Business Plans: Do You Really Need One?
If you are starting a business and intend to solicit investors or a financial institution for fiscal support, a solid and comprehensive business plan is required. You won’t even get in the door without one.
But what if you’re starting a small business that you will run, fund and manage yourself? As a solopreneur, you definitely need a plan, but the formality, length and complexity of it can vary. In fact, in many cases, a full-blown strict business plan isn’t necessary at all.
But wait…before you go running off cheering that the business plan is dead, let’s review the situations when you should take the time to develop a knockout business plan. You MUST have a business plan if you:
- Plan to apply for a loan or approach investors for financial backing,
- Will incorporate and have a board of directors to report to, or
- Are starting the business with someone else.
If those dynamics don’t apply to you, then you can probably squeak by without a formal business plan and still develop a successful and thriving business. But there a few things you will need. Here are the vital elements in what I like to call my Slimmed Down Business Planning Toolkit.
We all know that a mission statement outlines the purpose of your business, but it’s not that simple. A good mission statement isn’t something that can be completed in an hour. It takes time, input from others and a lot of wordsmithing to get just right. But once you have it (and revise it as necessary as your business changes), it can be an immensely valuable planning tool for your business.
Your mission statement should represent the underlying values and principles of your business, and provide direction for all of your business activities. It should be a short statement that encapsulates what your business is about, why you do what you do and the underlying values of your company.
For tips on writing your mission statement, visit:
- How to Write a Mission Statement on Entrepreneur.com
- Business Mission Statements on StephenCovey.com
Unique Selling Proposition
A Unique Selling Proposition (USP), the second tool in the Slimmed Down Business Planning Toolkit, is a summary of what makes your business unique and valuable to its target market. The USP is a fundamental piece of your business, and can shape not only your brand but also your market positioning, marketing techniques and how you interact with your clients.
Part of the process of creating a USP includes zeroing in on your target audience, analyzing your competition and taking a straightforward look at what you can offer that others cannot. If you take time to craft a relevant USP, you can carry it throughout all of your marketing materials, interactions and business branding. Paired with your mission statement, your USP can give a great deal of clarity to your business model, what you do and why you do it.
The third key element in your toolkit is your business budget. While your budget doesn’t have to include graphs, charts and in-depth analysis, it should at least contain the following:
- A year’s worth of projected business expenses and operation costs
- A projection of your income
- An anticipated marketing budget
To create a valuable budget, you will also want to include a column where you can enter in actual figures each month to compare to your projections. This kind of working budget can be an effective tool for managing your overall business finances on an ongoing basis.
For helpful tips on creating a budget:
- How to Create a Simple Budget on Entrepreneur.com
- Creating a Budget for Your Small Business: The Basics on Intuit.com
These three items can be extremely powerful when combined to create a slimmed down version of a business plan. But the trick is to make sure you are spending the necessary time to develop three effective documents on a continuous basis, not just drafting and forgetting about them.
Do you think this Slimmed Down Business Planning Toolkit can make a good substitute for a business plan? What would you add?
Image credit: Dominik Gwarek