How To Use A Business Plan For Small Business Success

Are you a small business owner without a proven business plan template to work with?

If you don’t have a plan to grow your business, it’s quite understandable.

There’s always so much do when you’re running a small business. Maybe until now you didn’t think it was worth sacrificing the time to make a business plan.

Or perhaps you simply don’t know where to start? That’s where my proven business plan template can help you.

The truth is that only 20% of small business owners have a plan. And when you consider that 80% of small businesses fail in the first 5 years, it seems that having a plan could be the key to success.

I was one of the 20% that did have a plan. I’m convinced that was the reason why my business was so successful. The reason I made at least 3 times the profit my competitors were making.

NEVER HEARD OF A BUSINESS PLAN? NEITHER HAD I

When I was thinking of starting my business, I had never heard of a business plan. Fortunately, I had a successful friend who told me what to think about if I wanted my business to succeed. He gave me a quick ‘overview’ and a business plan template to follow.

Following his advice, I thought about why I wanted to start a business. What outcome was I looking for?

A few hours later, following the template, I had my first business plan. It was all in pencil with lots of rubbing out, but it showed that I could make a profit of $7,820 in the first six months. Wow, that was the outcome I was looking for! I was happy with that.

In fact, I made more than that. After the first 6 months, I had made $11,000 profit following my plan. It was then that I could see that having a plan, and following it, was the key to success!

Two years and 3 employees later, we had continued to make profits and were gaining market share.

Although we were doing well, I felt a little under pressure. I was wondering how to keep my 3 great employees interested and motivated. I was wondering “what’s next?”

Around this time I read this quote

Two years and 3 employees later, we had continued to make profits and were gaining market share.

Although we were doing well, I felt a little under pressure. I was wondering how to keep my 3 great employees interested and motivated. I was wondering “what’s next?”

Around this time I read this quote:

“If You Aren’t Moving Forward, You’re Going Backwards”

Then I met someone whose profession was to help people create a business plan. I had never heard of such a person! He knew all the essential components that a business plan should have and gave me an even better business plan template to follow. He guided us while we wrote our first real plan.

As we followed our plan during the year the business worked really well. I got to understand the power of working with a plan. From then on, I made it a priority to have a new plan for the start of each new financial year.

A PLAN TAKES YOU FROM WHERE YOU ARE TO WHERE YOU WANT TO BE

We’d start the business planning process each year with a SWOT analysis. A SWOT is a crucial step. It identifies all the strengths, weaknesses, opportunities and threats to the business.

In the early days, my whole team would come together to perform the SWOT analysis. Later it would be the management team.

Including employees worked well for me. Employees have a different perspective, and so their input is invaluable. Also, going through a SWOT together promotes a feeling of ‘inclusion’.

I found it valuable to have an experienced professional lead us through the planning process. It gave everyone else the opportunity to focus on planning the future.

We’d start by asking ourselves a series of questions in each of the 3 key business areas: Sales and Marketing, Operations and Finance.

STRENGTHS

•  What advantages do we have?
•  What are we really good at?
•  What do we do well?

WEAKNESSES:

•  What aren’t we good at?
•  What skills are we missing?
•  Does business ever ‘slip through our fingers’? Why?

OPPORTUNITIES:

•  What do we know of but aren’t currently taking advantage of?
•  What trends can we see happening that could be advantageous to us?

THREATS:

•  What is out there that could cause difficulties for us?
•  Do we know what our competitors doing?

Although it is a simple process, a SWOT analysis is powerful. It uncovers and highlights all the different aspects of the business.

This is what ours looked like when it was finished…

With the information I had from the completed SWOT, it was easy to write a fresh plan for the year ahead.

I followed my business plans consistently for the next 15 years. Over that time I built a very successful and profitable service business with a turnover of $12m pa, 3 offices, and 28 staff.

Because the business was very profitable it became desirable to buyers. When I was ready to retire from that business I was able to sell it to a publicly listed company.

Without a doubt, the business plans kept me focused. It just wouldn’t have been possible for me to grow and develop the business to such a high level without one.

FOLLOW A PROVEN BUSINESS PLAN TEMPLATE FOR SUCCESS

Most professionals agree that there are 3 basic components of a business plan:

1. Executive summary: 1 paragraph. What you sell, to whom and why
2. Marketing plan: how are we going to get the sales we need?
3. Financials: Income (sales) and cash-flow

I found the easiest way to start was to follow Stephen Covey’s famous quote:

“Begin with the End in Mind”

I’d start with financials by asking myself these 4 questions:

•  What profit do we want to make next year – in $$?
•  What is the best gross profit margin in our industry – in %
•  What staff do we need in place, and when, to be able to do that?

Then, keeping the results of the SWOT in mind, we prepared a simple one-page business plan using an excel spreadsheet.

This is a copy of the business plan that worked well for me in my business. It has 3 basic components

1. Sales and income. Using the business plan spreadsheet, list the $ monthly goals.
2. Expenses. Underneath the sales and income, list the expenses you expect to incur by making those sales.
3. Profit. The profit or income (sales less expenses) at the bottom of the sheet becomes the goal for the month.

For more details on how to write a plan just follow the steps here “How to Write A Small Business Plan In Under 2 Hours”.

THE POWER OF THE BUSINESS PLAN IS IN THE REVIEW

For any plan to succeed it needs to be written using a proven business plan template and reviewed.

I reviewed my plan monthly, against the management accounts, 2 days after month end. This was a priority in my business. The dates were booked well in advance in everyone’s diary.

Management accounts are a summary of the financial position of the business. If you don’t have management accounts, getting some is your first priority.

“You Can’t Manage What You Can’t Measure”

I also reviewed my business plan at the end of each week, just by asking myself these 3 key questions:

1. Have we made the sales we forecast for this week?
2. What do we have in our sales pipeline for next week and the week after?
3. Have we collected all the payments we are due this week?

Answering these questions provided direction. I knew what my priorities needed to be for the following week. It encouraged me to focus on the ‘important’ and not get caught up in the ‘urgent’.

REVIEW, REFOCUS AND REDIRECT FOR SUCCESS

In summary, a business plan provides clarity and encourages focus. Reviewing the plan against results directs us to take the right actions to move forward towards our goals.

GETTING STARTED ON THE BUSINESS PLAN – THE TO-DO LIST:

1. Complete a SWOT analysis. Schedule a time with your staff.
2.  Spend 30 – 40 minutes on each of the 3 topics.
3.  Make it an ‘interruption-free’ session (no ‘phones!).
4.  A whiteboard or butchers paper blu-tacked to the wall works well.
5.  For each category, try to come up with 10 ideas for each of the 4 categories.
6. Get clarity on who your target customer is and why they value your service.
7. Look for marketing ideas to help achieve your revenue goal. Consider strengths and opportunities.
8. Discuss how to improve your weaknesses and reduce any threats.

AFTER THE SWOT ANALYSIS:

1. Check out this article How To Write A Small Business Plan In Under 2 Hours and complete the to-do section there.
2. Use a proven business plan template - yours or someone else's
3. Schedule monthly reviews to see how you’re tracking against your goals.