How To Develop A Simple Plan That Will Boost Your Business
By Kim O'Connor
Business plans are the term papers of the adult world—no one wants to write one. While experts stress the importance of planning, the very prospect fills most business owners with debilitating dread.
Little wonder it seems like such a chore: Formal business plans often run more than 30 pages and require weeks of hard work.
But, there is good news. If you’re not trying to woo financial backers, you can opt for an informal business plan, which offers practical value without all the muss and fuss.
And having a plan in hand can actually boost your bottom line.
Crafting an informal business plan is a simple, straightforward way to monitor the health of your business. It’s a vital tool that will help you diagnose problems, cut costs and implement new strategies. It also helps you capitalize on the things you’re doing right and correct the things you’re doing wrong.
Whether you are starting a new business or expanding an existing one, this guide is designed to make the planning process as painless as possible. It will walk you through writing an informal plan by examining three areas of your business: marketing, finances and infrastructure.
“Marketing is what brings money in the door,” says Gene Fairbrother, the lead consultant for the NASE's Business 101 program. “Finances determine how much you get to keep. Infrastructure is how you get the job done—that is, service your customers.
“If you have those three components in place, everything else falls in behind them.”
Before You Begin
You may find it’s helpful to review templates and samples of traditional business plans. The U.S. Small Business Administration and SCORE both offer good ones.
This is for inspiration only; don’t worry about all the fancy trappings. Since this plan is for your eyes only, formatting isn’t important.
“The value of a business plan is that it forces people to ask themselves a lot of questions and do a lot of research that is going to help them be more successful,” explains Fairbrother. In the end, the process of developing your plan is much more valuable than the final document.
Section One: Marketing
Your first task is to examine all the ways in which you communicate (or will communicate, if you’re just getting started) with customers.
For example, how do you connect with new customers? How do you stay in touch with existing customers to encourage repeat business?
Take a close look at all the elements of your marketing arsenal, such as:
Consider stepping up activity in any areas that seem to be working and dropping any efforts that haven’t paid off.
Next, identify and analyze opportunities.
For example, if your retail business promotions have been popular with customers, you might implement a customer loyalty plan. If your interior design website draws ample traffic, you might refresh its design or start writing a blog to keep readers coming back often.
As you work on your plan, don’t forget to consider the risks. For instance, a re-branding effort might draw new customers, but it could also alienate your existing customer base.
Wrap up the marketing section of your business plan with a quick goal-setting session. Develop a strategy by breaking your goals into actionable steps. Outline complicated tasks with informal to-do lists. Set rough deadlines to help you stay on track.
Section Two: Finances
Now it’s time to crunch the numbers.
Begin with a long look at last year’s ledger. If you’re planning to open a new business, focus on mapping out the first year, including one-time expenses such as security deposits.
Examine your expenses carefully and identify any areas that offer potential savings. For example, you might be able to renegotiate supplier contracts or interest rates on loans.
Next, determine which of your products or services are most and least profitable. This information might lead you to reconsider your offerings. Would it make sense to expand, diversify or cut back?
Round out your finance section by predicting your fiscal future. While formal business plans typically require a three- to five-year financial forecast, you only need to plan for the next year.
“Nobody in the world knows what their financial projections are going to be three years from now,” Fairbrother says. “It’s impossible. It’s better to deal with real numbers and real situations.”
Zoom in on your cash flow by walking through your projected expenses and income month by month.
A word of warning: Be realistic as you set financial goals.
Chances are, your profits will not triple in one year’s time. Big dreams will serve you well in other areas of your business plan, but the finances section is where you want to be conservative and careful.
Section Three: Infrastructure
The final section of your business plan concerns infrastructure, or operations.
This category encompasses employees (if you have them) as well as logistics—the systems and processes that form the backbone of your business. Search your schedule and the workflow of the business for pockets of inefficiency.
If you plan to explore new marketing opportunities or other business-building strategies, you will probably need to allocate (or reallocate) resources. Make sure you have all the tools you need, whether it’s manpower, equipment or other materials.
Implementing Your Plan
Many business owners go through the work of developing a business plan only to file it away in the archives.
Keep in mind that your plan is a living document that should be revisited often. Make adjustments as you go, inserting real-world figures as they become available and adjusting projections so you’re always looking one year ahead.
Fairbrother recommends spending two to four hours with your plan every month, focusing on a different section at each session.
“It doesn’t do you any good if you don’t look at it and use it as a management tool,” he says. “Every month you should be evaluating and re-evaluating. You have to continually work on it.”
Chipping away at it a little each month not only makes the task more palatable, but it also keeps your finger on the pulse of your business.
Kim O’Connor is a freelance writer who frequently writes about best business practices.
These NASE resources could come in handy when creating your business plan. They’re online now—and they’re free exclusively for NASE Members.