Writing Your 2019 Business Plan? Include These 5 Things
A new year, a new 2019 business plan. An important step in preparing for the challenges of the year ahead is having a solid business plan. Business plans should never be a “one and done” experience, but an annual exercise.
The technicalities and standard information that go into a business plan are easy enough to figure out, but there are other, more abstract things to consider before you put pen to paper.
Prior to drafting your 2019 business plan, take the following five steps.
Determine Your Purpose
Having a plan to make a profit is important, but it’s far from the only thing that matters to your business.
Business plans focus on what you are going to do but often neglect the ‘why’ and the ‘how’ values of the business. Why does the business exist? Why do people want to work here? How do we see ourselves? How do our customers see our company/brand? How do people representing the business behave?
Take the time to articulate your business’s core values and purpose, which will serve as your organization’s compass for making decisions at all levels. This ‘compass’ can be discovered by having an honest, open conversation with your team.
To discover your compass, engage in a formal assessment process. Look at habits, beliefs, values and capabilities so that everyone is working from a clear center point and have a framework for discussions about working styles, strengths, and individual and collective blind spots.
Build Your Vision
Business success is based on having a clear vision of what you want to accomplish as a company. But before you write a business plan, you should come up with three to five key strategies that will enable you to achieve that vision.
In addition to defining a vision for your business, define your mission statement. The mission is the “why” you’re doing what you do. The first sentence of the mission statement should be why you are in business. After you fully understand the why, then you need to define ‘what’ you are going to do and ‘how’ you’re going to do it. The third and final part of the mission statement should be the ‘who’ you want as customers and how you are going to treat them.
From the mission statement, it is easy to develop your “value proposition” statement that defines what makes you unique in the marketplace and how you intend to differentiate and position your business.
Clarify Your Financial Model
A good financial model will include many of the details from your formal business plan; for example, hiring, pricing, sales, cost of acquisition, expenses and growth. As with a business plan, your model should be revisited and updated as the realities of your business start to unfold.
Next, begin answering the ‘what ifs.’ If I sell this product at this price point, and this is the cost of client acquisition, what rate of return can I get? After you’ve built and tested your financial model, then you can go back and write a business plan.
On a basic level, your financial model should include:
- A revenue growth model with Key Performance Indicators (KPIs) that will push growth.
- Clearly identified expenses, maintained cash to fund those expenses, and explain how those expenditures are necessary in supporting your growth model.
- How your business will utilize its cash. Investors and lenders want to see that you know how long your business’s current cash supply will last and you have a plan for what to do with new capital.
For more information on using a financial plan to grow your business, see Tips for Financing Business Growth.
Identify Your Target Market
In the current economy, a well-defined target market is more important than ever. Targeting a specific market does not mean that you are excluding people who don’t fit your criteria. Rather, target marketing lets you focus your marketing dollars and brand message on those who are more likely to buy your product or service.
It can be tricky identifying your target market. Beyond identifying demographics—age, gender, location, income level—and psychographics—personality, values, interests, lifestyles—narrow your market more by answering this question, “Why am I uniquely suited to solve this problem?”
If you are unable to answer the question, you either have the wrong target market or the wrong offering. In this case, you’ll need to do more work before you can begin targeting your potential customers. If what you offer isn’t the most attractive to the type of client you want, you may need to change your offering or define your target market differently.
Test Your Business Idea
Testing business ideas helps you identify and resolve issues before they become obstacles to success. Begin by asking the right questions.
- What are my goals?
- What problem do I solve?
- What resources do I have?
- What resources will I need?
- Will I need funding to meet my goal?
Entrepreneurs should go out and talk to industry experts, potential customers in their target market, and financial experts like Allied Financial Corporation to determine their business plan’s viability.
Simply writing a business plan will not make your business successful, but it will give you a road map to get there. The forethought put into the plan identifies the milestones by which you can mark your progress.