A recurring theme amongst small business owners is that business plans are not useful for the small business owners. There is a saying that goes, if you think you can or you think you can’t, either way you are right. In other words, if you think business plans are useful or useless, either way you are right: Your mindset determines the success of your actions.

I find the reason why small business owners find business plan useless is because they use the wrong size tool for the job. For instance, I don’t hit a nail with a wrench but I use a hammer if I want to hit a nail into a wall. When it comes to business plans, there are three main types:

The Hammer

The hammer business plan hits the nail right on the head. The main goal of the hammer plan is to bring clarity so focused action can be undertaken. The hammer has 3 parts:

• Vision/ Purpose
  – Where you want to go
• Goals: Breaks down the vision into workable parts
• Plan: How to attain the goals. These plans should address the 3 leg stools any business stands on namely: marketing, finance and operations.

The hammer is recommended for the beginning entrepreneur. This is because as a business owner, you need to test the viability of your product or service before creating complex plans. A complex plan is no use if the market does not accept your product. The hammer business plan should be no more than two pages.

The Lamp

This is the plan you give your banker or investor. This plan has all the bells and whistles such as business strategy, opportunities, marketing plan, team work, etc. It is called a lamp because its intention is to shine light on the vital parts of your business.

The Seat Belt

This is for the experienced business owner because it requires you have some years of business experience. In other words, as a small business owner you have developed enough business knowledge about your market to device a complex strategic plan. Unlike the hammer, the seat belt goes into more details. The seat belt plan uses the knowledge gathered by experience to plan and strategize how the business will grow and achieve the vision. It is called the seat belt because it provides safe restrains when you are moving forward. Without a seat belt plan you could grow yourself to destruction. Every business takes risk but there is a big difference between taking a calculated risk and a reckless risk.

After the Business Plan

Creating a business plan is only half of the equation. A business plan is useless if you do not come back to look at it. To make sure your business plan is reviewed regular, a budget should be developed using the details of the plan. The budget becomes the measurement tool to ensure you are moving forward on your plan.

As a small business owner, if you use the wrong type of business plan you will end up confused and not take any action. A business plan is a tool that gives direction to a business. Without direction, the likelihood of survival becomes slimmer.

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