A lot of people struggle with planning their business. For a lot of entrepreneurs and small business owners, they either do or do not do it. I believe planning is vital to any businesses success. A lot of entrepreneurs don’t do it because they do not see the value in planning. However though you can’t see it, doesn’t mean it’s not there.
Imagine you and your significant other or friend are going on vacation. Would it make sense to chat about where you would like to go? How would you like to get there? How long would you like to stay? What things would you like to do while at the location? What time of the year should we go? Do we want to remain in a hotel or bed and breakfast? How much money do we need to go on our trip?
You cannot expect to go on vacation with someone if you do not chat and plan it out accordingly. Otherwise, you will never go on vacation with one another. Your schedules won’t line up; you won’t know what is happening, and as a result, you might start to fight with one another.
The same goes with a business. Planning helps establish the standards and expectations.
Whether you are a startup, small business, or large organization, business planning is vital to any size of firms success.
What is a business plan?
Business plans help establish the direction the business is going while explaining how it will get there along with who are the stakeholders involved.
I once read an article that stated business ideas crafted into a plan are more likely to be executed. First, discovering if there is a need in the market for the product or service. Second, creating a plan around the need providing value. According to that article, if you could do that, you’re more likely to start a business.
At times entrepreneurs and small business owners can feel overwhelmed when first starting their business. There are so many different things to consider from suppliers, accounts payable, accounts receivable, marketing, public relations, operations, manufacturing, etc. A business plan can help the startup entrepreneur to become calm and confident with all the compartments in which a company operates.
Build a business plan like you’re going on vacation
Planning a vacation can be relatable to this experience. When you first plan your vacation and start chatting about it, you discover there are so many things you need to consider before heading to the airport in the morning. However, once you understand all that needs to be done and create a plan of attack, you become more at ease with your holidays.
To set the record straight, I am not a Trip Advisor.
In short, a business plan helps set the direction and goals the organization is moving towards and how it plans to achieve such.
What is a business Plan Used For?
A business plan is utilized as a communication tool to the employees or key stakeholders of an organization. Business plans communicate to the suppliers, investors, employees, of the firm by explaining what and which direction the company is moving in.
Employees need to understand what the overall goals and identity of the organization are. Members need to understand and operate within that identity which helps establish a brand over time.
For example, say your company is a socially responsible coffee bean supplier. You pride yourself on providing a high-quality bean, which is ethically sourced that does not undergo any chemicals. Your employees within your organization need to understand this identity as it may affect the decisions made in the day-to-day operations.
What about your stakeholders? One important stakeholder you always want to consider is your customers. A lot of companies don’t pay enough attention to their customer and therefore create products and services that no one ends up buying. It’s important to understand what your customers want, and how you deliver value to them. Therefore, a business plan can serve the customers by understanding the level of quality of service or product to be expected.
How long should a business plan be?
A frequently asked question for entrepreneurs who are starting up their business or planning is, how long should a business plan be? There is no real answer to this issue. Business plans can vary in length from 1 page to 100’s of pages, plus.
It depends on the complexity and size of the organization.
A business that has multiple stakeholders and operates internationally is going to have a more complicated plan and larger document compared to a company that sells in a few retail locations.
The real answer is a business plan should be as long as it needs to be.
It should be thorough, concise and relevant to the information it presents. Examining everything that is essentially making the business operate.
What should not be missing in your business plan?
A business plan should contain some elements of your marketing, financial, operational, and strategic plans. In your business plan, you should describe what the plan is for marketing, who the target market is, how do you plan on obtaining customers, what’s the cost of acquiring customers, etc. In your financial plan, you should be showing cash flow analysis, a financial projection for years to come, etc. The same goes with all the other plans that your business has crafted.
Your business plan does not have to contain all of your marketing plan, financial, operational and strategic plans. But rather, the relevant information that is needed should be present. Any information that is relevant to the stakeholders or investors of a business should be accurately provided in the business plan.
Some entrepreneurs when building the business plan, either make it too vague or too descriptive. It’s a fine line to be walking, often one that takes lots of time and understanding of writing business plans. In my opinion, you don’t want to be too vague where the reader is confused and does not understand what you are writing about. On the other hand, you don’t want to be too descriptive as the reader might feel overwhelmed and confused. Descriptive information presented in a document can pertain to be lengthy. Meaning, you don’t want to be vivid with every single detail about your business plan, but rather keep the information is relevant.
Business Plans contain relevant information
If your company is planning on producing a new piece of machinery to increase production, you don’t need to describe all the details such as horse power, the touchscreen features, the material the conveyor belt is. Instead focus on, by purchasing the new piece of equipment, what that will mean for the business. If you expect production would increase by making the purchase, describe the rate of change to be expected. How long will the equipment last? How often does maintenance need to be done on the machine?
State information that is relevant to the company.
When to review the business plan?
Today the market is moving extremely fast. It’s important to stay on top of trends and always stay current with what customers want. If you fail to remain relevant and adapting to the patterns of consumer behavior, you might be at risk of disruption.
Look at the disruptions that have happened over the past ten years.
• BlockBuster and Netflix- Your movie experience when you want it, how you want it, and where ever you want it.
