Do you have a business plan? If you’re like many small business owners, you don’t have a positive answer to that question. Most believe that a business plan is only needed when investment or loans are part of the equation, and consider it an unnecessary headache. It’s also viewed as an pointless expense, since most small business owners feel incapable of creating a business plan on their own and think they must engage professional services to get it done. Add to this the debate over whether or not a business plan is needed at all, and there’s no wonder so many shy away from even thinking about it.
But here’s the thing, if you intend on building your business beyond a side-hustle, you should consider the merits of having a business plan. And if you want your side-hustle to be more lucrative and purposeful, then, you guessed it, create a business plan.
A Business Plan is not just for getting a Loan.
One of the greatest benefits of a business plan is that it helps you see both the big picture and the details simultaneously. Not only does a business plan require you to outline your goals for your business, it asks you to explain how you plan to accomplish those goals. You’re able to take a birds-eye view of your business, look beyond your day-to-day buying and selling, and chart the actions needed to get where you want to go. You see, having a dream is noble, but if all you have is a dream, with no clue about how to accomplish it, then chances are it’ll remain a dream. Working on a business plan forces you to take a long hard look at the feasibility of your dream, and this is an important step in turning dreams into reality.
Having a business plan is like having a destination, a map of the terrain, and a compass to guide you.
Most business plans have the same core data, generally outlined in the following way:
- Cover Page – Company name, logo, title of document, date
- Executive Summary – This section includes a summary of the business plan with details of the mission and vision statements, business objectives, competitive advantage, management team, and product. For use with loan and investment requests, this section also includes the amount requested with a brief statement about what it will be used for. You will write this section last, since you’ll need information from the other sections to complete it.
- Description of Business and Industry – Here you would demonstrate an understanding of the industry, your niche, what need you’re fulfilling, your products and services, and your company’s goals. In other words, where’s the opportunity?
- Management Plan – In this section, information about the management structure, key members of the management team, and management philosophy is included.
- Market Analysis – A market analysis includes description of your ideal customer, your target market, factors that influence the market that could affect your business, and a description of what makes your business different.
- Competitor Analysis – After analysing the market, you will need to identify key competitors. Who are the major players in your industry, in your niche? Does the market allow for easy entry, and do you see the possibility of competition becoming stronger in the future?
- Marketing Plan – So now you know all of this, what’s your plan to establish yourself and grow your business? What are your price points? What’s your strategy to find, engage, and garner sales from customers? How do you plan to promote your products and services? Answer these questions in this section to have a clear idea of how you’re going to generate revenue.
- Financial Plan – Most people are intimidated by this section because they fear it requires accounting savvy. Fortunately, it doesn’t require too much beyond an understanding of expenses and income. Your financial plan details all the money you spend, and all the money you make. Once you have an idea of how much money you spend in a month, and how much income you expect in a month, then you minus expenditure from income to determine the profit or loss made. This is where you would outline any need for investment or loans, and how those funds would be utilized. However, that’s not the only information in this section and your business plan still needs financial details even if you’re funding everything yourself.
- Execution Strategy – This is another section many find challenging because it asks that you think beyond your involvement in the business. Who are your suppliers? How will products and services be distributed? What happens to the business if something happens to you? When will you acquire additional staff, and how many do you need? How do you plan to mitigate risk? These are important questions that are quite sobering for entrepreneurs and small business owners, but they must be answered.
- Conclusion – The one question you need to answer in this section is why you and your company are uniquely qualified to deliver the products and services described to your target market. Why will your business grow? Why will you succeed? Many of the details required for answering these questions can be found in other sections of the business plan, but you want to say it outright, make it plain. This is a useful section for investors, but it’s also a great section for you as it leads you to put your unique selling point into words, and that is something which helps you connect with customers.
Most business plans cover a three to five year period so you can see how the business will develop over time. They are quite detailed for the first year of operation, then a little more general for the following years.
Don’t be intimidated by the prospect of developing a business plan. Use the outline in this article to get started and document an action plan to your success. Fill in the details you can, think about the rest, and fill them in when you have the information.
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Shelley-Ann Edwards-Barran is a writer, editor, writing coach, speaker, and advocate for better writing instruction. She is the CEO of WERD Coach Ltd., a company dedicated to helping writers at many levels – children, academics, authors.