I started my online writing business without a business plan. I didn’t need a business plan or so I thought.
Because I was working from home, why would a business plan be important?
Plus the long process of writing a business plan didn’t make me think of a business plan as a viable idea, on top of the difficulty of getting a job online as a writer.
Why is a Business Plan Important for Small Businesses in Kenya?
- Having a business plan enables you to understand you’re running a serious business. Your business may be from home or online but you need to show some seriousness
When I started freelance writing, I didn’t take my writing seriously.
I mean, I didn’t even realise I ran a business.
My aim for writing was to make money and for years I didn’t make money.
I made pennies and coins here and there.
I started realising I should have a business plan in 2020 when I had a decade as a freelance writer.
I ask myself a few months after quitting freelance writing, what would happen if I had a business plan?
What if I knew why I wrote so much? This made me realise there’s nowhere I am going with this blog if I don’t write a business plan.
So, I decided to ask myself a few questions.
Who’s this blog for?
Why am I proud of writing on this blog that made me quit freelance writing?
I want to change lives, to show you there are lots of opportunities online and offline, they need to get explored.
2. To show/have business goals where you are going/ want to achieve
A business plan helps you establish your goals.
My freelance writing career didn’t give me purpose.
I felt it was compulsory for me to keep writing for others.
When you asked why I wrote and what I wrote, I couldn’t tell you. Why?
I didn’t have goals. I knew I wanted to make one million shillings, half a million shillings nothing more.
If you don’t have goals, you won’t go anywhere. Your money goals become stale and you move in life without direction.
A business plan helps points you in the direction you want to go because a plan is a map.
3. Understand the competition
Did you know when I started this blog I didn’t have any competition? Lies. I did.
There was a blog coming from the back called Tuko and the news station.
Just because you chose a niche doesn’t mean you don’t have competition.
Competition surrounds you as a business owner.
But competition shouldn’t stop you from achieving.
In fact, competition teaches me one thing, not to compete but be the best version of myself.
If for example last year I didn’t take blogging seriously and depended on freelance employers for money, this year what do I believe about my blog?
What am I doing to help my blog take me closer to my dreams?
When people hear competition they believe you have to outnumber HuffPost, Mashable and other big bloggers or remove Jeff Bezos from the line.
No competition is improving your product/service and brand. It’s about working towards improving your why.
Also, if you’re in the same field, talking about the same things or topics or selling the same product, ask how can I as a business work to make mine stand the test of time?
The test of time here meaning how can you distinguish yourself from the business in your industry? What’s your story?
4. Understand customer – why do customers buy when they buy and why they don’t?
Did I ask myself for a long time why are customers coming for my Airbnb business and why my pillow and mandazi business? What did I do to make crave my services/?
What was different? So I decided to ask customers some said I am charming, others said, ‘oh my God, you’re the coolest I have ever met.
Others said I made them feel like Kings and Queens in my business. While others didn’t believe I ran the businesses myself, they were curious. Sometimes, a business plan helps you understand why customers may choose you.
My business plan, which I hid other the table, or I wrote for decoration, didn’t answer for me. I queried my customers to find out how they found out my little shop in the corner.
Understanding your customers and why they buy from you, helps you reach them via ads and promotions.
You will know the kinds of ads, animations, comedy, music or songs, that your customers prefer.
5. Break myths/answer questions you may overlook/underlooked
A business plan helps you answer tough questions like who are your customers and what are you going to serve them? Can you imagine a restaurant owner that doesn’t know what the customers eat?
You open a restaurant and wait for your customers to place their own orders.
The customers will order out of the market things you never heard of. It’s exactly what happens when you don’t have a business plan. I am not saying to write a decoration for a business plan.
I want you to embrace the business plan, the lean one, the one which you use as your referral/guide.
So, your business plan will help you break the myth by writing a plan that works and also facing the business plan.
I know entrepreneurs don’t write business plans because they’re afraid or don’t know what they must include in their plans.
6. How good is my idea?
A business plan helps you understand or know how good your business idea is.
A business plan helps you understand what customers want and how to provide the product or service to them.
With a business plan, you get to test your idea.
Testing your idea means, getting feedback from customers on how and what to improve from your products or services.
7. How will my business earn money? Additional revenue of streams
All the billionaires and entrepreneurs of the world have several streams of income.
An entrepreneur is obsessed with change and bringing change to their society, therefore, they keep experimenting on their ideas.
And from the experimenting of ideas, they find or get new ideas for business. A business plan helps you realise that within your business, there can be other revenue streams.
