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HOW TO WRITE A BUSINESS PLAN

This article is adapted from a chapter in Stephen Fairley’s new book, Getting Started in Personal and Executive Coaching (2003).

BUILDING A SUCCESSFUL BUSINESS REQUIRES A SOLID BUSINESS PLAN

Most books talk about writing a business plan like an academic exercise—the creation of an all important document that sits proudly on your shelf to show interested parties or to give to potential investors. However, I believe creating a traditional business plan the way most people write about it is a complete waste of your time and let's face it, the majority of small businesses are not interested in seeking out venture capital. Instead, I want to encourage you in this article to think about this process in a very different way.

This article will cover:

  Why you don’t need a traditional business plan
  The top 10 reasons why you must have a marketing plan
  10 east steps to writing and using your marketing plan
  Demonstrate these 10 steps using a free sample business plan

THE RIGHT REASONS

Do you really, truly need a plan to build a successful small business? No. My answer may surprise you but research shows people have built successful companies without a business or marketing plan. Anything is possible, but the real question is—Is it probable? What does having a plan really do for you and your business? Here are the reasons why you need a plan:

Increases your chances of long-term business success. It is possible to succeed without a marketing plan, but historically speaking having a solid marketing plan that you can follow will significantly increase your chances for success in your business endeavor. A solid, well thought out plan keeps you from making serious mistakes later than can sink your business.

It gives you structure in an otherwise unstructured business. Part of the appeal for many people in starting their own business is the freedom—no one to tell you what to do. This is great, especially when you know exactly what to do every day, month in and month out, year after year. However, most entrepreneurs are new entrepreneurs. If this is your first try at building a business having a plan can help give you structure and a context for your everyday activities.

Keeps you on the right track. One of my favorite quotes is from Lewis Carroll’s Alice in Wonderland where the Cheshire cat meets Alice for the first time and responds to her question with the classic reply, “If you don’t know where you're going, any path will do.” One of the best reasons to develop a plan before you get started is to help you stay on the right track. It is so easy to become distracted by problems that arise or opportunities that sound great, but don’t exactly fit with your long-term goals. A plan is not designed to be unduly constrictive, but to provide you with freedom within defined boundaries, the “boundaries” being your short and long-term goals.

Helps you count the cost before you start building. Critical to any marketing plan is an outline of your anticipated expenses, your marketing budget, your sales goals, and path to profitability. Knowing your costs ahead of time can be invaluable in planning out your growth strategy.

Makes you think outside of the box. It’s very easy to copy someone else, which is what most people end up doing when they don’t have a personal plan. There are several potential dangers to copying someone else when it comes to marketing your small business:

  You miss opportunities that are perfect for you and not other people.
  You take advantage of “opportunities” that are not right for you.
  You make the same mistakes as the person you copy.
  You stop thinking strategically about your business replacing it with duplicating efforts.

Exposes holes in your plan. Regardless of how advanced your thinking skills are you probably can't think of every major challenge you will encounter while building your business. Writing down your plan will help you expose the traps that could derail your efforts. It’s easy to overlook areas that you are unclear about or are outside of your expertise.

Forces you to become clear. A great reason for having a written plan is that it forces you to become clear with your personal and business goals, your target market, your financial goals, how and when you are going to implement parts of your plan. There is something about the disciplined exercise of writing these down that solidifies them and drives them into reality.

Helps you create a vision for what you want in the future. Where do you want to be in 12 months? How about 3 to 5 years? Ultimately, your business will be driven by your vision and the process of developing that vision is critical to your long-term success. The real value of a marketing plan is not just having it done, it’s all the time, energy, and research you put into thinking about your business in a strategic way.

Sets up measurable objectives for you to evaluate your success with. How will you know if you’ve had a successful year? Will it depend on how you feel or can you set up measurable objectives to compare your results against? If you fail to do so, how will you know whether or not your specific efforts were rewarded? How will you determine where to put your future efforts if something didn’t work? A marketing plan with objective goals can help you ask and answer the right questions when it comes to evaluating your marketing and sales efforts. The answers give you indications as to your next steps.

Sets you apart as being committed to your business. Let's face it, if you're not willing to spend a few days writing up a solid marketing plan to grow and develop your business, why should anyone take you serious? Do you really have anything better to do than to take some time and write down your plan for how you are going to succeed in your business? Writing up a working marketing plan sets you apart from other would-be entrepreneurs.

THE RIGHT ATTITUDE

Most people just don’t take the time to write a solid, actionable plan before they start their business. If they do it at all, it is usually after their first year didn’t go really well or just after they come back from a conference where a presenter talked about all the positive aspects of creating a business plan. However, I would argue that not developing a plan is totally contrary to the very foundation of successful business building. A core principle of building a business is about identifying where you are, deciding where you want to be, and creating a plan to get there. That’s exactly what a business plan does for your company. A business plan is simply a written plan that details:

...what your business does
...who your business helps
...what your goals and objectives are
...the financial, marketing and sales strategies you will use to get there

Don’t think of it as a Business Plan—think of it as a Marketing Plan. About 80% of your plan should be focused on sales and marketing strategies because these are the two areas where most small businesses have the most problem with and the largest reasons why they fail. It makes sense to spend most of your time on the part that makes the biggest difference to your success.

Don’t look at it as an academic exercise—look at it as a living document. It is something you use on a daily and monthly basis, not a long essay you write only to put on your shelf.

Don’t see it as a just one more thing to do—see it as a plan for all the things you must do to succeed. Your Marketing Plan becomes the driving force for all your actions and financial expenditures. It is your personal success plan.

Click here to go to the next section where we will use a free sample business plan to demonstrate the 10 easy steps to writing a business plan.

 

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