Why do small businesses need a strategic business plan?

What is a strategic business plan for small businesses?

A strategic business plan is composed of 3 parts, what is the current state of the business is right now. Where you want your business will be in the future, 12 months from now, five years from now. Lats part is how you will take your business there.

You can visualize it as a map. The business is in its current position, the target is the lighthouse, and the plans for getting there are the directions.

For each one of the parts, there is a ton of materials, books, videos, lectures, and methodologies with acronyms. Here we will try to keep it simple so everyone will understand it.

Where do you want your business to be

In the end, you probably want to make money from the business. You might also want to be a business owner. Otherwise, you can make money as employed with less stress as a business owner. It would be best to understand WHY, why this business exists, its purpose, and why it is in this specific industry and not another type of business.

It would help if you also thought about whether you want an excellent lifestyle business or you are willing to trade comfortable life and work days & nights to try to create a new enterprise business.

It might sound funny or strange since you struggle to start the business or make growth with it, but here we are, thinking about the business's purpose and future.

Now it's time to put the lighthouse on the map. It will guide where to go. Write a vision for your business that takes your values, preferences, and purpose of business into a few sentences and makes it in your own words. Doing so will help you understand where you want to go now and at every junction in the future.

The current state of your business

We can divide this section into internal and external parts. The first part is about the stage of your business. Have you just started, or are you the 4th generation running this business.

Another way and more general method to look at your business are to examine your business's strengths and weaknesses. For example, if it's one month of the company's existence, it's reasonable that your business can be very agile but doesn't have loyal customers. In another example, if you are the 4th generation business, you might have a lot of reliable customers, but the company can be less agile.

The second part is related to opportunities and threats in the market. Options in the market like new possible customer segments and threats like your competitors will take over the market.

How you will take your business "there"

Now you know the state of your business and where it is "there," you have put there your lighthouse. Now that you know the strong points of your business, what the risks are, and where the opportunities are, you can start building your plan.

Don't be fanatic in this state, don't try to plan everything until the minor detail right now. Assuming that you have a lot of possible ways to start the journey to the lighthouse, focus on a few for those you picked, plan them profoundly and leave the rest just as a fuzzy goal. Most of the changes are until you start to work on them, a lot of things will change, and this part of that planning will be useless.

An important thing to remember is the plans are dynamic and not written in stone. You can always change the goals or even change the lighthouse. The strategic plan should be dynamic. Think from time to time about whether the lighthouse or the plans make sense to you.

The benefits of a strategic business plan

The first benefit is the clarity of your business, and it forces you to understand your business better and your goals with it. You will know what you want to accomplish with the company and why.

The second benefit is that knowing where you want to go with the business increases the chances of succeeding with your business. Success has a different meaning for each one. The success will be by the definition you defined.

Another benefit is focus, you can work very hard on your business and do a lot of tasks, but they will not take you to your goals. With a clear plan, you can decide what to do and, even more importantly, what not to do.

An additional benefit is that you can measure your progress toward the lighthouse, and it will help you learn whether your action takes you in the right direction. By applying the learning, you can also avoid repeating business mistakes.

What is unique in a strategic plan for small businesses?

Small business means that everything is simple from a strategic plan perspective. In big organizations, you have to align everyone on everything. All leadership, directors, and employees should understand the lighthouse of the business, and everyone needs even to agree that the strengths are strengths and not weaknesses. If one team is working on a goal that leads to one path and the other working plan that lead to a different way, nothing good will come out of it.

Make sure you keep things simple. You should always understand every piece in the plan, don't forget that this is just a tool that should help you make your business better and not your business.

You came to write the plan with paper and pencil (it will change over time). You can use docs or spreadsheets or even a dedicated app like goalskeeper.io. In any case, please keep it simple.