• Cab Industry and Uber- A faster way of getting a ride. You no longer are calling a cab company ordering a ride, where a dispatcher would then send the closest to your location. Instead, you open an application, choose the ride service of your choice, and order the cab immediately. No longer waiting on the line to talk to a dispatcher.
• Hotels and Airbnb – An easier way of finding places to stay at a reduced rate compared to hotel chains.
Business plans should be time-based. Since the world is changing ever so fastly, it’s important to outline what year the business plan was created and when do you need to revisit.
Depending on the industry your business operates, may depict how often you examine your business plan.
Let’s say your industry is changing rapidly, staying on track with the existing plan might not make sense. Rather it makes more sense to revisit it, and create a new plan of attack and reduce the risk of being disrupted.
If you’re starting a business, you need to understand that industry and what you’re getting into. Examining the competition and what they are doing, and where the market is moving. If you were looking to start a cab company and decided to go ahead with a traditional route of expansion, you’re going to have some difficulties due to the changes in the market. Instead a more effective-approach is to understand where their market is moving today, and ask your self, “where might this industry be moving in 5-10 years and start positioning yourself for those changes”.
Industries such as technology are more prudent to changing more rapidly.
Why is a Business Plan Important to Investors?
Investors want to see you have a plan. You wouldn’t drive your car with a blindfold on so why would you operate your business with no plan.
Investors want to see you have a track record of building a plan, executing the plan and getting to where you want to be. It builds confidence in the investor because they know you can do what you claim you want to do. Obviously, there is risk involved, and at the end of the day, investors want to ensure they can receive a return on investment. If they can’t see, there will be no return on their investment their likelihood of investing diminishes.
Investors will have criteria for what they look for when seeking to invest in a business. Investors may have a target return on investment (ROI) percentage in mind or internal rate of investment. Though your firm may provide a return on investment to investors, it might not be a large enough or quick enough return.
Business plans can outline how you would spend the capital raised from investors. You want to put the money raised to good use that can help the business grow. Telling an investor you want to spend the money on foolish things that do not bring a return on investment to the firm just doesn’t make sense.
You want to show the investor that spending the money in certain ways can bring a return to the business. Whether it’s spending the money on equipment to increase or speed up production, advertising, open stores in other locations, etc.
This article only scratches the surface about getting investors in your business, and will a be a discussion for a future article! But for the context of this article understand in your plan of activities if you can show your investors the return on investment, and how long it will take your likelihood of receiving investment increases!
Looking to Get Started
There is one universal lesson I have learned doing the Bee Influenced podcast. Every successful entrepreneur who we have had on the podcast has had some failure at one point in time in their careers. However, every successful entrepreneur on the show will demonstrate there is a high importance for planning any thing you do in your business.
Successful entrepreneurs build plans and attack those ideas while learning along the journey.
Learning what works and what doesn’t work. Understanding what can be done differently to make the weaknesses not matter but double down on their strengths.
In the Brandon T. Adams episode, we examined what makes a successful crowdfunding campaign successful. Discussing the importance of planning and if you plan the whole journey, you are about to go on your chances of achieving your goals increases. Building an online following and blog takes a long time and one that you have to trust the process. John Sonmez from Simple Programmer talks about trusting the process and learning along the way. He talks about having an idea, building a plan, and then having the audacity to go after it. Trusting and believing you will get to where you are.
What is the common theme? Business Planning is essential to any business. Every business should have a plan whether it’s a 5-page document or a 100-page document.
Execute Your business plan
Planning a business is always good. In fact, a lot of people will suggest you don’t plan your business at all when you are first getting started. Though this might have merit, I believe the premise of what these experts are saying is discover what works and what won’t. Create a proof of concept, and determine if your idea can be commercialized. If you have an idea and start planning, you will not know if it can be commercialized. Discover if your idea can make money, or what needs to change to bring value to make it possible. Once you know for a fact, you can build a product or service around this, and that’s when you can start business planning.
The big thing for when you are getting started is starting.
A lot of times we chat all day about making plans and have meetings and more meetings, but at the end of the day, some thing has to get done.
You have to execute on your business.
Shia LaBeouf, the actor, said it really when he turned down a scholarship to Yale University. “The problem with college is that there’s a tendency to mistake preparation for productivity. You can prepare all you want, but if you never roll the dice, you’ll never be successful.”
Understand it’s important to execute on your plans, and at times over planning and over-preparing can be more determinantal than just doing.
Start Plan BEE- Business Plan Template Example
Do you want to start a business, but have no idea where to start? Have an idea for a product or service but not sure if it will work? Need help collectivizing all your thoughts?
If this describes, you don’t worry. Everybody starts somewhere!
I created a FREE Downloadable workbook to help you start business planning.
The Start Plan BEE workbook will walk you through planning your first business. It dives into the importance of building credibility with a business plan and helps you organize all the thoughts going on in your head.
It breaks down the business model canvas, explaining in detail and what you ultimately need to start business planning. You can fill out this workbook, use that information to start crafting an effective business plan.
Here’s what a reader had to say about it:
“The Start Plan Bee workbook is perfect for entrepreneurs looking for their ideas to blossom while implementing them into action. This book allows anyone to understand the fundamentals of a business plan. I encourage any person to use this workbook, so their business can be pollinated for success” – E.C
To download the Start Plan Bee workbook click the link and get it for FREE.
Best success to you,