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When I ask the female microbusiness owners I coach if they have a business plan, I typically get one of two responses: they roll their eyes and let me know they are just a tiny business, they don’t need a business plan; or they avoid eye contact for an uncomfortably long time. I get it, we’ve been trained that business plans are these cumbersome projects only for ginormous corporations or startups that need financial backing.
Pfft!
Every business should have a business plan, even if it’s a one or two-page document that covers the basics. And to prove to my pffft!, here are the five reasons you need a business plan.
#1: Gain Clarity
The process of creating a business plan forces you to gain clarity on your business, even if it’s only an idea at the time. Sure, an idea is all you need to begin a successful microbusiness, but the idea needs to mature to become a viable business.
Areas where you want to be crystal clear on are your target market, their problems or pain points, how you can solve their problems, and who or what your competition is. Honestly, if you can’t clearly convey the problems your business solves to yourself, how will you ever explain it to your target market?
And that assumes you know who your target market is. Spoiler alert: It isn’t everybody with cash money. Speaking of money…
#2: Money matters
Should you take that course/buy that tool/attend that mastermind/make that investment in your business? When you have a business plan, you know the financial forecast of your microbusiness. You’re not randomly guessing or making decisions based on how much money is in your personal checking account at this minute. Ouch, did that one hit a little too close to home? It was said with love, I promise.
Creating a business plan forces you to get real with yourself about the financial aspects of your business. Revenue. Expenses. Profit. Because “Hope for the best” is not a recommended financial strategy.
#3: Make decisions easier
Ideas come in all sorts of colors, but a business plan is black and white. Without a business plan, you might be tempted to chase down a rainbow {hoping to find a pot of gold} that makes no sense for your business.
Imagine you own a women’s boutique with a focus on work apparel and you discover a high quality party dress at a Crazy Eddie wholesale price {these prices are so low, they are insane}. Without a business plan, you might buy them and cross your fingers that you can sell them. But, with a business plan, you know what your product lines are, and you know what your marketing and sales strategies are. You can easily make the decision to buy or pass on the sweet deal based on your strategic plan.
#4: Creates the action plan
Action plans are so sexy, said no one ever. But, they are fantastic road maps. Instead of thinking of a business plan as a stuffy, boring document that “proves” you are a professional microbusiness owner, think of your business plan as an old-timey love letter to future you.
My dearest love: We have been separated for too long. I cannot until we are reunited. And here’s how I’m going to get to you.
Your business plan is a living, breathing document. It is outlining the next steps for your journey from Point A (where you are now) to Point B (where you want to be).
#5: Reality Check
My very first experience as a microbusiness owner occured in middle school. I had the brilliant idea of taking my lunch money ($1 a day) and spending it on the cheap gum sold by the piece at the 7-11 around the corner from my house. That single dollar (plus 4 cents for tax) got me 20 pieces of gum. By selling the gum for $.10 per piece, I doubled my money. I took a dollar for lunch and reinvested my profits ($1) into buying more gum for the next day. This went on for weeks, with me eventually buying huge paper bags of gum and becoming the most popular girl in 6th grade.
And then, I got caught. I put up quite the argument with the school administrators that I wasn’t technically violating the student code of conduct as I wasn’t actually chewing the gum. I was simply the supplier.
The principal was having none of it. My punishment for bringing the contraband on school property was fitting: I had to scrape gum off the bottom of desks.
Excuse me, while I dry heave just remembering that experience.
Had 12-year-old me correctly considered the risk assessment, she probably would have decided that small amount of pocket money wasn’t worth the price of spending a week as free labor in the most disgusting job she could imagine. Your idea may be brilliant, it may be exactly what the world needs, but if you don’t take the time to think through the potential outcomes, potential obstacles and give yourself a bit of a reality check, you can be derailed when they appear.
Writing your business plan doesn’t have to be an ugly, uncomfortable and unpleasant experience. Focus on the essential elements and you can have a functioning plan in no time. Or, join the next Business Plan Boot Camp and your business plan will be an easy, peasy, mac and cheesy process.
Need more goodness like this in your life? Why don’t you invite me over to your place? And by place, I mean your inbox. Subscribe to my newsletter and you’ll score my free-fifty-free Crafting Your Mission worksheet, plus periodic love notes from me. See you in your inbox!
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