The Importance of a Business Plan

“Business plan” is a term that tends to strike fear into the hearts of small business owners – not because it’s a long, drawn out process to write one, but because we think it has to be. At least, that’s what I thought once upon a time…and plenty of my clients have been in the same position. Many people think of it as an “I’ll do it someday” sort of thing, and it keeps getting put off. But what is the importance of a strong business plan? 

This is something that I find many small business owners aren’t clear on. We tend to see it as a formal document that’s used to help get funding from banks, but a good business plan is so much more than that.  

The thing is, outside of the business plan you may need for the bank, it doesn’t have to be a huge, formal document with branding and charts. Your business plan is a document that allows you to plan out your goals, create action steps and timelines, refine on your core values, and decide what you really want your business to look like at every step. 

Statistically, only 33% of small business owners have created a business plan – but 70% of businesses that survive for 5 years or more have a business plan. Most businesses that fail do so because of issues like money running out, entering the wrong market, lack of research, ineffective marketing, or bad partnerships. 

In other words, they fail because they didn’t write or stick to a business plan. 

If you’re ready to write your own business plan, check out my free training – you can access the same template and process I use to write mine out every year! 

Identify Core Values to Strengthen Your Business Plan

When our Marketing Coaches start to work with a new client, one of the first things they’ll often ask is to tell them about the business. Who are you as a company, and what do you do? Who do you serve, and why? 

This isn’t because they’re brand new to the account – they’ve already done some basic research into the website, socials, etc. before they meet with the client. It’s because who you are as a company and a business owner is key to every part of your marketing, and they want to hear it directly from the person who built the business. 

Much of what this boils down to is your Core Values. Every single thing you do as a business owner and as a company should be directly based on these values – and your business plan is where you start to really refine them. 

You see, your Core Values are more than just words. They’re the ideas that your business is built upon, the concepts that you want to portray. When you put them down in writing in your business plan, you’ll find that goal setting, strategic planning, and decision making become a lot easier! 

Goal Setting 

For many entrepreneurs, goal setting tends to be an abstract process. You have an idea of what goals you want to hit in general, but they stay in your head – they never really make it onto paper, so there’s not a concrete plan in place to reach them. 

This usually isn’t because we don’t want to plan out the process, but because it just doesn’t seem important in the midst of everything else. We already know what we want to do, right? 

Sort of. Yes, we have goals in mind, but simply knowing what they are won’t make them happen. You need to make them concrete (i.e., write them down), break them down into achievable milestones, and put a timeline in place. 

For example: if your goal is to increase your sales by 15% over the next two quarters, what are you going to do to make that happen? This is where your business plan comes in. 

Maybe you’ll decide to first audit your marketing to make sure you have the right leads coming in – and if you find improvements that need to be made, you’ll put those into action in the first quarter. Then, perhaps you’ll take a look at intake to see if your systems need to be improved or your team needs additional training. Once you pinpoint improvements there, you can plan to make them in Q2.  

Now, you have a plan in place. It may need some refining as more data is gathered, but the road map is there.  

If that plan only lives in your head, chances are it’s not going to happen. When you get it down on paper, share it with key members of your team, and schedule out the milestones, you can then put the tactical steps in place to make your goals reality. 

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Strategic Planning 

Strategic planning is another term that tends to frighten off a lot of small business owners – usually because they’re just not sure how to do it. It might feel like you have to hire an expensive consultant, hole yourself and your executive team up in a boardroom for a week, and come up with some huge plan. 

You can do that, of course, but essentially, strategic planning is a way to plan out the strategies you’ll use to reach your goals.  

This might sound simplistic, but what it really means is that you’ll choose strategies that are based on your goals, your numbers, and your trends rather than throwing ideas at a wall to see what sticks.  

You may want to pull your Admin or COO into some meetings to help you do this. You’ll probably want to talk with your head of marketing, your bookkeeper or CPA, and your sales team so that you can bring their insights into the mix. 

And as you do, you’ll begin to see which strategies make sense and which are better to leave behind. As you revisit your plan throughout the year, you’ll be able to see how your plans are working and make any revisions needed.  

This does take some time, but it’s time well spent. If you need help putting your own plan together, check out our free training – you’ll find a business plan template and a video that leads you through each step!