How to Write a Business Plan You Will Use
A business plan you write for yourself is a personal commitment that holds you accountable for fulfilling your promise.
Over the years, I have come across many business plans. Most focus on predicting revenues, expenses, and profits eight or twelve quarters into the future.
I have always wondered how accurate these projections really are since many entrepreneurs, especially in competitive markets, struggle with predicting the next month, let alone the next quarter.
Although these formula-filled spreadsheets impressively portray a high level of sophistication, I believe most business plans aren't very accurate because they don't account for the unpredictability of the world around us. It's impossible trying to predict something unpredictable. That's probably why most business plans are filed away and never looked at again.
However, in this article, I advocate for giving business plans another chance by writing a business plan you will use. It will probably fit on one page, too.
A Business Plan Is a Commitment to Yourself
Most business plans are written for banks or investors and follow rigid templates filled with specific metrics and detailed financial projections that often don't reflect your goals.
However, if you are writing a business plan for your own use, it doesn't need to conform to these templates. Instead, you can keep it high-level, focusing more on strategic aspects crucial for your company's success. You know what you must get right, and your business plan should reflect this.
A business plan you will use is a personal commitment to yourself that holds you accountable for fulfilling your promise.
10 Crucial Questions a Business Plan Should Answer
A sound business plan concentrates on critical business aspects rather than comprising a long list of ideas, action items, and overly ambitious goals.
When answering the following ten questions, remember that the substance of your plan is more important than its presentation or length.
1: What Is Your Purpose?
Why do you do what you do? What are you passionate about? What drives you? What is your cause?
Purpose is the reason why you founded your company beyond the money-making aspect.
2: What Are Your Values?
Values often consist of moral, ethical, and philosophical imperatives, principles you won't give up under any circumstances. They answer essential questions like what your business stands for and how you want others to view it.
Your values are so fundamental to your company's culture that they are beyond debate.
3: What Is Your Business’S X-Factor?
A business’s X-Factor combines your strengths and your passion to address your industry's biggest frustrations in a way your competitors won't do.
Answer the following four questions to find the X-Factor for your business:
What are you good at?
What do you love to do?
What is your industry's biggest frustration?
What are you willing to do that your competitors won't?
4: Who Are Your Ideal Clients?
Your ideal clients are the customers with whom you prefer doing business, both emotionally and financially.
Several aspects can make a client ideal. For example, your products and services may be a good fit for them, they may share the same values, or they may be willing to pay the list price.
5: What Is Your Promise?
Like a solemn pledge you take, your promise commits your company to deliver on this promise every single time - even if you have to sacrifice a portion of your profits.
A promise reduces everything you do to a single pledge. It is a single commitment that clients can trust you will deliver on.
6: What Is Your Vision?
How do you see your business in a couple of years?
In our fast-paced world, I do not believe a vision can stretch more than five to seven years. But, still, five to seven years is a long time.
Your vision describes your business at that point, how it will feel, with whom it will interact, and which emotions it will evoke.
7: What Is Your Mission?
Your mission statement outlines how you plan to achieve your vision.
It is a kind of roadmap, a strategic master plan, that lays out what you do, how you do it, for whom you do it, and what value you create.
8: What Are Your 3-Year Goals?
Your 3-year goals should focus on financial and non-financial metrics equally.
Start with identifying your key profit drivers.
Then add several non-financial metrics crucial to achieving your 3-year goals, like the referral rate, customer satisfaction rate, headcount turn-over ratio, market share, the number of reseller agreements, or order processing times.
Keep in mind that the financial and non-financial metrics are all interlinked. Influencing one can often impact several others.
Therefore, the quality of the metric matters more than the quantity. The best business plans only list a few critical metrics instead of a long list.
9: What Are Your 1-Year Goals?
The 1-year goals serve as a midpoint toward achieving your 3-year goals and, ultimately, your overall vision.
At a minimum, they must align with your 3-year goals but establish short-term or interim targets.
You can add several other financial or non-financial goals to ensure you exceed your targets in your 1-year checkpoint.
10: What Do You Need to Get Done in the Next 3 Months?
One year may seem like a long time, but it will pass faster than you imagine.
Maintaining a list of items you need to get done in the next three months will help you focus your energy on what is essential and hold yourself accountable for reaching your goals.
When Key Assumptions Change
Karl Schroeder once said, "Foresight is not about predicting the future; it's about minimizing surprise."
A business plan does not predict the future but will align your decisions with your goals, minimizing surprises.
When developing a business plan, you make many assumptions about the market behavior of stakeholders and about general trends.
However, you don't really know what your competitors will do in the future, which products and services your customers will prefer, how technology will advance, or the state of the economy.
Business plans help validate key assumptions as long as they are documented.
Should any of your key assumptions change, you need to review your business plan and determine how it should be adjusted to reflect these changes. In that sense, your business plan is a working document that will change over time to stay current.
What Is a Brand Compass and Why Your Business Should Have One: A brand compass is a crucial tool to anchor your brand decisions and ensure coherence across all brand elements.
What Is Your Brand Promise? Like a solemn pledge you take, a brand promise commits your company to deliver on this promise every single time. These three steps help you create a compelling brand promise.
How to Find Your Business’s X-Factor: Your business's X-Factor can help you gain a durable competitive advantage, leading to faster growth and higher profits.
