Critical Components of a Successful Small Business Plan
The mark of an effective and successful small business owner is his/her small business plan…well thought out and drawn carefully. A small business plan outlines the key objectives of a business, the targets and performance levels that must be achieved for growth.
A good small business plan is typically one which follows a thorough strategy formulation exercise. Strategic thinking defines strong leadership, and is the fundamental process that helps identify those critical areas around which business activities should be executed.
Formulating a business strategy is critical. A business plan ensures execution of work at, and within the right time. At the time of review, it encourages new initiatives in keeping with changes in internal and external business environment.
A small business plan should include the following critical components:
1. An appraisal of where a business currently stands in relation to critical business issues: A small business plan should include a list of business activities being performed at any given time. All critical issues facing a particular business process should be identified, analysed and spelled out. This appraisal list helps the company keep abreast of how a business is being executed.
2. Setting a time frame and business projection: This helps gain a clear understanding of where businesses are headed. Setting a deadline, or target, helps work on, develop and modify business ideas and processes, and concentrate on sales and marketing across the business plan to reach the ‘end picture’.
3. Defining business objectives: By analysing the gaps between processes being performed and the time frame to achieve targets, entrepreneurs can identify the main business objectives to fulfill their business visions. These gaps defined in a small business plan, constitute the company management process and its risk management profile.
4. Assigning tasks: Business objectives included in a small business plan require breaking down into ‘’bite-sized’ tasks completed over short periods of time, unerringly leading to completion of the bigger objective within specified time frame. Assigned tasks should be specific with realistic and agreed targets having separate accountabilities and responsibilities. This allows everyone to appreciate how their work has contributed to complete the bigger picture.
5. Strict adherence to deadlines: Deadlines stimulate work discipline, an important determinant of success. Adherence to deadlines ensures completion of assigned tasks within the expected hour. Accountability of those involved is also important.
6. Accountabilities and responsibilities: Tasks assigned to professionals with ownership qualities, and those believing in sincere execution, are doomed to succeed. Responsibility of work and accountability for actions is an example of a developed and devoted work culture.
7. Maintaining a report: Since all business plans and objectives have glitches and encounter difficulties in implementation, it is imperative that a small business plan maintain a regular report of business processes. An up-to-date accounting of how a business functions will help detect and solve potential problems.
To make sure the right things get done at the right time and in the right sequence, is no rocket science. All a small business plan requires is a healthy dose of common sense.
Writing a Small Business Plan
Formulating a small business plan can be easy if you can answer the following straightforward questions about your business:
1. What is your business aim? What do you want from your business? Do you desire flexibility and freedom of work, or are you geared towards making huge amounts of money. When drawing a small business plan, specify targeted earnings, how much time you are willing to devote, people you want to work with, time of retirement, etc.
2. What do you have on offer? What products or services do you want to sell? Are they creative, innovative products that interest people? Will those satisfy customer needs?
3. Who are your customers? What do they want? How strongly do they covet your product? What kind of customers do you desire for your business? A thorough market research will help decide the target audience for your business.
4. What type of market do you want to target? Where is your business located? Are your products easily available to your customers? Where is your customer base concentrated? Do a market survey to decide on customer groups for your products and services. ‘Where’ can be the geographic location of your business, or places your customers frequent most.
5. Who are your competitors? Where else do customers purchase like services? Competition is important for business success. It helps better your business, introduce new advancements and gradual development. Conduct a detailed market research on competitor product prices, outlets, target groups, etc.
6. How will you communicate with your customers? Product advertising and marketing is a critical component of a small business plan. Without a marketing strategy in place, businesses can lose potential customers. It is important to come up with smart advertising messages for your business that your customers can relate to. Employing advertising tactics different from your competitor also has significant impact on your customers.
7. Are your business skills and external resources sufficient to run a business? Is your professional team capable of executing your business plan? Is your technology up-to-date? What areas do you thrive in and where do you lack? A good entrepreneur always knows his best assets and where he requires help.
Once you have answered all questions, employ a business coach to review your small business plan.
Your Small Business Plan and Raising Funds
If you want business capital investors to pool funds in your business, you need a small business plan that is strong, well-planned and structured, based on detailed market research. Investors will readily finance your project if it shows a good business strategy. A diligently thought out business plan, accompanied by an impressive corporate presentation, results in maximum effect.
- Your small business plan should show a high-profit potential. Investors are most attracted to businesses promising good returns on investments.
- Your small business plan should include a business lead generation and conversion strategy for marketing of your company’s products or services.Your business model should definemarketing processes to convince investors.
- Your small business plan should be able to show good hiring plans. Most businesses suffer due to poor management of employees and recruitment of unqualified staff. Your business’ Key Performance Indicators for All Management and Staff’ should be considerably improved when you apply for business funds.
- Since investors play a vital role in a company’s management, it is for the entrepreneur to decide the extent of participation he/she will welcome. As a business owner, your small business plan should offer investors equity share in your business depending on their active or passive roles.