Starting a small business is hard work. The list of things you have to do in order to turn your dream into reality may seem overwhelming at first. Anyone who has searched “how to start a small business” online has seen page after page populate with articles on loans, investors, incorporating, credit scores, cash flow, taxes, permits—the list goes on and on.
When faced with such a formidable to-do list, it is easy to think of a formal business plan as something to table for later. After all, organizing a list of responsibilities and checking off items one by one as you accomplish them is itself a form of planning. Why waste time creating and perfecting a business plan at this early stage of the game?
The answer is that even the simplest business plan will help you
- Prioritize. You’ve created a to-do list, but which items on the agenda should come first?
- Create accountability. A business plan will help you and your team track individual tasks and responsibilities. Even if you’re running your business by yourself, a map that tells you when you’ve reached and surpassed specific milestones is invaluable.
- Get inspired — and reinspired. A business plan is a mission statement. It is an affirmation of the reasons you wanted to start a business in the first place, and the reasons you want to stay in business in spite of all obstacles. It is also a living document; it can and must change as you and your business change. Nothing is set in stone except your commitment.
The good news is that, unless or until you start seeking financing, your business plan can be as personal, informal, and inventive as you are. The last thing you want to do is think of your business plan as a tedious book report due at the end of the week.
Better one than none
With that in mind, a one-page business plan is a great way to get started. A one-page business plan is exactly what it sounds like—the purpose, goals and strategy of your small business set down on a single page. One page is less daunting than ten or twenty, and its tight framework will force you to leave out everything unessential. It’s also a great way to introduce your small business to potential investors down the road.
Now let’s take a look at some of the key components of your short-but-sweet business plan. These should include the following:
- Product or service value proposition. What does your business do? What is the problem facing your customers, and how does your business solve that problem? If you are a startup, be sure to mention any market research you have conducted to establish your product as a valuable way to solve a problem that will sell.
- Monetization model. How do you make money? What are your distribution channels and how much does each channel cost?
- Competitive advantage. What exactly sets you apart from other small businesses that claim to offer a similar service? Why do these unique characteristics give you an advantage? In what ways do your strengths expose your rivals’ weaknesses?
- Target market. Who exactly are your customers? Knowing your customers as well as you know your friends and neighbors (if not better!) is vital to building a successful small business. How old are they? Do they have kids? What is their average income? Are they internet savvy? The more questions like these you can answer, the better. As a separate but related project, consider creating buyer personas that will embody the type of customers you think will walk through your door—what can you do or do better to attract those people?
- Management team. If you have partners in your small business venture, who are they, and what do they bring to the table? What are their individual strengths and primary responsibilities? This is especially important for startup businesses or businesses that have less than 2 years in business.
- Customer relationships. What is your strategy for both finding and building strong relationships with your customers? If you’ve been in business for a while, how well is that strategy working? How can you turn your customers into brand advocates for your business?
- Key Financials. As you build, grow, or sustain your business, you’ll want to keep track of key metrics such as annual revenues, monthly sales, and gross profits. Have detailed balance sheets and profit and loss statements will be particularly important if you are seeking outside funding. Lenders will also want to see on your business plan how much funding you are seeking.
Getting it done
Always keep in mind that your business plan is an evolving document. Don’t worry about making it pretty or clever. Bullet points are fine—you should focus on short, strong declarations of what you are doing now to build your small business and what you intend to do in the future. If a pre-existing template or professional business planning would help you to organize your thoughts and relieve some of the pressure of staring at a blank page, LivePlan is a great place to start.
It may seem like just another task on an endless list of tasks right now, but a thoughtful business plan will give form to those tasks as a whole and show you how to best allocate your time and energy on a step-by-step basis.