How to create an effective business plan

16 Apr 4 Steps on how to create an effective Business Plan

4 Steps on how to create an effective Business Plan

To be completely honest with you, I actually do not like the words “business plan”, because it sort of conjures up an image of some big, thick thing you’re going to stick on the shelf and have it collecting dust. Traditionally in business, a business plan was used to obtain finance. The banks would say, “Hey, what’s your business plan?” And you’d get this big, fat thing that you’d put together but you’d never look at again.

Now that was okay because it’s not looking at the business plan that actually grows your business, it’s the thought process that goes to putting the business plan together. But in this article I’m just going to give you a few tips to think about how you can build your action plan. I’d rather call it an action plan than a business plan because we want to take action, and massive action leads to massive results. So if you’re ready to, to take action, then I’ll give you some tips on how to do it.

1. What are your long term goals?

First of all you need to think about where it is that you want to be and what that means is, what are your goals long term? It’s no good saying “I just want to pay my bills,” or “I want to be my own boss,” or “I want to have this flexibility.” You’ve got to be very specific when you put your business plan together and make a plan as to what it is that you actually want to achieve.

For example, say you are turning over a million dollars right now. Your action plan might be to turn over 2 million dollars within the next 3 years. At least now you’ve got the end in mind. And that’s, you know, starting with the end in mind is the only way to put together your action plan. So you say, “Okay, if I’m turning over a million dollars now and I want to turn over 3 million dollars in 3 years, or 2 million dollars…” whatever the goal is, then you can start to say, “Okay, what do I need to do to actually make that happen? How many sales do I need? How many people? What resources? How many offices will I have? How many vans will I have on the road? How many products will I need to sell? Will I need to be manufacturing? Will I need to be…” And so you can start to make all of these decisions.

2. What are you hoping to achieve?

Now I’m also a little bit against having a “revenue target” without understanding why you have that revenue target. I remember once being at a networking event, and I said to a guy, “What’s your goal?” He said, “Oh my goal’s to do 20 million dollars a year.” I said, “Why?” And he said, “It was just a good number.” And I went, “Well how much profit do you make?” He said, “I don’t know.” I think if you’re not sure of why you’re setting the goal, then what’s going to make you get out of bed each morning and put your feet on the cold floor. You’ve got to have a bit of a drive.

So this action plan’s got to mean something to you. So when you set this goal, think about, okay well what do I actually want to get out of it? I want you to think a bit deeper about what that end goal looks like. So say, “Okay, well if I decided I wanted to have 2 million dollars in turnover, how much profit do I want and why?” So you go, “Okay, well I would like to have the freedom to go on holidays every three months for a two week period.” Or, “I’d like to be able to go on a three month holiday every year.” Whatever it might be that blows your hair back, whatever it is that rocks your boat.

3. Working out the Action!

You’ve got to decide what that looks like. By setting that end goal, you can start putting your plan together and once you know what it is you want to achieve as your end goal, you can go, “Okay, what does that look like? What does that actually mean?” Start to design your business and go, “Well here are the things that we will do. Here’s the number of customers that I need. Here’s the number of sales that I need and to do that here’s the amount of people I need to deliver it. Here’s what the marketing’s going to look like.” Because it’s one thing to set the goal, the next is to set the plan of how you’re going to get there.

4. Breaking your goals down

Now I use to know a lot of people I spoke to about planning, I use Mt. Everest as an example. Do you know how tall Mt. Everest is? Well I think it’s slowly eroding away, but last time I checked it was 8,848 meters. Now if you were going to climb to the summit of Mr. Everest, would you put a plan together? Well of course you would, you’d be an absolute idiot not to. In fact, there’s been plenty of people that have put a plan together that have still perished up there because the conditions can be that nasty.

Business is the same. You can put a plan together and still not make it. Just because you’ve got a plan doesn’t mean it’s going to happen. It just means that you can be measuring yourself against whether or not you are on track. But if you were going to climb Mt. Everest, you definitely would put a plan together. Your goal is like the summit of Mt. Everest. Once you’ve decided you’re going to climb to the top of Mt. Everest, which is your goal, you need to start to work out what do you need to have in place to make that happen. What weather do you need to account for? How long is it going to take you?

Now, 8,848 meters seems like a long way, and it is. That’s, you know, it’s a tall mountain and like I said, people have perished trying to achieve their target. However if you climb just 12 meters a day, just 12 meters a day, you would get to the top of Mt. Everest in two years. Now 12 meters is nothing, right? So by breaking down your goal into small steps you can really start to make an achievable thing when you set those little milestones.

To finish up

So when putting your business plan together, or what I call the action plan, start with the end in mind. Break it down into steps and start to take action on those individual milestone goals that will get you to achieving what you want to achieve.

Good luck with that, and if you need any help, let us know.

Until next time, have a profitable day!

Ben Fewtrell