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Did you know that 60 to 80 percent of new businesses fail in the first five years? The reasons for this staggering number can vary, but there is often a common denominator: no business plan.
A recent survey conducted by the Kitsap Business Development Consortium revealed that while many business owners say they have business plans, those plans often only exist in their heads.
And it is a frequent misconception among small business owners that a formal, written business plan is only necessary if they are planning to apply for a loan.
The fact of the matter is thoughtful planning — including having a documented business plan that you review regularly — increases your chance of business success significantly. So if you are one of the many small business owners who does not have a documented business plan, take the time now to prepare for 2008 by getting your business plan out of your head and onto paper.
An idea is not enough
A documented business plan helps you accomplish two important things. It provides you with structure, a clear roadmap to help guide your business. It also serves as a source of business inspiration. As you write your plan, new ideas are born, roadblocks are anticipated, and a deeper understanding of where you want to go is reached.
Some small business owners feel overwhelmed by the idea of a formal business plan, envisioning a bulky, dull document that is dense and difficult to read. This doesn’t have to be the case. Remember, a business plan is, most importantly, a tool for you and your business. All good business plans should include some basic elements, including:
- An analysis of your market
- A company description
- An organization and management outline
- A marketing and sales strategy
- Specifics on your services or products
- Detailed financial information
But the format that you use to document this information takes many forms. Choosing a format that is easy for you to use will ensure that your business plan continues to be a useful tool for your business.
Make a SMART plan
Having a business plan that outlines unrealistic goals only puts your business in jeopardy.
Remember to follow the SMART guidelines to set business goals that are:
- Specific — Specific goals are more likely to be achieved than general goals. For example, “We will achieve 15 percent market penetration by November 2008” as opposed to “We’ll increase business in the next year.”
- Measurable — Asking questions such as “How much?” and “How many?” help establish measurement criteria.
- Attainable — Plan your steps wisely and establish a time frame that allows you to carry out those steps. “I want to make $10,000 in January,” is too vague to be an attainable goal. “I will contract five main distributors to sell 8,000 units in January,” breaks it down into manageable pieces making it easier to attain your goal.
- Realistic — A goal can be both high and realistic, but be sure that you have both the will and the resources available to achieve it.
- Timely — Without a deadline, there’s no sense of urgency around those goals, and you are less likely to achieve them.
The Small Business Development Center — Olympic College (SBDC-OC) insists that their clients have business plans. While not every business that seeks help from the SBDC-OC is ultimately successful, nearly 70 percent of them are. This increase in success over the national average can be credited to the fact that those business owners are working up practical strategies to problems before those problems become business killers. Are you doing the same?
(Editor’s Note: Wendy Miles, Director of Customized Training and Military Education at Olympic College, oversees the operation of the Small Business Development Center (SBDC). For partnership opportunities, contact Ms. Mile hers at 360-475-7786. For SBDC counseling services and workshops contact Rand Riedrich at 360-307-4220, rriedrich@olympic.edu.)
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