helps you to create a deeper understanding of your clients, their motivations and drivers for decision-making.
Work out what your customers really need and want now, and what that is likely to look like in the future. Identify their pain points, which means the aspiration or challenge that the customer is experiencing, and the emotion connected with that aspiration or challenge.
The customer’s aspiration or challenge may be real or perceived, but the customer is aware that they have the problem or opportunity and want a solution for it.
Fully understanding customer pain points is essential for your business plan because they provide huge opportunity for successful, commercial product and service development, and because they inform the language and channels for customer communications.
5. Know the competition
Having a unique selling point is always going to be a huge advantage in the business world, and this is especially true when you are trying to communicate the benefits of buying from your company.
As the business owner, you are going to need to know the strengths and weaknesses of all your competitors. This way, you will find it a lot easier to separate yourself from them, avoid making the mistakes that they have made in the past, and use the advantages they have found to benefit your small business.
Identify the competition that you face, and then be able to explain why you are different and a better choice than them. Do your research into the other companies in your industry and be super clear about why potential and existing customers should choose your business over all the others.
If you’d like some specific advice on competitive advantage, have a look here at my article on How to create an awesome USP for your business.
6. Take an honest look at your business
When you’ve looked outwards, focused on customers and got a good grip on what makes you stand out from your competitors, the next step is to take a good, honest look at where your business is at right now. What are its strengths and weaker areas? Use this checklist as prompts for your thinking:
- Financial performance: sales, costs, profit margins, growth
- Customers: retention, acquisition, satisfaction and engagement
- People: team, culture, skills
- Products and services
Identify where you and your business are at right now and create a clear vision for what you want to achieve in the next 3-5 years.
Take some time to reflect on your answers to these questions and write your answers as fully as possible to give a really detailed response. These questions cover the four Fs: Feeling, Finances, Flexibility and Focus.
1. How do you want to feel about your business over the next 3-5 years?
2. How much money do you want to make in the next 3-5 years? Why is this amount of money important to you? As well as the total amount, show how much money you want to make each month and each year.
3. What sort of lifestyle would you like to have with regard to your work life and your home life?
4.Which part(s) of your business would you like to focus on more? Why?
5. Based on your responses to questions 1-4, write a short summary that describes how you want to adjust your approach now to get even better results in the next 3-5 years.
7. Map out what you need to do, step-by-step
Keep it realistic
Think about the amount of time everything is going to take and then compare that to what resources you have available to you. It is always better to have it on paper that it will take slightly longer and be able to deliver in a shorter time frame than vice versa. So, if you think that something is going to take about 20 weeks, put in the business plan that it will take 24. This way, you are giving yourself a cushion for if things go wrong, but if nothing goes wrong, you are going to be ahead of schedule. This adds a level of credibility to your business plan and helps to de-risk it.
Focus on the details
When you are compiling your business ideas into a solid plan and writing them up, make sure that you have focused on the right details. You need your business plan to cut straight to the point without a lot of fluff surrounding it so that the people reading it know exactly what they are looking at and what you are trying to propose. Every piece of necessary information should be included in this plan so that anyone you present this to is not left with many questions or attempting to fill in the blanks themselves.
Get the financial information right
You want to remain somewhat conservative with your financial estimates. It is important that you do not overestimate and oversell how well you think your business is going to do. For example, if you think that your business is going to manage to get around 40% of the market share in the first year, think about toning this down a little and putting 20% in your business plan. Obviously, it is important to sell your business as a success, and I know that this is something that you want to do, but your business plan is far more credible if you remain conservative.
You should also ensure that your cash flow is properly recorded to ensure that you can afford to implement your plans. Keep your financial information as up to date as possible.
8. No empty claims
There should be no empty claims in your business plan. Everything that you claim should be backed up by some kind of evidence whether this is research that you have conducted or figures that have predicted a certain outcome. There should not be a single sentence that is not backed up by some kind of supporting information or data.
9. Why is this going to work?
Finally, you need to have confidence that the business plan you have created is going to work. For example, has another company done something similar and seen success from this? Or, have you already got a prototype up and running that you can show? Any factor that you can think of which could potentially have an impact on why this is going to work needs to be included in your business plan.
Showing that you already have plans in place to tackle issues before they become a problem also helps you to create confidence in your business plan.
For additional guidance and resources, see my article here on how to create business cases that helps you to make your decisions with confidence.
10. Seek a trusted, expert second opinion
Get your business plan looked over by a business adviser to ensure that it is the best it could possibly be. Completing your draft is a great feeling, but now you need to take it to an independent source to have it looked at. You could take this to a business adviser, or even an accountant if you would prefer, and they will be able to offer you the constructive feedback you need to improve your plan where necessary.
There could be pieces of information that are needed that you have not yet included, or there could be questions that this independent reviewer has come up with that you can now incorporate into the plan.
Real Result: Confident and successful business expansion
Andy Firth is a talented entrepreneur, with a special flair for all things digital and ecommerce related. He is founder and director of digital agency Ascensor.
Andy worked with me on the Idea Time programme to gain clarity in decision-making and to help create a business plan for accelerated growth.
Here’s what Andy has to say:
“We’re having a massive year this year at Ascensor, with legal contracts being worked on for a new building move. It was my BHAG (Big Hairy Audacious Goal) to be in that building by September this year and it’s all going according to plan and it’s because I’ve taken the time to properly focus on my goal. Also, my one-on-one time with Jo really looking at the goal has really helped because it is a huge commitment and in my heart 100%, it’s the right thing to do. […] Just by having the confidence, everything has fallen into place. I’ve had month, after month of the best months ever. I’ve recruited amazing people who have hit the ground running and it’s all to do with taking that time out to focus on the business and myself. And with taking that time out, doors often open that you don’t expect. I can’t thank Jo enough.”
Next steps for you and your business plan
I hope that you have found this article helpful, and now have some ideas on how you can write a successful business plan for your small business in a time-efficient, productive way. If you apply my tips then you will be able to create your business plan for growth in much less time than you might think. I am always on hand to help you. Join my Idea Time Membership as an annual member for £378 plus vat to get access to all the coaching and resources you need to develop a specific plan for you and your business. You can find out more and sign up here at Idea Time Membership.