Why Do You Need a Business Plan?

When you started a business, you either had an underlying reason for choosing what business you were going to go into, or you were presented with an opportunity—a family business or buying a small business—that pointed you in a specific direction. What you may not have had in your toolkit was a business plan.

So, what does a business plan give you? Here are a few valuable touchstones:

• Clarity of Vision: A business plan forces you to articulate your business’s vision, mission, and objectives This clarity can guide your decisions and actions, so you stay true to the business.
• Goal Setting: It helps you set specific, measurable, and achievable goals. This is crucial for tracking your progress and staying on course.
• Resource Allocation: A business plan helps you allocate your resources (time, money, and personnel) efficiently. It ensures you’re investing in a way that directly contributes to your business success.
• Funding and Investment: If you ever seek funding or investment, a well-prepared business plan is essential. It demonstrates your commitment, strategy, and potential for growth to potential investors.
• Risk Assessment: It allows you to identify and mitigate potential risks. By planning for challenges in advance, you can respond more effectively when they arise.

At a minimum, a business plan should cover the five things above and have pragmatic summaries of a few key areas. That’s up next.

Creating a Useful Business Plan for Small Businesses Under $1M

If this is your first time creating a business plan, or if you’re a small business, keep it short and simple. Don’t skip any areas. If you’re unsure how to put together any sections, just reach out to us.

1. Start with the Basics: Keep your business plan concise and focused. Begin with essential sections, such as an executive summary, company description, market analysis, and a simple financial plan.
2. Know Your Audience: Tailor your plan to the audience that you’re creating your plan for. If it’s primarily for internal use (you and your employees), focus on practical strategies and actionable steps. If it’s for investors or lenders, include financial projections and growth potential.
3. Market Research: Invest time in thorough market research to understand your target audience, competition, and industry trends. This knowledge will help you figure out your strategy.
4. S.W.O.T. Analysis: Perform a SWOT analysis to assess your business’s strengths, weaknesses, opportunities, and threats. This provides a realistic view of your current situation.
5. Set Clear Goals: Establish clear and achievable goals. Break them down into short-term and long-term objectives. Use the SMART criteria (Specific, Measurable, Achievable, Relevant, Time-bound).
6. Financial Projections: Create a simple financial plan that includes projected income and expenses, and cash flow. Be realistic (conservative).
7. Actionable Strategies: Outline actionable strategies for marketing, sales, operations, and finances. Describe how you will acquire and retain customers, generate revenue, and manage costs. Who will you turn to when you need help—think HR, finance, and legal stuff.
8. Risk Management: Identify potential risks. What will your strategies for mitigating them? Have contingency plans for scenarios like economic downturns or supply chain disruptions.
9. Regular Updates: Your business plan is not set in stone. Review is once a year and update it as your business evolves. Use it as a dynamic tool to guide your decision-making.

Ready to start? Below are some sources of business planning templates that will guide you through the process. And remember, we’re here for you. Reach Out.

Practical Tools and Templates**

To make the process more manageable, consider using business plan templates and tools tailored to small businesses:

1. SCORE offers a free business plan template specifically designed for startups and small businesses
   ( https://www.score.org/resource/business-plan-template-startup-businesses ):.
2. Bplans offers a wide range of business plan templates, financial planning tools, and resources
   ( https://www.bplans.com/ )
3. LivePlan is a business planning software that simplifies the process with step-by-step guidance and financial forecasting tools.
   ( https://www.liveplan.com/ )
4. Local SBDCs (Small Business Development Centers) often provide free or low-cost business plan workshops and guidance for small businesses
   ( https://www.sba.gov/local-assistance/find/ )

Even for small businesses under $1 million in revenue, a well-structured business plan can be a valuable asset. It provides clarity of vision, goals to reach, resource allocation, and risk assessment. When creating your plan, focus on the essentials, tailor it to your audience, and use practical tools and templates to streamline the process. Remember that a business plan is a dynamic document that should evolve with your business. By investing the time and effort to create a useful business plan, you can enhance your business’s chances of success and growth.