Many businesses will benefit from having a Business Plan. They can be complex but it is possible to structure a fairly straight forward plan that suits your business. We offer a Yellow Belt (beginner) introduction and later some more advanced Blue Belt (intermediate) suggestions.
When is a Business Plan Advisable
Business Plans are almost certainly advisable at some of the stages of a business' life-cycle. One would be wise to undertake a reasonably comprehensive business plan in the start-up or pre-startup of the business period.
Any business that is fast growing, would also benefit from a business plan that looks ahead for several years so that the growth trajectory can be maintained.
A business that is sadly in a troubled state, may well benefit from a business plan that helps to resolve whether it can be saved at all. If it is likely to be saved, it is almost definitely going to benefit from a business plan so that the same problems that led it to a troubled state are less likely to occur unpredictably.
A business that is in a mature, steady state stage of its life-cycle may not benefit so much from a business plan because very often its operations are very well understood by its owners.
However, there are some elements of a good business plan that are always likely to be advisable for any business in any life cycle stage. Throughout Profit Savvy we advise you to have a set of goals or vision for your business (Goal Setting Recipe). This is critical for understanding where your business is heading, keeping you focused on the chosen direction.
A second element from a good business plan, that is likely to be advisable in most cases, is a set of business metrics (Metrics Recipe). Metrics are a set of numbers that allow you to track how your business is progressing against your goals. Most of them are likely to be numbers relating to Profit and Loss, Inventory size, Growth rate, and a host of other topics designed to reflect whatever goals you have in mind.
Some Metrics, however, will be what is known as qualitative, meaning that they are a measure of a quality, rather than quantity. You might have a Metric that measures your contribution to society, which is rather difficult to put a dollar value on, but could be scored on a range from one to ten.
Building your Business Plan
There is a great deal written about construction of Business Plans. There is little point in us revisiting this in detail in Profit Savvy because of this great range of available information.
However, we have come across a book by Dave Lavinsky entitled Start at the End: How companies Can Grow Bigger and Faster by Reversing Their Business Plan (see below in Resources for the details), that we find particularly suited to designing business plans for smaller businesses as it follows many of the principals that are outlined elsewhere in Profit Savvy. This author has produced a book that will be easily understood and followed by smaller business owners and comes with a separate, free, downloadable set of workbooks. The author begins with the end in mind, which perfectly reflects our argument that a business owner should have a clear cut set of goals and that the business hangs underneath those goals in order for those goals to be achieved. He also mentions the need of a set of Metrics to measure how successful the business is in achieving those goals.
Even if you are not particularly interested in doing a full business plan, this book may be a worthy addition to your personal business reference library, because of the very useful chapters on Goal Setting Metrics and multipliers. By multipliers he means such things as the 80/20 Rule, (see the The Amazing 80/20 Rule Tool) to demonstrate how your business growth rate can be accelerated.
Books: (Great Business Books Menu)
Lavinsky, Dave Start at the End: How companies Can Grow Bigger and Faster by Reversing Their Business Plan,John Wiley 2012