Business plans are essential for focusing one’s mind and overall direction in what your new business is about. As your business grows it’s important to review and refresh your business plan. I think a business plan can be as simple as 2 or 3 pages. A good business plan is about substance not about quantity.
SCORE mentor Hal Shelton has written a new book, “The Secrets to Writing a Successful Business Plan” which is all about business plan writing. He answers a few pertinent questions for us below and provides his 12 commandments for writing a business plan.
1. A business plan is a marketing action.
2. Know your audience, and write the plan in a style and with information they need for the action(s) you want them to take.
3. Business planning should focus on the customer, not on the entrepreneur.
4. A small business is usually a bet on the entrepreneur, so provide a biography that demonstrates you have the technical and leadership experience to drive your idea to success. Either demonstrate you have the experience or you have surrounded yourself with others who have it.
5. The executive summary is the most important plan section. It delivers the message and sets the tone. It should be enthusiastic, concise, professional, and no more than two pages long.
6. Have sales goals that are supported by research and an actionable marketing plan.
7. Request funding in the amount you truly need, and support your request with financial statements.
8. Use of funding proceeds should be primarily for investments, purchases, and marketing activities that will generate the products, services and sales.
9. Surround yourself with advisors and mentors, and talk through your business ideas with them.
10. A business plan is never perfect and never finished, so do not procrastinate writing it or obsess about creating the ideal plan. At some point, you need to stop writing and start satisfying a customer need and making money.
11. It is all about the money.
12. Focus, Focus, Focus.
Is a Business Plan important?
Yes, a Business Plan is important! A Business Plan is the document or the basis on which a presentation is made, to communicate with others (e.g., prospective banker, investor, board member, employee, large customer, and/or vendor) what the business is about, why you are the right person to lead it, and that the business idea is feasible and viable. It is your calling card or entry point to those who you might need to make your business successful. There are many styles of Business Plans and an entrepreneur needs to find the one that best meets his/her needs.
Why is it important?
If starting a business is a sure thing, there would be no small business authors and consultants industry. In fact, more than half of all startups fail in the first 5 years. Creating a solid Business Plan that answers the question of “what does success look like” will help the entrepreneur determine to implement or not her business idea. The business plan will contain the demonstration that the business is both feasible and viable along with the messaging regarding value proposition and why you are the right person to lead this business at this time. Further, the Business Plan will be your documentation that you have considered and thought through all the factors necessary to have a successful business—you write the Business Plan for yourself, it is your Plan.
Once the business has started, the Business Plan will be the road map—the classic adage, if you do not know where you are going, you will not know when you get there. It is a rare situation when an entrepreneu
r has thought of everything and everything works out as planned. Knowing the context of how operating, marketing, financial, staffing and other decisions were arrived at will facilitate making adjustments and corrections as the business matures.
How can one predict their sales 6 months from now?
Answer depends on type of business (B2B or B2C for example), sales cycle and whether business is up and running or not yet started. Generally, the best way to forecast sales is to have a risk adjusted sales pipeline—which customers are being pursued and what is the probability of landing the sale in a certain time frame. And what gives the pipeline information credibility are the marketing actions the company is taking to identify and obtain customers—in detail. For example, just saying we will use social media is not sufficient. For a startup, it will be combination of looking at what competitors’ achieve, having talked with enough people before grand opening and guesswork. I often ask my startup clients to provide the name of 50 potential customers.