There are some very compelling reasons for writing a business plan for small businesses. The challenge is that the misconceptions about what needs to go into a small business plan scare most owners and entrepreneurs away.

If you are like most small business owners or managers, you are incredibly busy, if not borderline overwhelmed. The idea of taking hours of valuable time to write a plan for your business may not seem worth it. But the data proves differently.

When writing a business plan for small business, focus on what really needs to be done, and what really needs to be measured. The plan does not have to be a 15 or 20 page document. In fact, it should only be one or two pages maximum. You should also have a yearly budget or financial plan as well. You really do not need to go overboard and do tons and tons of research about the market, and the opportunity, especially if you are already in business!

To write your plan, you will need a few things to get started. If you can assemble any of your sales and financial information for the past couple of years, that would be a bonus. You will need a notebook and writing instrument, possibly a laptop or a computer, and yourself. Then, basically find a quiet place to sit down for about an hour, and think about your business, and where you want it to go, and how you think you can get it there.

Let’s start with where you want your business to go. This is just a fluffy way of saying your vision for your business. Set a timeline for your vision; say 18 months or up to 5 years out. Then think about what your sales would be if everything goes as planned. What are your primary products or markets, and where will you do it.

Here’s an example: Within the next 3 years, grow MS Cut to $750,000.00 in sales providing industrial routing and cutting services to manufacturers and distributors in the Indianapolis market.

Or how about this: In the next 18 months, launch Tim’s Lunch & Deli, growing to $250,000 in sales. We will provide delicious sandwiches, soups and salads using all locally grown vegetables and products to the public in downtown St. Paul.

By writing out where you want your business to go in this fashion, you can clearly imagine the end result of your vision.

In terms of how you are going to get there, this is the strategy and tactics section of your plan. Again, what are the ways you are going to do the things you need to do? This could be everything from the methods you will use to attract customers, to the way that you will approach pricing your products or services. It can also address your marketing and advertising plans.

The main thing to keep in mind when it comes to your strategies and tactics, is to make them realistic. If you are going to need a lot of specialty skills (that you don’t currently have…) or technologies or a lot of money to do them, then chances are they won’t get used. Write this section of your plan so that you can actually do everything you need to do.

Next, you need to create a few measurables for your business. These are things like monthly sales revenues, profit percentages, labor hours to sales, number of returns per month, number of employee hours each month, etc.. These are all things that you can keep track of so that you will know if your plan is working, or if you need to address something quickly.

Each business, and each industry can have it’s own set of unique measurables. You may have one statistic you can keep that is a telling symbol for your business. Keep track of it, and see how it effects other areas of your business.

You should be able to track anywhere from 3 to 9 different measurables. Any more than that and you will not get much from it, and you are less likely to actually collect the information anyway. If you are using software like QuickBooks, Peachtree Accounting or another accounting app, there are several measurables you can pull and use to track your success.

All of the above information will fit nicely on one or two pages. Once you have that information, and you have written your business plan for your small business, the number one thing you can do is to use it, and use it often. Make a monthly (or weekly) appointment with yourself, your business partner, or your senior staff to review the plan, and make sure it still relevant. If something changes (and it will!), change your plan. It should be a living, dynamic document that you use on a regular basis to run your business.

By writing a business plan for your small business, you are creating a better opportunity for your business, and giving it a better chance of success.

Why would you want to write a basic business plan as opposed to a more elaborate one? Most business owners I know struggle with the idea of writing a full-blown plan for their business. To be completely honest, writing a plan for anything, let alone a business you own or intend to start, is challenging because…

1. we don’t know where or how to start
2. we want our plan to be perfect the first time we write it – as in, we don’t want to make any mistakes
3. we don’t like to write – and let’s face it, writing a plan involves writing.

I’m going to share with you ways to overcome each of these hurdles. But before you do anything, allow yourself to break the process of business planning into small steps.

The first step is to have a basic plan which will serve as the foundation for a more detailed and comprehensive plan down the road.

How to Start Writing Your Plan

What goes into a basic plan? Well, let’s first define a basic plan as a plan for the bigger plan you will arrive at later on.

Here are the essential questions you need to answer:

1. What do you want to gain by writing this plan?

Is this plan an internal plan which you will use to guide yourself or your team towards achieving specific and measurable targets? Or are you aiming to attract potential investors? Is this something you would like to take to the bank to propose a loan for your business?

Begin by examining what your specific goal is for writing your plan.

2. Who is going to review my plan, and what do you want them to do with it?

You need to identify who is going to actually study your plan, and what they are going to do with it. If it’s yourself, then it’s a little easier to answer this question because the answer lies within you.

If, however, you are writing your plan for others to review, and assuming you’ve answered #1 above, you’re going to have to do some background analysis.

Start listing names or titles/positions of people who you expect to review your plan. Then, for each person, brainstorm how you want that person to react to your business plan – what they should do with it.

You could do the same thing for investors – do you know any business owners? Ask them what they would look for in any business venture they would invest, and specifically what they would look for if you wanted them to invest in your business.

3. What is the core product or service your business offers to buyers?

To answer this, write down the product or service you intend to offer as simply as possible. We’ll answer more detailed info about it in the following questions.

