SMART Business Planning
A successful business is often built around a solid business plan with goals, and one way to make these goals tangible is by using the SMART acronym; Specific, Measurable, Achievable, Realistic, and Timely.
For example, if you have as a goal ‘grow my business’, it doesn’t say where the business will grow, how it will be attained, by when or how success will be measured. Rephrasing the growth goal in a SMART format might be: ‘we want 100 new customers (measurable) who spend over $1,000 (specific). Target is to gain 10 new customers a week over 10 weeks (achievable and timely), based on our current capacity (realistic).
Every part of your business plan will benefit from using this acronym, so when you come to flesh out your business plan, overlay this philosophy every chance you get.
The nuts and bolts
While all business plans differ depending on the nature of the business and their objectives, there are some basic sections that you should include.
An overview of your business
Aim to describe your business in detail in this section. It’s important to include your:
- Business structure – is your business set up as a sole proprietorship, a partnership, or a limited liability company?
- Location – describe where your business is located, and any strategic advantage its location offers.
Your products and services
Provide details about your products or services. Explain how they're different or superior to your potential competitors' products or services, and the benefits they offer. You should also include details like:
- How products and services are developed or sourced.
- Your pricing policy to price goods or services and the type of profit margins you will have.
- How price sensitive your products or services are, and which make you the most money.
- How your products and services will be delivered to consumers. For example, your planned distribution channels and sales methods.
Your marketing strategy
Make sure this section covers:
- Market analysis and demographics to provide an outline of your target customer. Include your market research, showing how you’re targeting the right customers.
- Competitive advantage and what do you do better than anyone else. Outline how your business is different from your competition.
- Detail your advertising plans and how they'll attract more customers and additional sales.
- Market forecasts and future plans, by outlining any developing trends along with forecasts and future plans.
Your financial plan
Detail your costs and describe key assumptions behind your financial projections. It’s important to include:
- A break-even analysis to show that your business can break even, and when this will happen.
- A cash flow forecast. Try to be as accurate as you can when assessing your expected types of cash-in and cash-out.
SWOT analysis looks at your strengths and weaknesses, and the opportunities and threats your business faces.
By focusing on the key factors affecting your business, now and in the future, a SWOT analysis provides a clear basis for examining your business performance and prospects.
Your internal strengths are the unique qualities that set your business apart from the competition. It could be a strong brand, a unique piece of intellectual property or just a competitive advantage, like a great location. Be sure to promote and communicate these strengths to your market, and protect them. It’s those things that a competitor will find hard to copy.
An internal weakness is an issue which is unrelated to any market factors or actions by your competitors – it’s about your business’s own position, limitations and decisions. Anything from poor marketing to a bad location, or staff who lack proper training can be counted as an internal weakness. Weakness need to be reduced or eliminated where possible.
An external opportunity can be large in scope such as a regulatory change affecting your entire industry, or relatively small like forming a new partnership, new untapped markets, use of new technologies, or new products you could launch. As long as it contains unrealized potential, it can be classed as an opportunity.
A threat is something which has the potential to damage your success. Anything from a new competitor, to economic turmoil, to the possibility of a natural disaster in the near future can be classed as a threat. For example: Are new laws or regulations, the state of the economy, trends and changing habits of customers or the wider environment.
One of the great things about running a small business is you can amend your business strategy quickly. Here are some ways to adapt your business strategy without an overhaul:
- Focus on the one product or service that customers need now.
- Diversify if a new demand appears by identifying what customers need even if it’s short term.
- Change your customer segment if your products aren't currently meeting your target market's needs, and reach out to a different audience.
- Analyze customer needs as your target audience's concerns may have shifted during this time. Does your good or service meet those needs? If not, can it be shifted?
Each of these can help alter your business strategy to allow for flexibility. You may even uncover new customers, markets or products and services for the future.
Once your business plan is written, keep it close at hand. Review it regularly so you know you’re staying on target with your goals. Update it when necessary.
For informational purposes only. There is NO WARRANTY, expressed or implied, for the accuracy of this information or its applicability to your financial situation. Please consult your financial and/or tax advisor.