Do I Really Need A Business Plan?
When it comes to business plans, small business owners typically fall into one of four categories: those who create business plans every year or whenever a major shift is occurring in their business, those who grudgingly create a business plan before they launch and then never do it again, those who dream of starting a business but let the fact that they need a business plan stand in their way, and, lastly, those who forgo the business plan entirely and just dive head first into their business. Let’s discover how to turn an idea into a business plan.
While there are certainly those who have succeeded without a current plan in place, the reality is that going into a business, a new year, or a new product launch without one is only putting yourself at risk. A business plan is first and foremost a document to help you chart the path you want your business to take in the next year and, more importantly, what steps you will take to get your business down that path. Without that plan, it’s too easy to get swamped with all the details of running your day-to-day business that you never actually have a chance to move the needle forward on your business. Your business plan is that map that helps keep you on course and focused on the right things at the right time.
The good news though is that unless you’re looking for outside investment, the business plan you create doesn’t have to follow traditional business plan formats. In fact, the plan doesn’t even necessarily need to be written if that’s not going to help provide you with the clarity you need in your business. Feel free to mindmap, draw, collage, write, or any other tool you find useful to create a plan that will, at a minimum, address the following points:
Top 5 Components Of A Solid Business Plan*
- What are your top 3 goals for the coming year/product launch. Make these goals as measurable as possible – meaning, attach a number to them that you can go back to later and see if you actually achieved said goal. Nebulous goals, such as ‘raise customer awareness’ aren’t something you can look back at later and say with any certainty that you achieved.
- For each of those goals, what steps need to take place in order for you to work towards achieving those goals. Be as granular as possible and, when applicable, schedule those tasks into your daily, weekly, or monthly calendar so that they don’t get forgotten.
- What is your projected cash flow forecast for the coming year? When do you anticipate, based on your known and assumed expenses and anticipated revenue, your business will be flush with cash and when might there be periods where your business is running a little lean. What changes can you potentially make now to your business model, your business strategy, your product offerings, etc. that may help offset, increase, or level out your revenue. For new businesses, when do you expect to become profitable and are you ok with that timeline horizon?
- Who is your target market? What do you know about the people who buy or who you think will by your products? How do you plan to position your company to them so that what you have to say and offer will resonate with them?
- What is your marketing plan for the year? Remember, planning to post something on social media every now and then is not a marketing plan. In order to support your brand, support your product, and work towards achieving those goals you’ve laid out, you need to have a plan in place for how you intend to market to, communicate with, and engage with your audience. This is one of the most important but oftentimes overlooked parts of the business plan.
*As a reminder, the focus here is on internal business plans and not those that are being shown to investors. While investor-worthy business plans need to have all of the above, those plans should include additional information about company management, company mission, and an in-depth look at the marketplace among other things.
Jennifer Lewis is the founder of Small Food Business, a website focused on providing resources and information to food entrepreneurs. The site includes hundreds of articles specific to the food industry, a podcast series which includes interviews with industry experts, white papers, and a community forum amongst other things. In addition to being a professionally trained pastry chef and having worked in the food industry from more than 20 years, Jennifer also holds an MBA from Northwestern University’s Kellogg School of Management.