Creating A Business Plan
Failing to plan is planning to fail - Benjamin Franklin
As we draw closer to the end of another year, we want to say congratulations! You made it! Maybe this last year was the best yet for your business, or perhaps you’re burnt out and stretched thin after a year of ups and downs. You may be thinking, ‘how do I grow my business from here?’, ‘how do I keep this momentum going?’, or even ‘where do I go from here?’.
Generally, towards the end of the year, businesses create a business plan for the following year. Do you have your business plan for 2019 done yet (writing down 'make more money' doesn't count)? If you haven’t created one yet, take some time over the coming weeks to dig into creating one. Hopefully, you’ll be able to take some time off to rest and relax over this holiday season and can use that extra energy in your business plan to create new direction and momentum.
Creating a business plan is one of the best things you can do for your business each year. All successful companies review their business plans regularly to make sure it continues to meet their needs. Your plan doesn’t have to be wildly complex either; however, it does need to be organized and map out the next year of your business at a high level (remember, this map isn’t set in stone, so don’t worry if things change).
Today we’ll be going over what a business plan is, what's in it and how you can create one for your business.
Your business plan needs to be strategic. Your business, today, is in a particular ‘place’: you have a certain customer base, income, resources, strengths, and weaknesses. You want your business to get to ‘there,’ a point in the future (usually 3-5 years off) when you’re business will have a different income and resources. Your business plan lays out this year’s strategy to get to the 5-year goal.
WHAT IS A BUSINESS PLAN?
Put simply, your business plan is a written description of your business’ future. Honest. That’s it. It’s a document that outlines what and how you plan to get to where you want your business to go.
A business plan can work for you in many different ways:
- If you’re a startup looking for investment, you can use your business plan to show your vision and roadmap to success with potential investors.
- If you have a larger company and are trying to attract key employees, a plan can get you here as well.
- Plans can help you prospect for new customers, manage suppliers and generally manage your company more effectively.
WHAT’S IN A BUSINESS PLAN?
Generally, your business plan should include several key elements:
- Marketing Plan
- Financial Plan
- Operational Plan
Summary - This part is a high-level overview of your business and your plans for the next year.
You can include your business’ concept, your industry, business structure, details on your service(s) or product(s) and wins from the previous year.
You also want to outline the goals for the next year here as well, at a high level only, you’ll be going into the details farther on. Include where you want your business to go and the goals you hope to achieve.
Marketing Plan - Typically this information isn’t going to change drastically from year to year, but you may tweak it or ‘dial it in’ as you go along, so it’s important to come back to this regularly.
- Unique Selling Proposition
Think of this as your ‘elevator pitch’. This statement should be a one or two sentence summary that explains what your business does.
IE: I’m a small business bookkeeper from Phoenix, AZ and I’m the best bookkeeper for construction companies because I used to do all the financials for several and know the ins-and-outs of the construction industry.
- Target Market
Who is your target market? How many people are in your market? If you haven’t figured this out yet, this blog is an excellent place to start.
If you’re a company that sells running gear, you don’t target everyone that runs. You’re most likely targeting a specific group or type of runner (IE: marathoners, new runners, social runners, etc.). These details make your marketing and sales efforts much easier and more successful.
This part should cover your/your business’ reputation, the level of experience, the training(s) (including certifications and accreditations), the guarantee you offer, your system and your value proposition. This isn’t likely to change drastically year over year, but you will (in part or entirely) use this information in your marketing.
List out your most significant competitors for your target market and how you are better/stand out from them.
- Marketing Platforms
There are thousands of ways and channels in which to market your business: direct mail, social media advertising, referral marketing programs, traditional marketing, etc. Identify the 5-10 that are the best fit for your business and your target market and stick to them.
If your target market reads a lot of newspapers and local mail, putting all your ads money into Facebook and Instagram ads aren’t going to deliver the result you’re wanting.
- Marketing Budget
Once you’ve outlined whom you’re targeting and where you’ll be targeting them, you need to create a budget. How much are you going to be spending per channel/platform? How often will you be spending?
- Marketing Calendar
While each of the marketing components is important, the calendar may be the most important. Create a schedule laying out the marketing activities that will be happening each month. By laying out your year in advance, you’ll have an idea how much you’ll be spending on marketing per month and stay more consistent in your marketing efforts. This is not a set in stone schedule, if something doesn’t work, change it. If a channel stops delivering for you mid-year, don’t stick with it only because your plan says to.
There is no need to get granular with your plans here. Stay high level and then each month layout the details.
