By Kenneth Surbrugg, Director of the Center for Entrepreneurship at Missouri Southern State University
A goal without a plan is just a wish. – Antoine de Saint-Exupery
I recently watched a documentary about D-Day and something that I heard before stuck with me this time. D-Day, of course, launched during the early morning of June 6, 1944. However, the planning of this massive invasion began in 1942. The Allied forces had to plan for this massive European invasion. The Allies had to figure out what resources they needed, the location of the actual invasion, and who was going to participate. The Allies needed to establish who was going to be in charge on the ground and where the landing forces were going to go once they secured the beach head.
Small businesses, while not on the same scope and scale as D-Day, also require careful planning. What resources do you need to launch, maintain, and grow your business? Where are you going to locate your business? Will you utilize third-party websites to promote and sell items? Who do you need to hire or keep on your team? Who is in charge when you are unavailable? Where do you want to go next?
A business plan can help you answer these and other questions as you prepare to move forward. The business plan is your roadmap that describes how you intend to structure your business operations to serve customers. It outlines the financial estimates that are based on your business structure and goals established by you, the owner. It is your story to help you keep focused on what you want to do and accomplish while giving you a benchmark to measure actual performance versus your plan. And it allows you to create a strategy when you need to pivot.
A business plan can help both new and seasoned entrepreneurs structure ideas into a manageable document that defines the business opportunity, markets, customers, location, resources, and capital needs in order to generate profits.
There is not a magic formula for the length of a plan, but a good business plan should address the following:
- Company Description: How is the business structured? What is the mission statement? What are the goals of the company in the next one to three years?
- Service / Product Line: What is the opportunity in the market and how does your business address this opportunity? What intellectual property do you have or need?
- Human Resources: Who is on the team and what experience do they have or need? What are their individual roles and how do you coordinate their roles to generate positive business activities?
- The Market: What is the industry outlook? Is the local and regional market growing or shrinking? Who are your competitors?
- Customers: Who are your existing and potential new customers? Where do they live, or does that matter? How do they find information about your type of business or the industry in which you operate? How do they shop? How do they spend? Are there particular preferences that you need to address?
- Marketing and Sales: How are you going to attract customers to your business? How do you define customer service? Do you offer discounts or terms to your customers? How do you sell and where do you sell? Where are you located? What prices do you offer? Do you have premium or discount prices?
- Financials: How much do you need to launch or grow your business? What do you need to sustain your planned business operations? At your prices, can you generate enough in sales to support your business? What equipment do you need now or in the future? How do you plan to fund your growth?
Besides addressing the above sections, a good business plan will also define success and should describe how you, the owner of the business, intend to monitor business performance and when you will take corrective actions. For example, your plan should address how it intends to operate in the event of a major business disruption. Or on the other hand, it should consider how you respond if your sales are 25% more than what you projected. What employees will you need and what skills and qualifications will they have? What happens if your main sales channel is disrupted? In other words, your plan should consider how you intend to monitor the environment and explain how you intend to pivot to keep the business operating.
The good news? Your plan does not have to be a long document. However, it needs to describe what the business does and describe your potential customers. This plan is your story that contains enough information that an outside reader can understand what you want to do, who will benefit, and how you intend to conduct business. Financial projections need to be reasonable and well-articulated so the same outside reader can understand how you intend to make and spend money in order to generate profits.
Remember, the business plan is your story. It’s your business or idea. It’s your future. If you are responsible for the business, then you should be the one to write the business plan.
As Yogi Berra once said, “If you don’t know where you are going, you might wind up someplace else.”