Every company needs a sound and robust business model that scales as life changes. Many small businesses start with a business plan based on guesses.

Then as life rolls on, there is never time to update it to reflect your evolving situation. When your accountant nags you, you just feel bad. And your bank manager makes a new business plan a condition for any money discussions so you rush into guessing again.

As I coach my clients, I encourage them to create a simple, effective Business Plan that will earn them money as their business grows and their market changes.

Be succinct and clear

I encourage the owner to write their Business Plan in less than two sides of A4. In my experience with small businesses, briefer is better. The four sections should each have a couple of paragraphs to say:

• Why are we in business? ? your purpose and intentions in running the business
• What do we sell? ? your products, services and the combinations that customers want to buy
• Who do we sell to? ? your clients? demographics, locations, spending habits and interests
• How do we plan to run the business? ? staff, structure, targets, management and a simple cashflow table (in an appendix) predicting the income and expenses for the next 12 months

Stay flexible and customer-centred

You need to consider the Scale, Scope and Structure of your business and align them with your long term Mission. Then you can include this detail in the right paragraphs of your Business Plan.

Your mission is simply "Why are you running the business?" State who your customers are, the needs you satisfy with products and services and your unique approach to your market. A strap line of 15 words is ideal.

Your scale describes your team ? whether you employ them, associate with them or do sub-contracting. You might also show how the effort will flex as your sales levels change.

Your scope outlines the customers you want to work for and the key products and services you expect to sell to them. Where your market has a number of niches, each could be described individually.

Your structure defines how you sell to clients, the experience and skills needed for purchasing, production and delivery and how you manage your cash flow.

Being small, you are unlikely to have departments but you will have individuals following processes within a team. On the one hand, organising your firm will always be an exercise in frustration because the supply of your products and services rarely equals the customers' demands. On the other hand, small companies thrive by picking off market opportunities to which their bigger competitors cannot respond quickly:

• Time and market events overtake even the best organisation - so design flexibility into your business ready for when you need it.
• Unintended consequences grow with time ? so keep watching for the unexpected. Set up triggers to flag possible issues, agree who monitors each flag and make the most interested person responsible for fixes.
• Make-buy decisions always trade-off costs against co-ordination ? so monitor how the actions of your suppliers and associates effect your ?internal? costs of quality control, communication and re-work. Be prepared with a ?plan B? and re-take these make-buy decisions at least once a year to keep people on their toes.
• Understand the balance points in your business. But only re-organise once in three years ? even small changes take several months to work through a business.

Look for results

Before you finalise the draft of your business plan, you need to answer four questions honestly:

• Do you tell a clear story in simple business terms?
• Do you show where extra investment (of money or effort) will lead to increased returns?
• Do you show where unique value is added for your customers?
• Do you describe how you expect to maintain your competitive edge even as your market changes?

Finally It is my experience that an effective plan is marked with coffee stains and pencilled comments that show the business owner has reviewed it month and re-written it yearly. As you keep your business plan focused on the needs of your clients, you will thrive.

Return to Index