A business plan isn’t a one-time task to be checked off and forgotten. It’s a document that evolves with your business, guiding your decisions and strategies as you grow. For a trade business, a business plan describes how you intend to lift your business off the ground and covers aspects such as:
- How it’ll be funded.
- Marketing strategies you can use to increase visibility.
- Outlining what makes you unique compared to your competitors.
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- Why a business plan is important?
- Six elements that every business plan needs
- Seven business plan mistakes to avoid
- Using technology to develop your business plan
1. Why is a business plan important?
A business plan serves many of the same functions as a map. It:
- Provides clarity on your business goals and how you plan to achieve them.
- Identifies any risks that can stop your business from achieving its goals.
- Helps your business track its progress as it tries to achieve those goals.
- Identifies the resources you need to achieve your goals.
Properly written business plans work wonders. In fact, 71% of the fastest-growing companies have a business plan. If your trade business develops a clear business plan, it's 30% more likely to grow successfully!
2. Six elements every business plan needs
To succeed, a business plan should include the following.
Executive summary
Start by outlining the basic details of your trade business, including:
- Your business name
- The services you provide
- Short, medium, and long-term goals
- Core values
- Business structure (solo tradesperson, partnership, or an LLC)
- Date of incorporation and registration number (if applicable)
- The company hierarchy, including clear roles and expectations
- Contact details
- Links to the website and social media
Financials
Cash flow is the lifeblood of any business. If you’re unclear about your finances, your business won’t survive the next 12 months.
Your financial plan needs to include the following:
- A break-even analysis: This determines how long it’ll take before your sales match your costs. Most businesses will start at a loss as several upfront costs (known as start-up capital) need to be paid before a sale is even made. The break-even analysis determines when sales will eventually catch up and overtake costs (i.e., profit).
- A cash flow forecast: This determines the influx and out-flux of money every month.
- Debt handling. If you offer your products on credit, include a section on how you’ll collect money from your clients.
- Prices. Beyond stating the numbers, explain how you got to them and how market fluctuations or competitor activities could influence them.
Growth plan
To remain active in the long term, consider how you will manage the following:
- Supplier agreements. Having reliable suppliers locked in is crucial for sustained growth.
- Your skills, training, and experience. This part is more about identifying what’s missing and could hamper growth. It helps you plan for and address any skills gaps.
- Mentor and business support. As any apprentice could tell you, having an experienced mentor can make or break your future career. As you start on your business journey, finding a mentor can help you avoid common business pitfalls and advise you on how to grow successfully.
- A detailed road map of how you plan to grow.
Monitor the competition
Monitoring your competition has several benefits:
- It alerts you to their strengths and weaknesses.
- It helps you identify your unique positioning.
- It helps you articulate your market position.
- It provides insights into their strategies.
This can be as simple as taking the time to review how your competitors market themselves; what language do they use? Where do their ads appear? Search for their social media pages, where they rank on Google and any offline marketing strategies they use.
Marketing strategy
A marketing strategy outlines how you intend to find work and generate leads.
In this section, describe the size of your market and include how you intend to leverage online and offline channels to get new customers and retain existing ones.
Healthy and safety/legal/compliance
Make sure to identify any regulations or laws that you need to follow and confirm whether or not this has been completed.
Use this section to identify:
- The environmental impact of your activities and how you intend to address them.
- Any health and safety regulations that need compliance.
- Any other risk and your plan to mitigate it.
When writing a plan, remember to:
- Ensure every statement is backed by recent, relevant data.
- Be as thorough as possible.
Essentially, don’t leave anything to people’s imaginations or guesswork. This is crucial for you internally, as it’s your job to lead and guide your team and externally when applying for funding.
3. Seven business plan mistakes to avoid
With that said, here are seven mistakes to avoid.
Not using a business plan template
A comprehensive business plan template is a valuable tool to avoid critical mistakes.
By leveraging a well-designed template, you can rest assured that you’ve covered all essential aspects of your business strategy, from market analysis to financial projections.
Business plan templates provide a structured framework so you can organise your thoughts and ideas cohesively, reducing the risk of overlooking critical elements or inconsistencies in your plans.
Choosing the right business structure
Never overlook the type of business structure that’ll suit your venture best today and in the long run.
Why?
Knowing the types of LLC, whether it’s a single-member LLC, multi-member LLC, or series LLC, can profoundly impact your business’s legal and financial aspects.
