If you have big aspirations for your business, you need a plan to make things happen. Success rarely follows spontaneity (especially for entrepreneurs). A detailed plan is usually the best way to make your dreams a reality. Despite this logic, many small business owners flounder when articulating their business goals and their plan of action for achieving them. That’s where a business plan can help.
A business plan sounds daunting, but it’s actually pretty simple. It’s just a description of your business’s future that outlines what you plan to do and how you plan to do it. It can be as short and plain as you’d like or as lengthy and dense as you need.
Putting together a business plan—and regularly updating it—is a great way to periodically step back from the minute details of running your company and visualize the big picture. Getting started is easy if you approach it correctly. If you download a business plan template and start trying to plug in various elements, it’s going to be a long, dull process. The approach in this article is going to try and help you avoid that. First, answer the simple questions below (we’ll compile them into a digestible format later). Start with what you know—then research what you don’t. You’ll be surprised how much you already know about your business, industry, customers, competitors, and more.
1. Define Your Business’s Current Situation
To begin, describe your business and its current condition. What’s your place in the market? What need does your business help fulfill? How is your company doing currently? Is business booming or are things trending in a negative direction? Are there any opportunities your business could seize now or soon? Is there anything from the industry, community, or your competitors that could threaten your business? How is employee morale?
This list of questions isn’t comprehensive, but it should provide a good place for you to start thinking about the current state of your company. Be transparent and honest when describing your business. This plan won’t help anyone if it’s full of fluff and dodging issues that need addressing. Again, your answers can be short and sweet or filled with plenty of details—it’s your business plan.
2. Determine Your Goals—Don’t Forget the BHAG!
Now that you know where your business is, where would you like it to go? Think of short-term and long-term goals. Where do you want to see the company in 1 year, 3 years, 5 years, or 10 years? Think realistically, but feel free to stretch your imagination. Dream big! Later, we’re going to create the step-by-step plan for how you’ll make these goals a reality—once you start seeing the required input necessary to achieve your goals, feel free to come back to this section and make changes.
Many think it’s critical to be bold and daring, no matter what stage your company is in (startup, public company, or even just an unhatched idea). And there’s nothing bolder than a Big Hairy Audacious Goal (BHAG)! A BHAG is a medium- to long-term goal that’s borderline outrageous but just rational enough to be feasible. Take Volvo, for example. They have a BHAG that no one should be killed or seriously injured in a new Volvo by the year 2020. Or think of John F. Kennedy and his crazy idea (before the end of the decade) to launch a man into space, land him on the moon, and return him safely home! Big things occur when you allow yourself to dream a little and then craft a plan to make it happen.
3. Analyze the State of Your Industry and Customers
Next, start to think of your industry and the market as a whole. Are there new trends that could impact your business? Will you need to shift gears shortly to satisfy market demand or keep up with the competition? Take tech, for example. Artificial intelligence (AI), automation, and personalization are hot at the moment. Tech businesses that fail to recognize these trends will inevitably fall behind. Your business needs to keep up with the industry expectations and (ideally) think of ways to get ahead of the curve.
Another related topic to consider is your customers. Who are they? What do they want? How are they changing? What’s the best way to get in front of them? Creating a business plan is a perfect opportunity to start building your customer persona if you don’t have one yet. Remember—start with what you know. If designing this business plan makes you realize you don’t know your customers at all, then it’s already provided a significant benefit. If you’re not feeling confident or feel like you’ve lost touch with your customers, don’t despair. Take the time to get to know your customer better.
4. Investigate Your Indirect and Direct Competitors
Understanding your competition will help you see where your business fits in the grand scheme of things. Who are your competitors? What makes them competitive with your business? What do they do that you don’t? What do you do that they don’t?
Now is a great time to perform a SWOT analysis of your competitors. SWOT stands for strengths, weaknesses, opportunities, and threats. Once you think about your competition in this light, you’ll see new opportunities, discover viable products, and find ways for your business to gain a competitive advantage.
Don’t just limit your thinking to direct competitors. Start thinking of other products or services that could be indirectly impacting your business. Think about Domino’s, for example. Domino’s has direct competitors like Papa John’s and Pizza Hut, but those aren’t the only businesses challenging the fast-food pizza giant. Indirect competitors like McDonald’s, Subway, and Wendy’s are all businesses that Domino’s needs to keep a close eye on. Why? Because they’re all targeting the same hungry customers.
5. Strategize How You Will Make Your Goals a Reality
By this point, you have a good understanding of your business, where you want to take it, and what could help (or stop) you along the way. Next, you’ll need to come up with the detailed strategies for how you plan on crushing your goals. What are you going to do to set yourself apart from the competition? What sales and marketing tactics are going to help you find and retain customers? Have fun with this part! No, you likely won’t use even half the awesome ideas you come up with, but it’s an excellent chance to think creatively about marketing your business.
The next part is equally important, but, unfortunately, not as much fun. Once you’ve planned the strategies, it’s time to think about the logistics. Will you need to make some additional hires to execute these strategies? Does that mean you’re going to need to expand the office space or purchase a second location? When will you need to purchase or replace equipment to keep up with business growth?
Finally, you need to start thinking about the financial side of things. It takes a little cash to change the world, but money doesn’t grow on trees. Will you need to take out a business loan? Or will you trade equity for capital instead? Do you have enough cash on hand to make things work? Do you need to consider a larger credit limit?
6. Transform Your Knowledge into the Business Plan
Answered all the questions? Great! Even if you don’t have all the answers down yet, you’ve come a long way toward creating and finishing your business plan. And the best part is…you’re practically finished. The next and final part is arguably the easiest. We’re just going to take all the knowledge you’ve written down and plug it into an easy-to-read format. Here’s what it’s going to look like:
1. Executive summary
2. Business Overview
3. Market Analysis/Industry Analysis
4. Competitive Analysis
5. Sales and Marketing Plan
6. Operations and Management Plan
7. Financial Plan
You already have the information necessary to start filling out all of these sections. This format isn’t required per se, but it’s a typical arrangement across most industries. Just copy and paste, tweak a few sentences here and there, add a comma, throw in some bullet points, and voila! You’ve created a good-looking business plan.
Once you’ve finished, it’s time to print the plan, bind it, and put it in your file cabinet to be checked again in 3 years…not! Keep your business plan close and regularly check it. It’s your master plan—it’ll help remind you of critical factors and should influence important decisions. Before you go chasing that “new shiny object,” reference your plan and see if it fits in the grand scheme of things. Before you make a major purchase, reference your plan to see if it’ll contribute to your short-term or long-term goals. Your business plan is not a static document. Review it frequently, update it regularly, and follow the path you’ve developed to the future you’re building.