Though my business partner and I have worked for businesses, from start-ups to established enterprise businesses, it was only when we started a business that I truly appreciated what an executive was versus a business owner. As a business owner, the buck stops with you, and you are responsible for the company's overall direction and financial profitability. I had written many business plans for companies over the years, but like many business owners, I did not need to write a business plan because I understood my business.
Understanding Business Plan Requirements
Over a decade ago, when we started the business, we worked with various start-up businesses in various phases in different industry sectors. In each case, I would start talking to them about the importance of a business plan. Some had started a plan as they were looking for funding, but tried to write it themselves without ever having written a business plan. They also lacked an understanding of what the government, a bank, or an investor was looking for financing. Many of the business plans fell short as they were not able to articulate the following:
their market,
provide detail on what value their product or service provided,
show credibility by having the background or experience to run a business
did not have a marketing or sales strategy that showed how they would generate revenue,
and tried to create their five year financial outlook without tying it to the plan.
A couple of companies felt they did not need a business plan as the structure would be too confining on the entrepreneurial spirit. They thought they knew what they were doing, and the goal was only to make revenue. The fact was that each time you talked to them, they had a new business idea or had decided to change their original plan and needed to produce more revenue. Anyone can find someone to buy something from them. Success is found in creating a business focused on generating sustainable, repeatable business revenue that is profitable and, at some point, transferable.
Thinking As a Business Owner
I started looking at one company we were working with and saw all of the pitfalls when you need to articulate concisely what you provide to the market. As I looked at them with confusion, I started looking at my business with my business partner. In my head, we were focused on a particular target market, knew what services we offered, set our market price, and knew the type of marketing and the types of partnerships we needed to develop. We began creating serial engagements and began generating revenue. We built a website, started a blog, began networking, and did all the "right" marketing tactics. It suddenly hit me that though we had a mission and a vision for what we do and generated revenue in our first year of business, I was still thinking as an executive, not a business owner.
I have written many business plans and excelled at understanding businesses and articulating them well on paper. The difficulty came when I began writing our plan. It was no longer about knowing what was needed but articulating what kind of business we wanted to be in the future.
Setting your Goals and Objectives
About one year in, we took the time to write a business plan for two reasons. I realized that though we were generating money, we needed a plan outlining our long-term goals and objectives. I knew we could not criticize others if we did not truly practice what we were preaching and knew we wanted to look for funding for marketing and office equipment.
My business partner and I decided to develop a business plan to help further define our business. This included what products and services we wanted to offer our target market, determining what partnerships we needed, and looking at our short and long-term financial goals. I started developing the outline for the plan. I then started investigating small business grants and loans available online. I completed the form for information on a particular grant, which, unbeknownst to me then, started a time clock and had a deadline of 4 weeks. Though it seemed some days to be an onerous task, when it was complete, I felt more like a business owner as I genuinely had a grasp of the direction and focus of my business and what was possible. This plan helped us define a sustainable, repeatable business model and gave us the confidence to implement it and become profitable.
Articulating Your Value
Since completing the plan years ago, we have talked to many prospects and potential partners. At the end of the conversation, they said they truly understood our value proposition and what we were doing. They felt that what we are looking to provide is unique and beneficial to owner-operated businesses.
Once we implemented our long-term strategy through our website and marketing materials, it was evident to potential clients that we would add value to their business versus just performing serial contracts based on our ability to do it. Of course, it took much work to abandon the revenue from prospects asking us to do something that would have made us money but was outside our business direction and did not add value to their business. Those businesses likely hired someone to do what they believed they needed, but when they later determined there was no intrinsic value – it wasn't our business that they would associate with a lack of value.
Defining a Roadmap for Your Business
Though a business plan may seem confining or a complicated process, it is indeed what defines and provides a roadmap for the success of your business long term. It is your game plan. It does not and should not remain stagnant – it can be changed and updated as the market or your business changes. It should clarify where you are and where you are going. The plan does not need to be as long as the one that we developed to go after funding. It can be as small as a few pages for internal use within your company to provide clarity of direction for everyone.
Summary
If you need a business plan for financing, we provide clients with a couple options. If you want to write it yourself, we have developed a 150-page ebook that takes you through the development step by step, including templates, a sample business, and a glossary. Suppose you do not feel comfortable writing a business plan for financing yourself. In that case, we develop business plans with the financial model developed by our partner, who is a CPA. We do not write plans for internal use, but if your need help, we can provide you with guidance through business coaching.