Failure to consider these options might lead to unnecessary complications or missed opportunities for tax benefits. Take the time to understand the differences and select the most fitting structure for your business’s success.
While a Limited Liability Company (LLC) offers valuable protection for your personal assets, it’s not an impenetrable shield. An LLC separates your business and personal finances, meaning creditors typically can’t seize your home or car to satisfy business debts.
However, there are exceptions: personal guarantees on loans, involvement in wrongful acts, or failure to maintain proper separation between your personal and business finances can pierce the LLC’s veil, exposing your personal assets.
Lack of comprehensive market research
Not researching your:
- Target audience profiles
- Competitor’s activities
- Current market trends
can have severe consequences for your business.
On the first level, you fail to capitalise on any valuable market opportunities. These could be opportunities to:
- Enter new markets.
- Change prices to maximise sales.
- Respond to changes in consumer sentiment.
- Reinvent your unique selling point (USP).
- Capitalise on the competitor’s weakness.
Taking the time to analyse your customers’ specific needs and pain points can make all the difference.
For instance, HVAC businesses may need to account for the heightened demand during winter. In this case, they may need to provide specialised support for clients needing emergency repair for boilers and heating units.
The company for long-term success by:
- Making a strategic call-out plan
- Preparing for customer service spikes
- Securing proper funding
On the second level, you’re giving competitors an open window to take advantage and overtake you by having your eye off the ball.
And, lastly, you won’t be internally prepared to deal with things like:
- Regulatory compliance issues
- Supply chain disruptions
- Business continuity
- Emerging risks
Inadequate marketing and promotional activities
A comprehensive marketing strategy is crucial for any business to reach and engage its target audience effectively.
Savvy businesses understand the importance of leveraging diverse marketing channels to amplify their brand visibility and drive customer acquisition.
A multi-faceted marketing approach blends:
- Strategic partnerships
- Engaging in social media campaigns
- Organic search engine optimisation
- Targeted pay-per-click advertising
This holistic strategy enables any trade business to:
- Reach its ideal customers at various touchpoints (website, social media, and offline).
- Drive significant sales and brand loyalty.
- Command a strong online presence.
Unrealistic financial projections
It’s tempting to make the financials look healthier than they are, but it’s the equivalent of brushing the problems under the carpet.
If your financial plan is unrealistic, you’ll:
- Be putting the viability of the business on the line. If the business fails, it’ll be difficult to return money to lenders, notwithstanding the difficulty
in making staff redundant–all because of irresponsible finances. - Be putting your credibility in the spotlight. Being the business owner means the buck stops at you, which is beneficial when things are successful but can be challenging in the opposite situation.
- Make decisions based on the wrong information.
- Have cash flow problems and budgetary constraints.
- Fail to account for unexpected business expenses.
Vague business objectives
When you set vague or ambiguous business goals, you’re essentially working towards nothing.
This is because:
- Both you and your staff don’t know how these goals translate into daily, weekly, and monthly activities.
- There are no KPIs or benchmarks that evaluate performance.
- You don’t know how to record progress.
It’s like walking in the dark.
- You don’t know if you’re going in the right direction.
- You can’t see or detect any roadblocks.
This causes:
- Wasteful expenditure because you’re throwing money at something too abstract.
- Low morale due to lack of clarity.
- Confusion among staff.
The lack of clear, measurable objectives and strategies not only stalls immediate tasks but also jeopardises the organisation’s overall strategic direction.
Not revising the business plan
You might make the best business plan — except you lock it away and never look at or update it again.
A business plan is only as relevant as its ability to help you meet today’s challenges and opportunities. There’s little value in working off a plan that’s three years old. Imagine trying to run your business according to a pre-Covid plan during the height of the pandemic. It just wouldn’t work. A business plan should evolve as new information becomes available. Ignoring valuable feedback or fresh insights can lead to the persistence of outdated strategies that no longer serve the company’s best interests.
4. Using technology to develop your business plan
Using a job management app, like Tradify, makes tracking your businesses' growth and processes automatic. With features like real-time data analysis and reporting, you can make informed decisions that drive your business forward. Collaborative features, like shared timesheets and notes, also mean you can share important updates across your team.
In the long term, failing to update a business plan can stunt the company’s growth and diminish its relevance in the industry.
A business plan is a document that guides your business throughout its lifecycle. It outlines the overarching aims and objectives, strategies to achieve them, and threats that can prevent success.
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