7 Reasons You Need a Simple Business Plan if You’re Serious About Increasing Profits
Starting a business venture is exhilarating. You’ll experience the thrill of turning your vision into reality, the anticipation of making an impact in your clients’ or customers’ lives, and of course, the prospect of turning a profit. But before you jump into the activities of launching and running your new business, there’s something you should tackle first – creating your simple business plan.
Many business owners balk at this idea, “But wait, why do I need a plan? Shouldn’t I be focused on getting my business off the ground and generating an income?” Yes, exactly. That’s why you need a simple business plan.
And with a simple business plan, you won’t be spending weeks creating, formatting, and perfecting a document for use in presentations. A simple business plan is straightforward, concise, efficient, and for your eyes only. It won’t limit your ability to make money in the early stages of your business, it will enhance it.
A business plan has numerous broad benefits that will put you on the path to profitability:
- It encourages proactive decision-making. A simple business plan will help you make confident and strategic decisions based on informed insights.
- It reduces business overwhelm. A simple business plan acts as a blueprint that will outline your next moves for up to a year. You won’t need to second-guess yourself, simply “stick to the plan” until the data, sales, and audience feedback tell you otherwise.
- It promotes continuous improvement. By regularly reviewing and refining your business plan, you’ll adapt to market changes and stay a step ahead of the competition. This mindset of constant improvement will not only improve your business operations – it will improve your profitability.
A simple business plan produces all these benefits and more but doesn’t require the time commitment of a traditional business plan.
The Simple Business Plan vs The Traditional Business Plan
A simple business plan is a streamlined version of a traditional business plan. While a standard plan is typically detailed, elaborate, and often used to attract investors and stakeholders, a simple business plan is for YOU.
It’s an internal document that acts as your business’s compass. Its primary purpose is to steer you towards your goals, including one of the most important goals for small business owners: having a profitable first year.
The Simple Business Plan: A Tool to Drive Profits
As a new business owner in your first year, you’re focused on generating a profit. You might see business planning as a delay tactic, but nothing could be further from the truth. Here’s how a simple business plan is directly tied to growth and generating a profit.
1. It Solidifies Your Brand
Your business plan isn’t just a strategic document, it’s a branding tool. It helps you identify your brand’s identity and values, which affects how your target audience perceives you and responds to you. Profitability isn’t just about selling a product or service, it’s about selling a brand that people want to connect and identify with.
Let’s say you have a coaching business and you’ve determined that your brand is about empowerment, knowledge, and personal growth. You want to help clients realize their potential and succeed in their entrepreneurial pursuits – together. This resonates with your audience and convinces them that investing in your products and services is an investment in their future.
A powerful and relatable brand can command higher rates, attract repeat business, and foster loyalty. All of these factors contribute to profitability and wouldn’t be possible if you didn’t take the necessary time to explore them in advance. A simple business plan helps you to do this.
2. It Helps Clarify Your Vision
Having a clear vision and mission gives your business a purpose. It clarifies your unique value proposition (what sets you apart from the competition) and who your target audience is.
For example, say that you have an online coaching business that targets new entrepreneurs. Your vision might be to empower them with the knowledge to confidently start and grow their business. This vision is your North Star, leading you to the activities, tasks, and strategies that will directly contribute to your profitability. Your vision and mission provide the foundation for all your profit-making strategies and decisions. In developing your simple business plan, you’ll take the time to consider these important elements of your business.
3. It Puts the Focus on Strategic Marketing
A marketing plan is a key part of every business plan. It’s where you define how you’ll target and engage with your audience. Returning to the example of the coaching business, your marketing strategies might involve offering free webinars, giving away an eBook in return for an email address (which leads to them receiving a 5-part email series), or a creating blog series that focuses on common challenges your audience faces.
Without a simple business plan, or a marketing plan, you wouldn’t know where to start. You’d be trying out all sorts of tactics and hoping they work, instead of referring to the data you’ve collected and mapping it out in your simple business plan.
Your marketing strategy isn’t just about gaining new customers, it should also focus on retaining existing customers. By strategically targeting your marketing efforts with the help of your simple business plan, you will increase your customer base – and your profits.
4. It Prioritizes Financial Planning
Financial planning is a major component of every business plan. The financial section typically includes revenue projections, expenses, and projected cash flow. For example, if you have a coaching business, you may plan to offer various packages at different price points, each catering to a specific customer segment and their unique needs.
Planning out your finances in advance allows you to optimize your product/service offerings to maximize profits and control costs. By forecasting possible financial issues or obstacles, you can prepare in advance, ensuring that you stay on the path to profitability.
5. It Paves the Path for Expansion
It may seem premature to be thinking about expansion at this stage, but scaling your business requires planning. Strategic expansion can boost your profits, as long as it’s well-planned and executed. A business plan can help.
For example, let’s say a coach envisions their business growing to include mastermind groups or exclusive VIP coaching services. By identifying these potential streams of income in their business plan now, they can strategically work toward these goals. This might be reflected in their expense estimates, cash flow projections, operations strategies, and marketing tactics.
6. It Boosts Operational Efficiency
Efficient operations directly contribute to your profitability. Your business plan will help you outline your operational strategy – how you’ll produce and deliver your products/services, what processes you’ll follow, and what resources you’ll need.
For example, a coach might decide to use a particular platform for their sessions or decide to hire an assistant to handle administrative tasks. A well-thought-out operational plan will help minimize waste and streamline processes, which will increase profit margins. Operational efficiency also helps to save time, allowing you to focus on the activities that generate profit for your business.
7. It Enables You to Track Your Progress
A simple business plan allows you to set specific, measurable milestones. This can help you track progress toward your profitability goals. Returning to the example of the coaching business, this might mean tracking the number of coaching sessions delivered and paid for, customer satisfaction rates, revenue growth, sales of self-directed courses, and the number of subscription plan upsells.
Regular tracking and review of these metrics help ensure that you’re not going off-course. It provides a reality check, allowing you to focus on what’s necessary to achieve your profit goals. If something isn’t working or generating the profit you’d anticipated, you can adjust your strategies.
A simple business plan is more than just a preparatory step; it’s a profit-boosting tool. It won’t delay money-making or slow down progress – it’s an essential prerequisite to success. So, before you rush into your launch, marketing tactics, social media posts, and operations, take a pause.
Craft a simple, strategic business plan that brings together your vision, strategy, operations, and finances to achieve an essential goal: profitability. With a simple business plan, a successful, profitable business is within your reach.
