Developing a business plan is a great tool to help you effectively address any challenges you’ll face. More importantly, a solid business plan will help you set and reach your business objectives. After all, if you don’t have goals to meet, how do you know what you are aiming to achieve?
Here’s where to start when developing a business plan:
Begin with your business vision.
In your plan, describe the purpose and reason why your martial arts school, fitness club, or gym exists. Talk about what you are delivering to the marketplace and what sets you apart from the competition.
Be specific. Use the vision statement for inspiration and as a reminder of the business you are trying to build. Share your vision with your employees to keep everyone on the same page and hold staff members—and yourself—accountable.
Perform a market analysis that evaluates your membership base and competition.
Group your members into specific categories based on demographics (e.g. age, gender, proximity to your business location, class participation, training program).
When analyzing your member data, look at what needs your member groups have in common and what needs are being met at your school or gym. Are your competitors doing a better job at meeting any of those needs? Where do your members reside? How can you expand your reach to other communities? Are there new market trends that can make or break your business?
Next, take a hard look at your competition. Factor in their business location, costs for training, facility environment, class and training schedules, and membership counts. You must stay ahead of your competitors in meeting the needs of your customers if you plan on being profitable this time next year.
Develop a financial budget for the fiscal year that ties into your market analysis.
A financial budget is a plan for future income, expense, and cash flow. Tie your financial budget to your goals that you want to meet for the year. It’s important to make sure that each goal within your financial budget and business plan is specific, measurable, achievable, realistic and time-targeted (SMART)*.
Your goals need to be specific so that you can hold yourself, and your staff, responsible and measure progress within a designated period. For example, a business goal might look like:
<John’s Martial Arts Academy> will sign X new members during the month of March or <John’s Martial Arts Academy> will retain __% of existing member base all of 2012.
Keep your goals attainable and realistic, too. Finding a happy medium between stretch goals and erring on the side of conservatism is your best bet. You want to set goals that you and your staff can meet.
Lastly, when devising a financial budget, ask yourself best and worst-case questions such as:
- What will revenues look like if a competitor opens up down the street?
- What if you buy out a competitor and consolidate locations?
- What expenses can you sustain if your promotion plan flops?
A final word: Keep in mind that a business plan is just that—a plan. It’s okay to miss your targets. If you find yourself coming up short, re-evaluate your plan, and adjust as necessary. Don’t become discouraged and abandon the business planning process entirely. It’s important to keep at it, and consistently monitor your progress against your goals. What gets measured gets done.
*Doran, G. T. (1981). There’s a S.M.A.R.T. way to write management’s goals and objectives. Management Review, Volume 70, Issue 11(AMA FORUM), pp. 35–36.
About the author: Michael Connor is Member Solutions’ Director of Finance.