For example, if you are blogging as a business, do you see your income coming from Google Adsense only? There are other revenues or income streams you can get from the blog.
8. Determine the financial needs.
You may not realise it but you may need to raise income from investors or get a loan from the bank in order to develop your business.
A business plan helps you know why you need to raise capital. How much you will need and for using on what and how long it will take to raise the capital.
Capital helps you plan ahead.
9. Attract investors
A business plan will help you answer investors bugging question, ‘Is there a need for this product or service and why do most customers choose you?
Do customers know of your existence, if they do, how did they hear about you?
How will you attract your new customers and how will you create a cult following with your seasoned customers? What are the financial projections for this business?
How much do you expect to earn by the end of the year and will this business grow in the next decade, how much are we looking at?
Investors love to partner with business owners that are confident, aware and realistic about their business earnings without exaggeration.
If you don’t know how to calculate projections, kindly refer to an expert to help you understand the terms love to use like gross profit, net profit.
Also, investors love to know about your exit strategy.
How will your business function when you’re gone?
Who takes responsibility?
How does the company work without you, on what capacity will you work for the company?
Will your exit be active or passive where active means, you remain a chairman or passive meaning, you work as a consultant?
Every business owner must plan an exit strategy.
10. Make the best decisions by pursuing opportunities that make a profit and make a difference
Business plans help you stay focus without wandering away from your purpose/mission or vision statement.
If you find yourself losing focus often, refer back or take time to understand why you got started.
Also, the reason for starting any business is profit, are you making the intended profit, is it enough or do you have to check for other ways to add to the revenue?
What difference do you want to make with your business?
Every business owner begins their business to make a difference in their lives, society or country.
11. To research
I love knowing what’s happening beyond my writing world as a Kenyan and my curiosity turned me into a business blogger.
A business plan helps you know the trends in your market and outside your market.
The more you research, the deeper the understanding of not only your brand but the reason why you got started and the problems you have to solve as an entrepreneur.
Research also helps you know a potential threat like the pandemic crush that causes economies to fall and what to do in case of a crisis.
In your research, you will know if the market you serve or want to serve is growing or shrinking in size.
A market can shrink in size due to a number of reasons like an influx of the product, where no product stands out and all are the same, the pricing is different from the competition, your customer service sucks and worst, there’s no need for your product or service.
Does research also uncover if the market is stale or stagnant?
You also get to know the size of the target market and what your target market says about your product, your pricing customer service and other suggestions to help improve your products/services.
12. Attract employees
The biggest headache of all employers is getting the best talent money can buy.
We know when you find a talented team, you work in peace and can develop your products and services with your team’s knowledge.
A business plan helps you in the hiring process where you cannot hire your immediate unmotivated family members. You want to focus on hiring the best team that’s motivated and result-oriented.
A team that believes in your vision and works like they’re you.
Can you imagine why people want to work for Apple or Google or Nike?
Because they know their talent gets recognised and their ideas mean something to the company.
Your business plan answers the question, how do I treat my employees well that they want to remain in this company for a long time?
What happens when my employee who I took time to train gets sick or gets poached by another company?
How do I make the best come to me instead of getting employed somewhere else?
READ MORE: Employ the Best and Get Them to Stay: What Kenyan Employers Must Know About Hiring Top Talent
13. Attract partners
If you want a pool of like-minded partners, have your business plan.
Write down what you want in a partner, not their physical description but their mission and vision for the business.
Ask yourself, how will differences that arise get resolved?
What happens when my partner dies or wants to quit the business?
What’s the responsibility of my partner(s).
How do we divide our dividends and will my partners allow me to have the lion’s share as the founder?
READ MORE: Getting a Partner for Your Start-up in Kenya
14. Position your brand
Without a business plan, you won’t know what your brand stands for or what solutions you bring to the market.
A brand’s position is about identifying what makes the brand stand out from the competition and why customers must choose you over the existing businesses.
A business plan helps you understand what you bring to the table in order to stand out from the noise.
What’s your uniqueness?
What are you doing differently?
And how does that difference make customers love your business?
15. Focus on goals /efforts
Have you ever tried working without a plan?
And yes, I spent over two hours at lunch chatting and talking because I didn’t have a direction.
With a business plan, you know where to concentrate your effort and what goals you must pursue.
You spend your time on mindful projects that enhance your business rather than ‘busy’ pursuits that don’t take your business anywhere.
16. Judge business success
You won’t know the amount of success you have achieved over the years or months without the help of a business plan.
