Scale a Business Plan to Fit Your One-Person Enterprise
Business plans have many components. Lucky for you, though, when you’re self-employed, you can skip a few of the parts because they simply don’t apply to your business or your business plan:
You can ditch the executive summary completely. Your plan is probably concise enough to read quickly and won’t require a summary version.
You won’t have much to say about your company’s organization. It’s hardly necessary to explain the chain of command when you’re running a company with a staff of one.
Your company description can be short, so long as it’s clear. Yours will probably describe your abilities, the advantages you offer, and the market potential you will tap into.
The financial review can be basic, as long as it provides thorough explanations of your projected revenues and expenses and how cash will flow in and out of your business.
Don’t worry about polishing your prose until it’s perfect. The important thing is to get the key points down on paper.
What your business plan does need to include is
An overview of your company
An analysis of your business environment
Your business strategy
Your financial review
A copy of your action plan
Together these five sections cover the nuts and bolts of self-employment planning.
Before you wave off this section with the personal assurance that you know what business you’re in and what you intend to do, realize that if your direction is even slightly fuzzy at the launch of your business, you’ll pay the price for your lack of focus ever after. So don’t skip these two steps:
Write vision and mission statements.
These statements describe the purpose of your business and what you hope to achieve.
Set goals and objectives.
Your goals and objectives define exactly what you want to accomplish and how you will go about achieving your aims. For most people, becoming self-employed is a venture into uncharted waters. Goals and objectives are essential because they serve as an important yardstick to measure your progress.
Your business environment helps you analyze your industry, your clientele, your competitive environment, and the economic and business trends on the horizon that can affect your success. All four are important even for one-person businesses.
For example, you’ve probably looked around to see whether your regional economy has room for a number of construction contractors, self-employed accountants, freelance designers, or whatever other independent service you’re offering.
Even so, you want to look more closely to find out how many others are out there doing the same kind of work you do and decide what makes you a different and better choice — and whether there is, in fact, enough business to go around.
Just as important as assessing your competitive environment is the need to track key trends in your industry. If growth is booming in your area, business may be ripe for the picking. But if economic trends don’t look so hot, you may need to dedicate time and energy devising strategies to attract new business in a slowing market.
As you study industry trends, be sure you read the indicators not just for the moment, but for the future as well. Include both a rosy forecast and a worst-case forecast. The cheerier version of the future should help keep you motivated.
But the lesson from the recent recession is clear: Use the more conservative version for planning. It’s better to be pleasantly surprised when business is better than expected rather than taken by surprise when the profit you’d hoped for doesn’t materialize.
Company description and strategy
You’re self-employed, so obviously you don’t need much space to describe your company’s organization. Instead, devote the effort to an explanation of how your company will operate — how you’ll work with customers, deliver products and services, get new business, outsource work, and so on.
In this section of your business plan, also describe your strengths and weaknesses, both personal and professional. You are the entire management team and staff, so defining your own capabilities and how you’ll compensate for shortcomings is an essential element of your business planning.
The financial review section of your business plan doesn’t have to be long, but it does have to be complete. Show how much you plan to make, how much you need to spend to get started, and how much you need on an ongoing basis to keep yourself in business.
Set money aside in case work slows down or a client doesn’t pay on time. Decide how much money is enough to carry you through a month, two months, six months, or whatever time period makes sense for your business.
Then build up a cash reserve — not in a personal bank account but in a business savings account where you’re not likely to raid the money around the holidays or vacation time. An adequate cash reserve can mean the difference between weathering a rough stretch and going bankrupt.
Your action plan is just what the name suggests — a nuts-and-bolts plan of action, broken down step by step, to move your business ahead. Don’t go forward without one.
Start by carefully looking at your personal strengths and weaknesses. If you know you’re a strong service provider but a bit thin in the marketing area, for example, your action plan may include enrollment in a marketing class or arrangements for freelance marketing or agency assistance. If you’re a little wobbly when in accounting, your action plan may be as simple as hiring an outside accountant.
The reason the action plan is so important to a one-person business is because no supervisor or boss is telling you what to do next. You’re the one who has to set the direction, steer a course, and measure your progress. Ultimately, your action plan is a good device for making sure your company stays on track.