Business plans… Where the real value is.
The following is an executive summary. Details can be found by clicking the header links.
In my 25 years running a public accounting firm, my experience has been that most of what’s written in business plans is redundant and unnecessary. But there are, in my opinion, three critical elements. Those DO NOT include…
Branding? I’ll cut to the chase. I’ve never seen a small business brand that was visible. They may work on cattle, but for small business…. Fancy artwork, cool brochures… the only good thing is they’re recyclable.
A mission statement? Ditto above. The customer doesn’t care. Your employees don’t care.
The critical elements are as follows.
A valid accounting system. Most small businesses have accounting systems but those systems are designed to help the IRS, not the business. A valid accounting system produces real time financial data that you can use to make decisions.
A market analysis. When I ask business owners who they’re customers are, they often start the answer by saying “anybody that…” Customers aren’t anybody. Most businesses have very specific customers and those that don’t have very specific “best” customers. You can’t know how to market effectively if you don’t know exactly who your best customer is.
A market penetration strategy. This is your strategy to get new customers.
A growth strategy. This strategy is two-fold. How can you retain and systematize your customer base and how can you sell more to them? Both the market penetration and growth strategies must be integrated into operations so as to not create more work. A web site that neither you or your customers use is not a growth strategy, it’s a waste of money.
And finally, a Business succession strategy. This is the difference between you selling (or transitioning your business to family) in 6 months or 10 years.
To be sure, a business plan would be much more expansive than this if one was looking for funding, especially from SBA, but my experience having worked with SBA is they are more interested in valid financials and the above elements than fancy brochures. Contrary to what you might think, SBA employees are VERY SHARP. Nobody wants you to succeed more than they do, but they’re not going to just give you money. You have to show that the investment they’re backing is a valid business.
My experience has been, it’s all a matter of focus. If you know your profit margin and can keep your employees away from the coffee pot by having a steady stream of work, business is easy. Anything that strays from that cuts like a knife.