How and Why You Should Write a Yearly Business Plan
written by: wearmanyhats•edited by: Jean Scheid•updated: 7/6/2011
This examines the yearly business plan, how, and why you should write one.
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There are many businesspeople who believe that giving birth and writing a business plan are equally painful. While there's no doubt that a business plan is critical to the success of a first year business, why on earth would anyone want to write one yearly? Here are some reasons why you need a short, efficient business plan, some tips on writing it, and how to make it fit its purpose.
1.Know why you are writing it. Is it to get financing for expansion, or has your competition changed? Do you feel you need to change a key aspect of your service or direction? Is it to focus on the next five years? Whatever it is, that will be the meat of your plan.
2.Know it's important to include your previous year’s budget.Sometimes just writing it down gives you a new perspective on how you can improve the next year.If necessary, explain how the budget will change for the upcoming year.
3.Eliminate the mission statement on this short version unless there is a reason you have to change it.If you feel strongly it’s mandatory, consider putting it into a small phrase and include it on the coversheet of the plan. Never fall in love with a mission statement when brevity is needed, especially if you haven’t strayed from the intent of it.
4.Figure out what changes have occurred in your business during the year. List them and include a short explanation and analysis, especially if you need to present this plan to a group of investors or a financier.Remember, business plans are to inform, clarify and define, not try to impress or delude.
5.If this yearly plan is for your eyes only, include a list of things you have learned and three goals for the upcoming year. Ask yourself if those goals are attainable. If they are not, write ones that are. If no one else will ever see this plan, include a list of your mistakes.Make notes on how you will fix them or improve the business to avoid them in the future.
6.Analyze your competition.This is important because competitors will side blind you when you least expect it.If they are offering a new technique, or a way of paying better, or have figured out how to capture a part of the market you wanted, then you need to address this.If one went out of business, explain why. Business failures are just as important as business successes.
7.Address changes in the industry.How has it changed and where is it going?What are new innovations, expected technology, or additional services customers have come to expect.Analyzing this is important because if you never think about it, you can bet someone else has a handle on it. This is more than dealing with the competition.This is the future of your industry and how you better know how your business fits into it.
Consider the business plan to be a tool, much like a hammer builds a house.If you arrange the plan to answer questions, figure out the future and past of your business, or help you get financing, then it is a good tool.And if you make it useful as you write it, you will find it won’t be as bad as giving birth.