As the former owner of a strategic marketing and communications agency in San Francisco, I can’t stress enough the importance of a written business plan. My small business didn’t have a documented plan, but if my partners (also good friends) and I were ever asked, we’d have said we had one in our heads.
This rings true for a lot of small business owners today. In fact, only one in three in our January 2015 Wells Fargo/Gallup Small Business Index said they had a formal, written plan. But those who told us they did have plans reported greater optimism for 2015, including plans to: add jobs, increase capital spending, and generate higher sales during the next 12 months.
Why are business plans important?
Today, I have the opportunity to be part of a team at Wells Fargo that is doing everything we can to help small businesses meet today’s demands and prepare for tomorrow. We know business owners in general are very busy and mainly focused on day-to-day activities. So it’s not surprising to see that creating a written business plan isn’t top-of-mind for most entrepreneurs. However, we believe that creating a formal business plan is an important step for a successful business — which is why we recently launched Wells Fargo’s Business Plan Center as the latest Wells Fargo Works for Small BusinessSM offering.
The primary purpose of a business plan, in addition to defining what your business is and where you’re headed, is also to clarify what needs to be done to move ahead. A business plan is a living document that should be updated as goals are met and needs change. It doesn’t last forever, so modifying your plan is an important annual or quarterly exercise to help you focus on the future as well as the day-to-day.
In looking back at my experience as a small business owner, I wish my two partners and I had created a formal plan. We ran a successful operation and the constant demands of steady work created its own positive momentum. But with a plan on paper, we could have built a more-sustainable business model to prepare for changes and challenges. Experience and instinct guided our decisions along the way, but had we gone through a planning process that included scenarios, outcomes, and potential next steps, we’d have had more clarity and been better aligned about where we were taking the business.
What we’re doing to help
Our new Business Plan Center is a free online resource available on WellsFargoWorks.com. It features a Business Plan Tool that guides you step by step through the process of developing a written business plan. It also offers a Competitive Intelligence Tool you can use to gain insights about your competition, such as maps and lists of competitors or how they compare to your business in areas like revenue, annual average worker salary, number of employees, and more.
The Business Plan Center recommends that each of these components are part of your plan to ensure long-term success:
Company Overview: A description of the business, products, or services you’re selling today and enhanced offerings you’d like to bring to market.
Analysis: A thorough analysis of the market and competition.
Marketing Plan: A strategic plan to set your business apart from competitors and reach your prospective audience.
Financial Data: Your starting balances, plans for generating revenue, and sales forecasts. Our Business Plan Tool allows you to generate financial statements – such as a detailed cash flow statement, profit and loss statement, and balance sheet.
Executive Summary: A business recap – who you are, what you sell, who you sell to, and financial summary.
As I reflect on my former business, having access to an online tool like this would have made a huge difference. With a better view of the future, we might have expanded into new markets, differentiated our business model, and established formal succession plans to help with the evolution of the business. Of course in hindsight, it’s easy to identify steps we could have taken, but the message is clear: Creating a business plan is an important step for any business.
Case is Wells Fargo’s Small Business Segment manager responsible for the strategic direction of Wells Fargo’s focus on small business, which includes the Wells Fargo Works for Small Business initiative, and the online resource WellsFargoWorks.com. Today, Wells Fargo serves approximately 3 million small business customers across the United States and loans more money to America’s small businesses than any other bank (2002-2013 CRA government data).