What separates successful small businesses from those that fizzle out?
A small business plan!
I have observed the power of a well-crafted small business plan. Over the years, every company I've worked with has seen greater success directly tied to the level of planning they put in.
Now, I know what you might be thinking. “I've got a great idea, and I'm ready to hit the ground running! Do I really need a plan?” The short answer is a resounding yes.
While urgency might sell products, statistics tell a different story.
Small businesses with a plan are 30% more likely to succeed.
University of Oregon
Those are pretty good odds, wouldn't you say?
Don't get stuck in planning purgatory
Creating a small business plan doesn't have to be a drawn-out, painful process that keeps you from actually building your business.
In fact, unless you're seeking investors, I strongly recommend not spending too much time on this step. Some aspiring entrepreneurs get so caught up in planning that they never actually launch their business!
So, how do you strike the right balance? How do you create a small business plan that sets you up for success without getting bogged down in the details? That's exactly what we're going to explore in this article. I'll walk you through three essential steps to craft a winning small business plan that will clarify your vision, keep you on track, and significantly boost your odds of success.
Let's dive in and set your business up for long-term success!
1. Mission, Vision, and Financials
Every great journey needs a destination, and in the world of small business, that destination is defined by your mission, vision, and financial forecast. Think of these as your business's guiding star, its ultimate goal, and a realistic roadmap of how you'll get there financially.
Crafting your mission statement
Your mission statement is the heart of your business plan. It's a concise declaration of why your business exists and what it aims to achieve. To create a compelling mission statement:
- Keep it short and sweet: Aim for one or two sentences that pack a punch.
- Focus on your purpose: What problem does your business solve?
- Make it inspiring: Your mission should motivate you and future employees.
For example, a mission statement for a local organic bakery might be: “To nourish our community with delicious, healthful baked goods made from locally sourced, organic ingredients.”
The Vision Statement
While your mission statement focuses on the present, your vision statement looks to the future. It's a description of what your business aspires to become in the long term. When crafting your vision statement:
- Think big: Don't be afraid to dream about where you want your business to be in 5, 10, or even 20 years.
- Be specific: Use concrete language to describe your ideal future.
- Align with your mission: Your vision should be a natural extension of your mission.
Using our bakery example, a vision statement might be: “To become the Midwest's leading organic bakery, known for our innovative recipes, sustainable practices, and positive impact on community health.”
Mapping Your Financial Forecast
Now, let's talk numbers. Your financial forecast is where you translate your mission and vision into dollars and cents. It's a realistic projection of your business's financial future. Here's how to approach it:
- Start with expenses: List all anticipated costs, from services and subscriptions to utilities and insurance.
- Project your revenue: Based on market research, estimate your sales for the first few years.
- Be conservative: It's better to underestimate revenue and overestimate expenses.
- Include multiple scenarios: Create best-case, worst-case, and most likely financial projections.
Remember, your financial forecast isn't about predicting the future with 100% accuracy. It's about setting realistic expectations and preparing for various scenarios.
Realistically, if you have defined these three elements – mission, vision, and financial forecast – you're much more planned out than 65% of businesses out there. Good job!
Only 33% of small businesses have a formal plan
Thryv
2. Why Should Customers Care?
In our fast-paced world, you often have just a few moments to capture someone's attention and convey the value of your business.
That's where your elevator pitch comes in.
It's a concise, compelling summary of what your business does and why it matters. In essence, it answers two crucial questions: What problem do you solve for others, and why are you the best solution?
Identifying the problem you solve
The first step in crafting a powerful elevator pitch is clearly identifying the problem your business solves.
Ask yourself:
- What pain point or need does my target audience have?
- How does this problem impact their daily lives or businesses?
- Why hasn't this problem been adequately solved before?
For our organic bakery example, the problem might be: “Many people want to enjoy delicious baked goods but are concerned about artificial ingredients and high-calorie content.”
