As small business entrepreneurs we all know the dichotomy between working in your business and working on your business. The latter often gets shuffled off to the corners of our desks because we’re really busy working with customers and doing things that keep the business operating and keep revenue coming in.
You must work on your business in order to make it sustainable. One way to do that is to have a current business plan.
Four Reasons Your Small Business Needs a Business Plan
1) The Economy Is Uncertain
Times are tough. That might even be the reason you started your business – but it’s an even better reason to have a business plan. What safeguards do you have in place in case your market niche changes or their buying habits shift? If you’ve carefully analyzed the market for your products, you can more easily anticipate their changing needs. Those knowledge nuggets can be recorded in your business plan for you to refer to and revise as needed.
2) You Have Competition
Chances are, someone else is already doing what you do. The most common refrain I hear from new entrepreneurs is that they have no competition, but it just isn’t true. Even if you have a unique product someone else will come along and copy it (or simulate it if you’re protected by a patent). That’s okay, but if you’ve outlined in your business plan how you’ll differentiate from your competition, then you’ll find rivals to be less of a threat. You’ll know how to maintain your unique positioning, because you planned for it.
3) You Need Funding
Entrepreneurs usually write business plans so they can secure funding or investment. Even if your business is already successful and you can prove it with previous financial statements, the people who give you money need a clear picture of where you’re planning to take the business. More importantly, they want to know when they’re getting their money back and how much they’ll make in returns, either through interest, dividends, or an exit strategy like an IPO. If you want people with money to get excited about your business, give them a clear, succinct business plan that explains where you were, where you are now and where you’re going to go with the funding you need.
4) There’s No Magic Formula
The identical business models that worked for others in your industry probably won’t work for you. A business plan is like a fingerprint. It’s the blueprint for how your business might (I say “might” because external factors can always change the outcome) succeed if you do all the things the plan says you’ll do. But I guarantee your plan will be different from all the other plans out there, and that’s what makes it so crucial to have one. If you have a guide to look at whenever you need a reminder about your business objectives, you’re much more likely to stay the course while those without a plan are floundering.
Once you have a business plan, it’s a good idea to revisit it regularly. A business plan is a dynamic document that could change as often as your business does, so don’t let it get dusty. A business plan gives you an advantage, provides a benchmark, and makes you accountable.
Do you have a business plan for your small business? If not, start writing!
About the Author: Jessica Oman Oman (@writeahead) owns Write Ahead Consulting, a business plan writing, copywriting and editing firm helping small businesses across the US and Canada. She is co-author of Communicating with Confidence: The Creative, Ambitious Entrepreneur’s Guide to Better Business Writing, and is devoted to promoting entrepreneurship and giving small business owners advice to make them more successful. Jessica’s other passions include traveling with her spouse and her dog, baking, and riding her bicycle.