So you have a small business idea that just might be your ticket out of your 9 to 5. What’s the next step?
Expert opinion varies somewhat on the subject, but most agree a plan of some kind is in order.
“It’s really important for businesses to have a plan so they have a roadmap for their business,” said Carol Roth, entrepreneur, CNBC contributor and author of The Entrepreneur Equation. “It’s difficult to figure out where you want to go if you haven’t figured out the best way to get there and haven’t planned it out.”
Roth suggests that your business plan should be a living, breathing document that’s adjusted over time as the circumstances of your small business change. She recommends evaluating and tweaking your business plan twice a year. “If you do it the right way, it really should be a roadmap for you to figure out where you want to take your business and have very concrete milestones that have timeframes associated with them,” Roth said.
She emphasizes that the plan doesn’t have to be pretty if you’re not using it to obtain funding. It just has to be a functional guide that works for you.
A key area to focus on while drafting your plan is revenue projections. “You do want to go in-depth to give yourself very concrete plans,” Roth said. “Really analyze where most of your revenue is coming from, making sure you spend most of your time on things that create the revenue rather than wasting a lot of time on things that aren’t producing revenue.”
Writing a business plan doesn’t have to be intimidating, thanks to software. Roth and Ivana Taylor, publisher of DIY Marketers, recommend the business planning tools available through Palo Alto Software. Taylor has found the Live Plan version especially helpful, which she says is very cost effective. “The reason I love it is it is more or less done for you—it connects to your QuickBooks and syncs up all kinds of information. It guides you through the process. You don’t have to think too much, you just have to answer the questions.”
One of the important benefits associated with going through the rigor of writing a business plan is that the process itself reveals weak points in your plan. Heed the red flags—if your plan isn’t feasible, you may need to abandon it, Roth said. “I see business plans from entrepreneurs all the time, where they’re giving up a nice salary and then when they look at their business plan, say year five, they see that their profits are going to be $20,000. That trade doesn’t make any sense whatsoever.”
In addition to financials, Roth also advises to pay close attention to how much time you allow to reach certain goals and objectives. “The good news is that entrepreneurs tend to be optimistic, and the bad news is that entrepreneurs tend to be optimistic. They forget that everything is probably going to take three times as long,” she said.
For assistance crafting business plan strategy, ABC can help a variety of tools where you can get low cost insights and ideas from successful coaches. The information may be basic, but if you don’t have a plan, any information can be helpful. Also, use resources around you like your business banker, community chamber of commerce, local business coaches / consultants and your accountant can be valuable assets while strategic planning. Finding resources that have experience in your industry or service area can also be very beneficial.
Even if you’ve been owning and operating a small business for several years, it’s not too late to write a business plan. It could still prove useful—especially if you want to grow, improve your profit margins, eliminate waste, identify new opportunities and more. Finding employees that will help the business grow and expand your capacity to deliver high quality service should be a key component to your plan
“You’re working with empirical data, not hopes and wishes, and you’re going to get better results,” Roth said. “You already know what’s happening in your business. Then it’s looking at where it is you want to take it next.”