Creating a business plan for a small business is like laying a path to success, building it brick by brick. Starting from nothing but a planned destination is the hardest part. But once started, each brick, strategically placed, takes you one step further with great thought and determination.
This is the most important tool for the small business owner. It is your guide, or roadmap, to success because it should scrutinize every aspect of your business. The main areas this document should contain are Management and Operations Plans, Market Analysis, Services and Pricing, Sales Strategy and Financial Analysis.
The biggest mistake entrepreneurs make is placing the business plan on a shelf and never reviewing it again (that is, if they write one to begin with!). The business plan provides guidelines, projections and suppositions. It does not provide certainty or absolutes. Therefore, it must continue to be tweaked and revised. This document is a living, breathing document that helps you see what works, what doesn’t, what has changed and what needs to change.
Three key components that should be analyzed closely are the Sales and Service, Market Analysis and Pricing. When starting a business, research on your projected market can only provide a best guess. As your business grows, you’ll most likely find variations that should be incorporated into the business plan.
When reviewing your client base, you might discover a need to adjust your assumptions. Were the demographics correct? Was the geographic area first determined really where you’re finding your customers? Are the channel markets who you expected them to be? Scrutinize your findings and make changes to your business plan accordingly.
The Sales Strategy might also change. For example, your plan might have called for print advertising and direct mail, but you discovered that networking and referrals turned out to be the best way to secure sales. Your advertising budget will adjust positively with this scenario, but you might need an additional part-time employee to cover the time you’re attending networking meetings. The adjustments are a continuous project!
If your demographics prove to be different than anticipated, there might also be a need to adjust your pricing and services. Let’s consider a cleaning service, established to do weekly cleaning to the Boomer market. The advertising was directed at the Boomers, and you find that you are reaching exactly who you are targeting! But you find that most are calling to hire a cleaning service for their parents. The aging seniors would most likely need less frequency (monthly or quarterly), which could create a cash flow issue. Therefore, there might be a need for a different pricing structure. More refining to your plan will make it a better path to success.
A business plan will help you see where you are and where you can go. It will help you determine if you are staying on track or if you need to refocus. Just like a brick path that needs constant care, the same is true for a business plan. You must secure loose ones, replace broken ones, pull weeds, and often widen and lengthen the entire path to handle additional traffic (customers, products, services).
This vital document will make your journey more enjoyable and more successful, but only if it is visited and revised often rather than sitting on a shelf collecting dust.