A business plan helps you judge where you came from and where you are and where you are going or want to go.
Judging a business success helps you plan for capital or knowing the amount of capital you want, what to improve in your business and if you may require more staff.
You also get to know the amount of revenue a certain product or service produced for you and what to do to improve the product or service.
Judging a business success means keeping up with the financial information to help know if the revenue collected is sustainable for the long term.
Businesses change due to a number of factors like pandemics, changes in consumers needs, government taxes, competition.
A business plan helps you prepare for change unexpected and expected eventualities.
You get to know what to do in case a pandemic hits the world and how to adapt your business to keep moving forward.
During the pandemic, Amazon and luxury goods company, LVMH, tripled their earnings. Newspapers kept reporting how the rich got richer.
Why did they?
They tailored their businesses to become e-commerce stores.
They asked themselves, how do we keep our employees from getting fired or how do we prevent ourselves from the closing shop?
Other companies like Apple, Google, Twitter promoted the idea of working from home. Workout instructors became more prominent as people wanted to know how to stay fit within their homes. More people consumed media from their phones.
You have to ask yourself as an entrepreneur, what happens to my business instead of getting thrown off?
If you are in the hospitality industry, instead of the closing shop as a travel consultant what happens to your travel business?
How can you adapt your travel company to withstand the pandemic?
How do you make people travel more?
Adaptability means, you feel the heat but find solutions. Great awesome leaders and brands get created in a crisis.
These leaders think like Daniel in the Bible, let the will of God be done.
They believe they have got the solutions, they don’t get scared of the lions or complain or lose their minds because of a crisis. Instead, they stand to face it head-on.
18. How to reach your customers.
The hardest thing about businesses is retaining your customers. Getting them is easy because customers get attracted to new things or new businesses and want to ‘give them a try for change’.
A business plan helps you answer the most difficult question, How do I retain my customers?
How do I make my customers stay with me in my business? What incentives can I provide to them to make them come back again and again?
No matter how long bookshops in the US complained about Amazon, customers kept going on Amazon and those bookshops/publishers that partnered with the disruptor that was Amazon, won.
Why? Amazon is customer-centric, it’s all about providing the best customer service and a selection of products that you don’t have to look elsewhere.
Imagine, shopping on a website where everything is on the shelf and the best of it from the comfort of your home?
A business plan helps you know the best way to retain your customers because with strategies like having a wide selection of products, the best customer service or better yet, your personality.
Ask yourself, what will make my customers come back to me again and again.
Also in the business plan, you answer the most frightening question business owners face, ‘What’s the ad budget and what price will you charge in order to make a profit?
19. Uncover new opportunities
A business plan helps you come with new ideas; ideas that help you realise whether you will fail, survive or thrive. Uncovering new opportunities means, discovering new ways of doing things.
For example, we read hardcover books, these days with the help of Kindle you can have a million books on your smartphone.
Amazon discovered how to make customers buy books affordably and best yet, carry the books with us. Which company do you know helps you customise a shoe the way you want it?
And if you have a huge following can benefit from your detailed designs? Nike.
Which phone company do you know offers the chance of you carrying a device as best as your PC or laptop? Apple. A business plan helps you discover the ideas that float in the market without exploration.
FAQs Why You Need a Business Plan for Small Businesses
Why is a business plan important to potential investors?
Why is a business plan important for small businesses?
What is the importance of a business plan?
Do small businesses need a business plan
What are the Elements of a Business Plan?
The most important elements of a business plan include:
The description of the company products and services,
The competition analysis,
The key people/management,
Key financial information.
What are the 10 Parts of a Busines Plan?
The 10 most important parts of a business plan include the following:
Business Description/ Structure
Market Analysis and Strategy
Marketing and Sales Plan
Management and Organisation Description
Products and Services Description
Financial Projection and Needs
Exhibits and Appendices
What is a one-page business plan called?
A one-page business plan is called a pitch.
What makes a good business plan?
A good business plan is detailed and explains what a company does or aims to achieve, lists its key management or how the business with operate, how the products and services it intends to launch will be of benefit to the society, how the business plans to stand out from the competition.
What are Some Best Start-Up Ideas in 2022 to Implement From Home in Kenya?
Some of the best start-up ideas to implement in 2022 from home include:
Taxi booking service
Food ordering system
All businesses, large, small or medium need a business plan.
Business plans aren’t static; you may write them but they change as your business changes. Whether starting an online business or a home-based business, you need a business plan.