As a business coach, I often get asked about business plans – how to do one, where to find a template, what to include, who needs one, etc. One of the biggest misconceptions about business plans is that there is just one way to do a business plan. There isn’t just one way to do a business plan – whether to do one and what to put in it are dependent on why you are doing the plan in the first place. When someone asks me about a business plan, the first question I ask is “Why are you doing a business plan?” This often brings some surprise because business plans are often included in those lists of things that every business needs so as business owners we don’t always ask the question.
There are two main audiences for your business plan – internal and external. Your internal plan might be a document which helps you make decisions and run your business. You might use casual or colorful language if it’s meaningful to you, e.g. “I want customers to feel like I always felt when I went to Mrs. Smith’s house.” Your internal plan might help employees or outsourced help you hire to feel connected to the big picture of your business and give them a backdrop against which they can make decisions. Your internal plan might help you stay on track when you look at it periodically. It might help you stay focused on why your business is important to you.
A business plan for an external audience can look very different than a plan for an internal audience. One of the big reasons you might need a business plan is to get funding. Your potential investor or lender will want to see that you have sound, well-researched ideas with a clear path to profit. A risk-adverse funding partner may want to see that you’ve done all you can to reduce risk of loss. A speculative investor may be looking for the potential for big returns. Even if you’ve established that you are doing a business plan for the purpose of getting funding, you still need to know what’s important to the person or organization you are approaching.
I suggest that all businesses at least have an internal business plan. It’s important to get all your great ideas and guiding principles out of your head and into a document. This will help you guide your business along and move steadily forward. It doesn’t need to be formal for you own use. If you need to approach someone outside of your organization with your business plan, you’ll need to polish it up and formalize it and maybe even create a different version for different purposes. If you start with an internal document though, you’ll be helping your business and have a great foundation for the day when you need a more formal plan.