Selling your unique solution
Once you've identified the problem, it's time to present your solution. This is where you highlight what makes your business special.
Consider:
- What specific products or services do you offer?
- How does your approach differ from competitors?
- What unique benefits do customers get from choosing you?
Our bakery's solution might be: “We offer a wide range of baked goods made from 100% organic, locally sourced ingredients. Our innovative recipes prove that healthy can be delicious.”
Demonstrating your expertise
Why should customers trust you to solve their problem? This is where you briefly showcase your credentials.
Share your expertise:
- What relevant experience or skills do you bring to the table?
- Have you achieved any notable successes or overcome similar challenges?
- Do you have any unique insights into the industry or problem?
For example: “With 15 years of experience in organic farming and culinary arts, our head baker has developed a network of local organic farmers and a repertoire of recipes that maximize flavor while keeping health a top priority.”
Putting it all together
Now, combine these elements into a concise, engaging elevator pitch. Aim for something you can deliver in 30 seconds or less. Here's how it might look for our bakery:
“At Green Crumb Bakery, we believe you shouldn't have to choose between delicious treats and healthy, living. We offer a wide range of baked goods made from 100% organic, locally-sourced ingredients. Our head baker, with 15 years of experience in organic farming and culinary arts, has developed innovative recipes that prove healthy can be delicious. Every bite from Green Crumb is a step towards a healthier you and a healthier community.”
You'll use this same pitch in your marketing materials, on your website, and whenever you have an opportunity to talk about your business.
Practice it, refine it, and be ready to deliver it with passion and conviction. Make sure it's all true, and the delivery will come naturally.
3. Your Business Plan Should Adapt
The business world doesn't stand still, and neither should your small business plan.
One of the biggest mistakes I see new entrepreneurs make is treating their business plan like it's set in stone, or they never revisit it.
In reality, your business plan should be as dynamic and adaptable as the market you're operating in.
The importance of regular reviews
Think of your business plan as a roadmap. Just like you'd check your GPS regularly during a long road trip, you need to review your business plan periodically.
Here's why:
- Market changes: New competitors, technologies, or customer preferences can emerge rapidly.
- Internal growth: As your business evolves, your goals and strategies may need to shift.
- Learning from experience: You'll gain insights as you operate that can inform better strategies.
I'm not suggesting reviewing this all the time, more like setting aside time at least once a year for a thorough review of your business plan. However, don't wait for your annual review if you notice significant changes in your business environment.
Adapting to change
When you do review your plan, here are some key areas to focus on:
- Goals and milestones: Are they still relevant? Do you need to adjust timelines or targets?
- Market analysis: Has your target audience changed? Are there new competitors or market trends?
- Financial projections: How do your actual numbers compare to your forecast? What adjustments are needed?
- Products or services: Is there a need to pivot or expand your offerings?
- Marketing strategies: Are your current methods effective? Are there new channels to explore?
Remember, adapting your plan isn't a sign of failure – it's a sign of smart, responsive business management.
A word of caution
Don't get stuck in the mud!
While regular reviews are important, don't let the planning process paralyze you.
Remember what I said at the beginning: some people waste so much time planning that they never make real progress on their business.
The key is to find a balance – stay flexible and responsive, but keep moving forward.
Your business plan is a tool to guide your journey, not a strict script to follow. By treating it as a living document, you ensure that it remains relevant and useful throughout your entrepreneurial journey.
A Small Business Plan is a Roadmap
Creating a small business plan isn't about predicting the future with perfect accuracy. It's about setting a clear direction, understanding your market, and being prepared to adapt as you go.
I'm telling you personally, as a perfectionist, don't let the planning process keep you from taking action (I have been stuck here many times). Your business plan is a powerful tool, but it's not the end goal. The real magic happens when you step out into the world and start bringing your vision to life.
Remember, every successful business started with an idea and a plan.
Your future self will thank you for starting now. Let's make these 24 hours count!