4. Who is the ideal customer for this product or service?

Really, ideas for business are a dime a dozen. You often hear people talk about a great business idea they have, but they rarely back it up with any kind of proof that a customer exists for such a product or service, and that that customer would be willing to pay.

Try to be specific in profiling your buyer. For example, does your product or service cater to men or women, or both? What age groups or income levels does it service/attract? Are there any geographical areas that your product or service would supply?

5. Is there enough demand for your product or service?

This is something you’ll want to investigate in more detail as you develop your business plan. At this point though, what’s important is to do some preliminary research. Searches on Google, Hoovers or Bizminer will help you study a particular industry, and you can often drill down your research to a particular state or city. Your search at Google is of course, free, but you’ll often find for a small investment at sites such as Hoovers or Bizminer, you’ll get meaningful data for your market vertical, which you can start analyzing right away.

It’s also not a bad idea to survey buyers on their purchase behaviors and perceptions towards your product or service. Arranging a questionnaire or focus group can give you some useful insight into how potential buyers react to your product or service.

If it’s reasonable, consider giving away product or service trials and then follow-up to evaluate user expectations and experiences.

If you don’t have demand for your product or service, it really doesn’t matter how great it is anyways, right?

6. What existing problems or needs does your product or service solve for your customers?

This is one of the most important questions to answer, because ultimately, your product or service is just another one available unless it clearly and uniquely solves a problem or need which buyers face.

To give an example, let’s say your product is a software application that helps you manage your finances and taxes. There are a few applications in the market which do that already. So, what does your application do that others don’t? Is it better on features, is it faster? Is it more secure? Is it more user-friendly? Is it more portable? Does it really help someone save money or increase their net worth?

Can you see why getting clear on the solution you offer to your target market is so crucial?

7. Who are your direct and indirect competitors?

You really should gain at least an initial understanding of who else is offering similar products or services to your target market. It’s good to know how their products or services are currently used and perceived – why people buy them, and why they don’t. In doing so, you begin to understand the strengths and weaknesses of your competitors from the consumer’s perspective.

Depending on what your product or service is, you can find all kinds of information about user experiences with your competitors’ offerings. Sites like Amazon let you see product reviews by customers who bought products.

8. What do you need to get your business rolling/growing, and what will it cost?

This is arguably the most painful part of business planning. Yet, what is the point of having a plan if you don’t know how it all adds up financially? You may not know how to put all the numbers together on your own. If that’s the case, invite or even hire someone to help you sort out the numbers.

Aside from any potential revenues earned from sales of your product or service, you’ll need to know your fixed expenses – what it costs you to run your business whether or not you sell a single item, and your variable expenses – what it costs you for each item sold.

Naturally, in the early stages of planning a business, you will be doing a lot of forecasting, and your numbers may not be as accurate as you’d like them to be. So, you’ll want to be as conservative as possible about how much revenue you’ll generate and how much your business will cost to run.

9. Putting your plan to action – what are the key steps you need to take?

At some point, the plan needs to hit the road! The plan is no good if it doesn’t help you take action. So a simple action plan should be included – what needs to be started and completed, when and who will do it, all need to be mapped out at least at a basic level.

Having an action plan will also help you get excited about your business venture, as you can see how it comes to life.

10. How can you improve your plan?

Once you’ve answered these questions, you have a basic blueprint of how your business is going to look at the early stage.

Remember, your first step is to prepare a basic business plan that serves as a foundation. From this foundation, you will want to further explore areas which need more analysis and testing, while some aspects of your business venture merely require you to get started and measure how things are going.

Business plans are a necessity if you are trying to get finance for a new business. Most investors or loan companies will not look at you twice unless you show them a detailed business plan.

Many people don’t bother with a plan as they feel it is not necessary. But you mainly need a business plan for yourself. The actual process of creating a business plan will do you wonders for the long term success of you business. As you work through your plan you will come across a list of questions which will highlight areas of your business which you may have overlooked or which need more research. Even if your not asked for a business plan it is well worth doing one and referring back to in the weeks and months to come.

So what makes a good one?

A good business plan should be a long term strategy for you business. It should include everything that you will need to do to run your business, including what the actual activity will be, what resources you are going to need. You need to detail your employees, money, time, equipment or stock.

Your business plan should include

o your business idea – what you do, sell etc
o who your target audience is
o your projected revenue and expenses for a year
o list of your major competitors and how they are different to you
o marketing plans and what results do you expect from them
o how much you expect to sell and when
o resources (e.g. money, employees, premises, equipment)

With your business idea you need to explain clearly why you are different from your competitors, what you are offering that is different and why your target audience should use you. Include how much your products or services will be and explain any market research which was undertaken. If you haven’t done any market research you should stop writing your plan and so some.

In the marketing section you need to explain who needs your product, where the purchasers will be based, your competition and why you are better or different. Also if is worth mentioning any emerging or growing trends in the market including impending changes and what the effects will be to your business from these changes.

If you have a team of people as part of your resources you should explain what each persons job role will be, what their strengths and weaknesses are and if there are any gaps how you will fill them.

The financial projects are very important and you should try to ensure they are as accurate as physically possible. Ensure you explain what your likely profit and expenses will be including any assumptions.

The more research and planning you do the better chance your business has of succeeding. So get researching and get planning and you will soon be reaping the rewards.