Making a Business Plan

Written by Jessica on March 20, 2011

There are a million ways to make a business plan and I can’t tell you which way is right. My opinion is: make a plan, any plan, and write it down. As Lea Woodward of Location Independent said so eloquently, “The important thing about writing a business plan is the process you go through to create it.” I agree wholeheartedly.

What Is a Business Plan?

A business plan explains how you will make money. It can also include, in excruciating detail: what your business does, and operational info like finances, products, services, competitors, operating procedures and marketing plans.

A business plan needs to answer the questions:

• How will you make money?
• Why are your goods/services better than the competition?
• Where is your business headed? What is the goal?

Generally small business owners look at these questions and either have one word answers, or they run away screaming. Here are a few easy ideas to get you moving along the right path.

Write an elevator pitch.

You have 30 seconds (supposedly in an elevator) to explain to someone what your business does. Be accurate and succinct.

What will your business do and not do?

If you are a freelancer  what are you willing to do and what drives you insane? It’s pretty easy to make these lists, which is why they’re way to start your business plan. Make two columns, then brainstorm until the beer runs out.

Who are your competitors?

Looking at what the competition does wrong is one of the easiest ways to tell why customers should chose your business. Study your competitors’ failures, list them, and watch how their businesses evolve.

How are you going to find customers?

Contrary to popular belief, just because you build it, doesn’t mean they will come. Thanks for crushing our hopes Kevin Costner. How are you going to find business? This doesn’t mean making a full blown marketing plan, it means having some idea of what you can achieve.

How much money do you need?

Ahhhh, finances. Most people think the goal of a business is to make more money. This usually isn’t the most important goal for location independent professionals. Decide how much money do you need. Press return. Then decide how much money do you want. Work towards the first, then the second. Know the difference and set your priorities accordingly.

Why is a Business Plan Important?

You aren’t convinced yet? Here are a few reasons why a business plan is good to have.

Decisions are easier to make

Are you willing to take on this huge project? Will you fly to China to work for a month? Sign a partner? An advertising agreement? Sell out? Start something new? All of these questions are so much easier to answer when you have a plan. Even if your plan is only two sentences long.

Taxes

If you are a US based business, and the IRS pays you a visit, a business plan is one of the first things they ask to see. (So I have been told).

Procrastination

Hmmm, google some stuff, waste a few hours looking at funny pictures of cats, watch some YouTube videos, maybe doodle a bit. Sound familiar? A business plan not only helps year to year, it also helps everyday. Knowing your goals promotes focus when your attention wanders.

Setting Goals & Making Predictions

Describing where you want to go is the most important part of your plan. How is your business going to evolve? How can it get better? What are your goals? Answering these questions helps you decide what is most important and what you should do next. It also helps you decide how and when to make sacrifices in order to accomplish more important goals.

Once you know what your goals are, check out your financial plan. What financial steps do you need to make your goals a reality? Are your goals and plan realistic?

Revising Often

As a digital nomad you will find that your business plan is constantly changing. New ideas come up, bad ones die. Competition grows and shrinks, the market evolves. That is to be expected, especially if you are a one person show. Revise your plan as your business evolves. Document the decisions you make and update your goals so you can continue to focus on what is most important.

Helpful Resources

There are millions of templates on the web for writing business plans. I found most too elaborate for my needs, but they do provide a great place to start. When in doubt ask other colleagues or mentors. Here are a few sites to check out:

SBA: http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business
SCORE: http://www.score.org/business_toolbox.html