Do You Need a Business Plan?

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The short answer according to Rachel Lawley: yes. (See previous post for more details on Lawley.)

A good business plan will help you identify in detail the goals, purpose and strategies for your company.

“A business plan is the medium that forces current and prospective business owners to truly question their business, what and who will affect it, and what and who it will have an effect on,” she said.

As for the freelancer, consultant and contract employee, Lawley said you don’t necessarily need a complete business plan, but they are useful.

“Consider this, would you work for a company where they didn’t provide you with a description of your job, or offer you regular performance reviews?” she said.

Lawley added that creating a solid business plan early on will give you a solid foundation, so you can have confidence in your goals and in yourself.

“You can continue to adjust your plan, based on how your services or clients develop,” she said. “But it’s important to have that plan, to have a mission to stay focused on. Otherwise, you might find yourself accepting clients who need work that you know how to do, but hate doing, just for the money. That works short-term, but it diverts your attention away from your real goals.”

A business plan is necessary if you need investors or a business partner. This eliminates confusion and ensures you and your team are working in unison.

“When the company is still fresh and ideas are flying around, sit down with your partner (maybe with a mediator sometimes) and put ‘pen to paper’ about what your goals are, who you want your clients to be, where you want to be in a year, two years, five years,” Lawley said.

But the bottom line is, there is no best time to create a business plan.

“If you can draft it while the company is still in the idea stages, that’s perfect,” Lawley said. “But it isn’t always that simple. Maybe you start out casual, either solo or with a business partner. But by the end of the first six months to a year, you should write your plan, before you have any misunderstandings, and especially before you miss out on any great opportunities.”

For freelancers, the best time might just be when your business develops and takes on a new purpose.

What is a Business Plan?

Photo from: The Company Line Blog
A recent tweet from Rachel Lawley got me thinking about whether freelancers, consultants and contract employees could benefit from creating a business plan for themselves. But before we get into whether or not you need a business plan, let’s establish what one is.

Rachel is an Interactive Communications Manager who works as a consultant in business development. She acknowledges that creating a business plan can be intimidating. But, she says, in the end, it is worth it.

She recommends the template and guide on The Small Business Association. The main sections of a business plan are:
1. Executive Summary
2. Business Description and Vision
3. Defining the Market
4. Description of Product(s)/Service(s)
5. Organization and Management
6. Marketing and Sales Strategy
7. Financial Management

“Because companies that provide services can get a little stickier than those that provide products, don’t allow yourself to skip questions because you don’t think your service will have as much of an impact as a product,” Lawley said.

Her best advice is: don’t skip a question and say you’ll come back to it.

“Write down the first things that pop into your mind, and then allow yourself to come back to it,” she said.

That way, you have a good starting point.

“My theory is the more you dig and question these things when you’re still just starting, the stronger and more prepared you’ll be later,” she said.

Lawley says it is possible to run your business without a business plan, get clients and in two years, end up exactly where you want to be.

“Picture this, though: two years from now you want to develop a website for your services,” she said. “How are you going to sell your services? What do you want to specialize in — what type of client, industry, focus? Simply read through some of the templates for plans and you will get a good idea of what kinds of questions some of your competitors already know the answers to.”

Every business, large or small, should be keenly aware of the areas a business plan prompts you to think about – those areas help you define your company’s goals and purpose. Because the bottom line is, you want to make money, even if it is just a little on the side now.

Come back tomorrow for more details on why freelancers, consultants and contract employees should consider penning a business plan.