When many small business owners start thinking about building a small business, they are often misled into believing that the only document they need to be successful is a business plan. In fact, this plan is just one of seven documents that every small business must have if it ever hopes to survive, let alone succeed.
Let me explain…
Document 1. Business Plan
The business plan, which is what most accountants, lawyers, and business trainers will say, is the only document you need, it’s the first document you need to fill out. I certainly strongly disagree that this is the only document you need, because the real deal of this document is to summarize the other six mandatory documents you must have.
The size of your business plan document will vary depending on the size of the business you are buying or building. Your business plan should contain details about how your business will be run, how you will finance the business, what kind of profits you will make, how you will advertise and market your business, what your exit strategy will be from your business, what form your business will take, where you will be located etc
If you are buying a business rather than starting a new one from scratch, always ask the previous owner to see your business plan. This will give you a good idea of the inner workings of the business and how it got to where it is. One thing to keep in mind, though, is always make sure that regardless of whether you are buying an existing business or building your own, you create your own business plan so that you have a clear understanding of where you are going with this business.
Document 2. Business model
A business model is usually built using tools like Microsoft Excel or Microsoft Access. The model allows you to apply various scenarios to your business model to see what kind of result will be produced. This is a fantastic tool for running scenarios and seeing what the outcome would be if certain conditions occurred, like your truck breaking down or what would happen to your profits if a certain piece of machinery broke down over a period of time.
The business model is also very useful when dealing with organizations such as banks or financial institutions. If your business model can show what impacts various factors can have on your business and that it can still survive, then banks and financial institutions are more likely to give you the money you need.
Document 3. Marketing plan
The Marketing Plan document lays out how you will market your business. Include information about the brochures you will use, the types of ads you can use, the frequency of the campaign, the medium you will use, etc. The marketing plan provides a detailed vision of how you will market your business. Your marketing plan should represent 12 months of operations, meaning you should have built all of your marketing strategies to flow and build on each previous marketing campaign over a 12-month period.
Doc 4. Plan of operations
Your operations plan is designed to define exactly how your business will be run. The operations plan should include how to do each task in your organization, checklists on what needs to be done each day, week, month and year. Essentially, the Operations Plan defines how your business actually works.
The key benefit of your operations plan is that if you ever lose a staff member, you can use the operations plan to teach new staff members the tasks they need to complete each day.
Doc 5. Sales Plan
The sales plan describes how sales will be carried out on a day-to-day basis. How you will sell your products and services, who your target markets are, your outreach techniques, any customers you need to contact on a day-to-day basis, and what your contact processes are. Furthermore, you need to define what step-by-step process you need to follow to convert a prospect into a customer.
The sales plan should use flowcharts and should also include any letters or marketing materials that need to be used for a particular sales process.
Doc 6. HR Plan
The HR Plan establishes the Human Resources structure of your organization. You should include information such as job descriptions, who each person reports to, who they are responsible for, what tasks they are responsible for, and any special tasks they may have to do during the year.
The human resource plan should also contain information such as job posting templates, approved job descriptions and templates, hourly rates, acceptable work practices, etc. The Human Resources Plan sets out how your people are to participate in the job and what you define as acceptable work behaviors in your workplace.
Doc 7. Manual of Style
The Organizations Manual of Style establishes how it will present itself to its clients. The style manual includes information about your logos, your business cards, the colors your company will use for your logos, banner designs, how to place advertisements in newspapers and what colors should be used, what fonts should be used in Letters or Faxes. The style manual will also establish what information will go on your business cards, where the logo will be placed, and what information it should contain.
The organizational style manual establishes how you will present yourself to the public and what standards you will use. If you’ve never seen a Manual of Style before, just go to a large corporation’s website and type ‘Manual of Style’ and you’ll usually find one available for review.
After 10 years in small business and a number of small businesses under my belt, the one thing I have learned is that if you don’t have these 7 plans and documents done before you start or build your business, it will never get done. The simple fact is that small businesses are incredibly demanding of the small business owner and once the business is up and running it is highly unusual for the owner to ever have the time to go back and build it. Without each and every one of these documents, your business will lack focus on what it wants to achieve and that is why 70% of all small businesses around the world fail within the first 12 months.
In closing, I’d like to take a moment to outline the seven documents that all small business owners should have before contemplating a small business…
1.Business Plan
2. Business model
3. Marketing Plan
4. Plan of operations
5. Sales Plan
6. HR Plan
7. Manual of style