- Marketing Tracking
As with everything marketing related, it’s crucial to track and measure everything. If you don’t already have a marketing system or management tool, you can start by tracking in a spreadsheet to measure results. You want to monitor every marketing activity you do from start to finish (conversion rates, click-throughs, closing ratios, etc.), this way you’ll be able to know what actions work best for your business.
Look back at the last 12 months financial statements.
- Where did your income come from specifically?
- When did it come in?
- Any significant financial swings up or down?
- What do you project to bring in in 2019?
Base this number off of your marketing action plan and the economy. Project your income by month and make your best, most educated guess when making this projection.
Where did you spend your dollars this last year?
Were all of your expenditures useful or good? Did they have a positive ROI (return on investment)?
Working off your marketing plan and your learnings from the past year), create a monthly budget for the next year.
If you know approximately how much money is coming in and going out on a monthly basis, you’ll have a more accurate picture of your company’s cash flow.
Once you have a budget in place for each month, you can begin to measure each month’s performance against it.
This can be an overview of where you are or an improvement plan. Look at each of these functional areas and brainstorm and evaluate what’s working, and what’s not. If you have team members, this is a great place to bring them and get their insight, because they tend to have ideas you may not have thought of.
- Marketing (do this before working on the marketing plan)
- Customer Satisfaction
- Customer Fulfillment
- Organization Management and Leadership
- Back Office
- Data management, accounting, reporting, etc.
- Finance Management
- Cost of goods, expenses, inventory, etc.
- Once you’ve evaluated each category, make sure to set goals for it. Make sure you review these goals monthly/quarterly to keep an eye on your progress.
‘You cannot really move forward until you look back’ - Cornel West
HOW TO CREATE YOUR OWN 2019 BUSINESS PLAN
Review & Assess - Reflect on the last year in your business:
- What went well?
- What didn’t go well?
- What would you change/do differently about this past year?
Analyze everything — what events occurred, how they were handled, and what were the outcomes. Brutal honesty is required here. You can’t fix a problem you don’t know exists. It can be helpful to do a SWOT analysis now as well. Looking at the previous year, what were the business’ greatest strengths, weaknesses, opportunities, and threats?
Decide What You Want - This isn’t goal setting, these are high-level outcomes we're focusing on. What do you want for your business? Your life? Your health, your relationships, etc.? Prioritize what is important and what you’re aiming to achieve because until you know what you want, the small goals don’t matter.
Why Do You Want These Particular Goals?
Get specific... Why do these goals matter to you? Why, specifically do you want this particular outcome? The energy behind your ‘why’ will determine the outcome.
Determine Your Goals - What are your objectives for 2019? What do you want to accomplish?
You can think about what you want your business to be in 3 years, or 5, or 10 and then work backward to where your business is now. What sort of offerings and marketing do you need to start creating now to build the momentum you’ll need to achieve these long-term goals?
Make A Plan - How will you accomplish these goals?
Start by looking at the goals for 2019 only (planning too far in advance can be overwhelming and may not be overly helpful). Figure out what needs to happen to hit the goals you set for 2019, what activities need to be accomplished, how are they prioritized, and who is responsible for them?
If you are a ‘solo-preneur’ what resources do you need to hit your goals? What do you need to learn about? Can you hire someone to help with an area you may not know well?
Keep this plan short and sweet. If your plan is concise, it’s more, and you’ll more easily succeed in following it.
Measure Success - How do you make sure it’s working?
This step is crucial. Many people will make a plan, but they won't put this piece in, and in the end, it’s like doing a puzzle without the out edge, you have nothing to hold the whole picture together and are left guessing.
Your goals should be SMART. Create specific, time-bound deadlines for each aspect of your plan. The best-laid plans need milestones and smaller, more bite-sized goals along the way towards the broader goals. Make sure to include success metrics in your plan, what constitutes success or progress?
Don’t be overly-rigid. Your business plan is a direct reflection of where you are right now and provides an outline for the next year. This map isn’t meant to be a static and rigid document, but a living and changing one. If something changes throughout the year, update it in your plan.
Regardless if your business is brand new, it’s five years old, or you’re a successful business owner many times over, creating an annual business plan is a beneficial exercise. If you are a business of one, share it with a mentor or those in your business network (that you respect) for feedback and suggestions. Creating an annual business plan can seem overwhelming at times, but it is one of the best things you can do for yourself and your business.
If you get started now, you’ll be able to get it done by the time 2019 rolls around.