I still remember these words from the small business workshop facilitator when I was starting my own business. However, I also remember disagreeing with him (in my mind anyway) as he spoke of the importance of having a well-thought out plan for your small business. I knew he was talking to the other people who had no previous business experience. Clearly this was not me.
With a nearly 25-year corporate career and an MBA, I knew the ins and outs of marketing a brand. I had experience in PR and promotion. I knew how to budget. All of this was tucked away in my head ready to execute at the drop of a hat. I didn’t need to write anything down. That was for amateurs!
However, after leaving the class, I begrudgingly began to work on my plan. Hours later, I had several pages outlining why my products were unique and how they would change the world. A plan surely worth a grade of A-plus…not so much.
As I learned, not only from this facilitator, but other experts, business plans are not product brochures. They reflect the vision of your business and the means for which you will carry it out. They are well-researched, rooted in fact, and contain the nuts and bolts about your business Grade for my first attempt? Maybe an “A” for effort, but a “D” for content.
I’ve learned that there are three reasons why small business owners don’t have a business plan. The first – “I don’t have time. I have to run my business!” The second – “I have no idea how to write a business plan.” And last– “I don’t need a business plan. It’s all in my head.”
These three reasons have one thing in common. They are…how shall I say this? Well, they are excuses. That’s right. Excuses. And excuses don’t grow businesses. They keep you stuck or worse, they keep you from ever starting. Does a business plan take time? Yes. Does it require effort? Yes. Can you do it? A resounding YES!
The first step in finding a solution to any challenge is to admit there is a challenge. I’m going to assume if you are reading this that you don’t currently have a business plan, but want to create one. Given that you’ve taken the first step, the next is to rid yourself of the excuses that are holding you back. Because if you really want to accomplish something, you will find the time, you will push through the excuses, and you will recognize that you may need help. That’s what I had to do. You can do the same. You just need to decide to start. I hope the following information and tips will help.
While there are many templates available for business plans, having a few pages outlining the following key areas is a great start.
These include:
- Summary. An overview or snapshot of your business.
- Industry overview. What’s going on in the industry for which you will be doing business?
- Competitive Analysis. Who are your competitors?
- Financials. How will you make money?
- Management. How is your business organized?
Summary
It’s tempting to start with this section because it comes first in the plan. But it’s best to develop this last because it is intended to present the reader with a snapshot of your business. This is not a lengthy section. Three to four paragraphs are sufficient.
Your business plan is mostly for your eyes only. However if you’re seeking investors, you must write your plan as if they will read it. Remember, like anything you read, if it doesn’t catch your attention in the first few minutes, you’re not likely to finish reading it. So make your summary compelling but accurately reflective of your business offering.
Industry Overview
This section contains information about the industry your business will serve. This should reflect not only a broad but a local view. Think of this as a “state of the state” for your business.
For example, if you are opening a gift store, you want to include data on the retail industry as a whole, but also data on local retailers. What are the challenges and opportunities? What are the predicted growth trends? This information can be gathered easily from free research available on the Internet, the business section of any library, and various industry associations.
Competitive Analysis
That sounds scary, doesn’t it? I hear the word ‘analysis’ and the hairs on the back of my neck stand up. But what this really means is do you know who your competitors are? What are they are offering? If you don’t have a good sense of who your competition is, how will you be able to make your products or services stand out amongst them?
In keeping with our gift store example, before you even begin, you want to know if there are other gift stores in the area. Where are they located? What is their product line? What type of customers visit their store? How long have they been in business? You don’t want to open up next to a Hallmark.
Knowing who your competition is helps you differentiate your product or service and helps you to better serve your customers. New businesses start up every day and so your competition changes every day. Staying on top of the happenings in your industry will be critical for your success.
Financials
Another section that can instill fear for some business owners. But aren’t you in business to make money? I mean, there are certainly businesses that are labors of love, but even they have to pay the electric bill!
So what’s included here? Simple. You make money by selling your products or services. In order to do that, it costs money. This section is merely a reflection of all of the ways you will make money and all of the expenses to do so. Yes, there are fancy terms for many of the financial statements you will need to include, like cash flows, income statements, and balance sheets. These are critical to understanding how your business will make money. But having a simple budget-like statement outlining where and how your money will be made and spent is a great way to get a sense of the financial picture for your business.
For our gift store, revenues will be made from the products sold. Expenses are things like rent, sales tax, and utilities. At the end of the day, you want more revenues than expenses. Knowing where both come from will help you run your business better.
Management Overview
I started this section first because it was the easiest and gave me a sense of accomplishment. Basically this is the “who” and “how” of your business. Are you a sole business owner or do you have partners? What’s your business legal structure? What type of insurance do you have? What happens if the business closes or ownership is transferred?
This section addresses your business structure. You want to speak to a small business expert on the type of business you should set up and any insurance you may need to protect yourself and your assets.
And that is a business plan in a nutshell. Not too bad, right? Your business plan is not something you write once and file away. As your business grows and changes, so should your business plan. Take it out regularly, evaluate it, and determine if it needs to be updated to reflect your progress. While a business plan is a serious document, it should also tell a story. And like any good story, you want a really good beginning, lots of detail about the characters, and a great ending.
So get started today! Everyone loves a great ‘rags to riches’ story. You could be next!
Submitted by Jennifer Covello
Owner, Founder, Frittabello, LLC
www.frittabello.com
203.524.0784
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Jennifer is an award-winning author and owner of Frittabello, LLC, a baby gift business she started in 2008. Her products are available online at www.frittabello.com and in upscale Fairfield County retailers. Ms. Covello facilitates “Put Your Love on Paper” baby journaling workshops as well as small business workshops for moms called “Moms to Mompreneurs”. She is a frequent contributor to various online publications for entrepreneurs and is a blogger for Working Mother Magazine. Ms. Covello lives in Norwalk with her two children.