Helping Your Clients Develop an Effective Business Plan
Some business owners think that a business plan is too difficult or time consuming to pull together – not a worthy time investment, unless they are seeking funding. That is unfortunate. Preparing a formal business plan offers a multitude of benefits, including better strategic vision, redefined priorities, and deeper insight into the interdependencies.
Help your small business clients reap the benefits by following these steps to develop an effective business plan.
Dip into your client’s wisdom
No one knows your client’s business as well as he does. Encourage him to dream out loud and talk about goals, targets, and desired impact. Where does he want his business to be in 5 years?
Research, research, research
A business plan is more than just a dream. Viability is in large part determined by grounded assumptions. Encourage your client to research the field and the ideas thoroughly. Think through opportunities, growth prospects, and competition.
A note of caution about using financial data. Some clients have a misconception that the strength of a business plan is in elaborate analytics. Making sure that solid numbers form the basis of the plan is important; doing excessive financial acrobatics is not necessary.
Spend time and effort on the executive summary
The process of preparing an executive summary forces business owners to crystallize and condense ideas down to their core. That requires deep thinking and a thorough understanding of concepts, timelines, and interdependencies. If the business plan will be used to seek funding, this may be the only part of the plan that decision-makers will read. Even if the business plan is being prepared for internal use, stress-testing ideas by paring them down is a useful exercise.
Focus on impact and outcomes at least as much as on the method
Business owners are often tempted to see their unique offering through the filter of their business processes. To them, a proprietary technology, a secret ingredient, or a 15-step assessment methodology is what makes their offering special and valuable. The reality is that the customers rarely care about how the business owner got the product or the service to come out the way it does. They are buying the end state: problem solved, hunger filled, pain relieved. Encourage them to spend at least as much time on impact and outcomes to customers as they do on their methodology.
Keep it brief
Lengthier is not better. A 100-page business plan is not necessarily more effective or thorough than a 30-page one. Challenge your clients to eliminate sections that do not contribute to the impact of the document.
Don’t underestimate competition!
An honest look at competition is a critical component of a great business plan. Consider competitors’ strengths, study their decisions, and learn from them. Where does your client have a competitive advantage and how durable is it?
Consider the marketing plan
A marketing plan is critical to turning the product or service idea into a reality. Even if your clients dislike marketing, encourage them to consider how they will get the word out to boost sales.
Remember that even the perfect business plan is wrong
A business plan, even when impeccably researched and footnoted, is wrong the moment you finish it. The competitive landscape changes daily and real life rarely plays out exactly as you plan. That is not a good reason to skip planning, because going through the process helps your small business owners deal with the ever-changing reality.
In closing, the most important part of a business plan is how it translates into concrete actions. The process of compiling a business plan encourages your small business owner clients to consider their priorities, resources, and alignment between the two. Living the business plan – in other words, putting resources, effort, and thought behind what is most important – is where the value of a great business plan shines.