When small business owners hear the phrase “business plan,” they tend to think of a long, formal document with charts, financial jargon and pages that no one really reads. They think of a stressful, time-consuming task that often doesn’t make much of a difference. But, the truth is, a business plan is actually one of the best ways to make your business successful – as long as you do it right. For many small business owners, the issue is that the business plan is too complicated and doesn’t fit the needs of small business. In fact, most small businesses only need a simple business plan.
The Real Purpose of a Business Plan
People often think that a business plan is just a way to apply for funding, but that’s only a small part of what it does. For most small business owners, the real purpose of a business plan is much more useful. A good business plan can help you to make a clear path out of an idea, make the right day-to-day choices that move the business forward and find risks before they happen. It’s also a good way to keep you on track and responsible, as a business plan helps you to see what your priorities are and gives you a way to check how far you’ve come.
Why Most Small Businesses Only Need a Simple Business Plan
As a small business, you probably don’t need a traditional business plan with dozens of pages, not if you work for yourself, are a consultant or run a relatively small startup.
Simplicity Makes People Act
Plans that take weeks to write often don’t get finished or used. You can write a simple plan quickly and then improve it over time.
It’s Easier to Change Simple Plans
Small businesses change quickly. Prices go up and down, markets change, and offers get better. A shorter plan is more adaptable and easier to change as you learn and evolve.
Clarity is Better than Detail
You don’t need to give too much information to be helpful. You need to have clear ideas, realistic numbers, and a list of things that are most important to you.
You’re Writing It For Yourself
Your business plan’s main audience is you, unless you’re actively looking for outside funding. It should answer your questions, and that’s unlikely to require pages and pages of information.
What Should Be in a Simple Business Plan That Works?
A Business Overview
You need to set out what the business is, what the business does and the main problem it fixes. Think of it like an elevator pitch. If you can’t explain your business in a short paragraph, you need to focus more. Avoid using buzzwords, and write as if you were telling someone who doesn’t know anything about your business what it is.
The Problem and How You Can Fix It
Real problems are what make strong businesses, so be sure to explain the exact issue that your customer is having. Cover why current solutions don’t work and how your service or product fixes that issue. Be specific, as the more clearly you explain the problem, the easier it will be to sell your solution.
Your Service or Product
You need to include your service or product in your business plan. Give a clear description of what you sell or do, how people use it, the most important benefits and what makes it better or different from competitor offerings.
Your Ideal Customer
Trying to please everyone usually means not pleasing anyone. Include information about who you want your ideal customer to be, detailing their demographics, what they’re looking for or the type of business they run. Think about what they really want, need or are angry about. The more you know about your target market, the easier it is to make decisions about pricing, marketing and products.
The Size of the Market and Demand You don’t need to do a complicated market analysis for a simple business plan, but you do need to know that there is demand. Cover if the market is growing, stable or shrinking, and why customers are likely to pay for what you’re offering.
How You Will Make Money
You need to add your plan for pricing into a simple business plan, including how customers pay you, your main ways of making money, important costs and expenses, and where the point of breaking even is. You don’t need complicated spreadsheets. Simple numbers are much more helpful than detailed, yet unrealistic forecasts.
Marketing and Sales Strategies
A great product doesn’t sell itself. You need to explain how people will find out about your business, what types of marketing you’ll use, how someone goes from being interested to buying, and why this method works for your audience. Don’t try to do everything, just focus on a few marketing and sales channels that you can do well.
Goals, Milestones and Metrics
A business plan should drive your business forward. Include goals for the next few months, important milestones and things you’ll track to see how well you’re doing. Goals that are clear make your simple business plan a roadmap, instead of a document without much weight.
Things to Avoid When You’re Writing a Business Plan
Making it Too Complicated – Having more pages doesn’t mean better planning, as confusion often hides behind complexity.
Writing to Investors – Don’t write a business plan to impress investors if you’re not looking for funding. Write one that will help you do your job better.
Being Too Hopeful – One of the most common mistakes is to think that costs are lower than they are and that revenue is higher than it is. It’s safer and smarter to make conservative guesses.
Not Thinking About Customers – A business plan that only talks about your idea and not your customer’s reality is unlikely to be as effective as you need it to be.
When small business owners hear the phrase “business plan,” they tend to think of a long, formal document with charts, financial jargon and pages that no one really reads. They think of a stressful, time-consuming task that often doesn’t make much of a difference. But, the truth is, a business plan is actually one of the best ways to make your business successful – as long as you do it right. For many small business owners, the issue is that the business plan is too complicated and doesn’t fit the needs of small business. In fact, most small businesses only need a simple business plan.
