7 Things That Should Be in Every Small Business Plan
A business plan does not have to be 10 pages long, a simple 2 pager that is clear and succinct is just fine. As part of your continuous small business planning keep it updated and fresh as you complete one goal after another.
Get all of your planning out of your head. Write it down, brainstorm, and let ideas flow without censoring yourself every minute.
1. Purpose and Vision: The two key elements of your business plan
The key elements to a short form business plan include a few short sentences outlining your Purpose and Vision.
Your business purpose is your "why".
Why are you in business and what do you want to achieve?
Your business vision is how you're perceived by your customers.
Your vision is reflective of your reputation, how do you want the outside world to see your business.
2. List the top 4 things you want to achieve
Think about what’s important to you, go back to your why. It could be
- more time with family
- you want to hit $1 million in sales
- you want to automate and streamline your business processes
- have more flexibility in your working schedule.
Don't be scared, this is just the surface, think big goals.
It's useful to think about your values in determining your Top 4.
Go back to your why. What's most important to you?
3. Create KPI's to achieve your Top 4
Looks back at the 4 things you want to achieve and set yourself KPI’s which will help you stay on this path of clear purpose. Track and measure your business performance against these KPI’s, reward yourself when you're doing great, and take corrective action when needed to improve the outcome.
Your KPI's might be:
- Gross Profit targets
- Turn over targets
- Customer communication reply rate targets
- Leaving work on time targets
Hold yourself accountable to these KPI’s, no one else will be there holding you accountable, you need to be self-driven.
4. Set an annual business budget
Set yourself an annual budget, what total turnover do you want to achieve for the year?
If the goal is $1Mil, then that's the starting point.
Now work towards your bottom line profit. What’s the estimated total of your direct costs?
Turnover – Direct costs = Gross Profit
Gross Profit / Turnover = Gross profit %
How much will you need to allocate to overhead expenses like telephone, electricity, rent?
And finally, what’s you Net Profit position?
Gross Profit – Overhead Expenses = Net Profit
Once you have established your rough numbers for the year, compare how you're actually tracking with the financial information you have at hand, what are your actual results year-to-date?
5. Identify your ideal customers
Who does your business serve?
Who do you want to serve?
It could be mum and dad domestic clients, small jobs, it could be commercial clients who want regular maintenance contracts.
What’s your value proposition to your ideal client?
Why should this ideal client choose you over the next guy? Become confident in your value proposition, so when you're asked “so what do you do?” you can blow them away with a confident account of what you do, how your different and why you’re the best.
6. Identify your business's opportunities and vulnerabilities
Brainstorm the five biggest opportunities existing in your business right now. They could be introducing a new service, or expanding into a new geographic area.
Do the same for your top five vulnerabilities. Common vulnerabilities are capacity, cash flow, and internal processes.
Think about what keeps you awake at night and what’s happening in your industry right now. How can you get ahead of the game?
Identify your most critical challenge.
Out of the above-mentioned vulnerabilities, what do you believe to be your most critical challenge? Which of these vulnerabilities need to be addressed immediately and pose the most risk to the business?
Record this most critical challenge on the business plan, this will be the basis for your goal setting.
7. Set clear business goals
List 4 goals, these could be 3 months, 6 months or 1-year timeframes.
I say list 4 because any more is just putting unrealistic expectations on yourself. Set yourself the task of ticking these initial goals off. Small wins encourage motivation.
Next to each goal, write down your 90-day goal. The step's you'll take in the next 90 days towards achieving the larger goal. This is all about breaking goals down into smaller achievable parts.
It might be that you:
- meet with a digital marketing specialist to get your marketing plan sorted out.
- audit a few past jobs to make sure costs were captured correctly.
- talk to a bookkeeper or accountant about improving your financial awareness.
Record what actions you are going to take to achieve these 90 days goals, set time frames and hold yourself accountable to those time frames. No more excuses, just get it done in bite-sized pieces.
Great, you've got your business plan!
You have an established, easy to follow, plan of your purpose and vision, goals, and the steps you'll take in the next 90 days to achieve them.
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