The SMART Approach in Business Plan Drafting

In your business plan, avoid generalising important information that your funders will rely on in deciding to engage you or to fund you. Do not generalise your products, your market, your operational, financial and marketing strategies. Specifically mention the exact products you will provide including their brand names, packaging sizes and varieties. Likewise, be specific on the amount of funding required and  always outline exactly how it will be used. Be specific on the marketing strategies you will use. For instance, if you are planning to use internet marketing, mention the apps, sites and systems that you will use and how you will use these. Your business plan should not be a general document but a detailed, specific and well-crafted piece of work.

As an example of generalisation, in business plans, it is quite common for entrepreneurs to mention that they are in the clothing retail market in a particular city or town – and that’s all. It is also common for entrepreneurs to believe that businesses such as retail clothing are well understood and therefore, they do not need to go into much detail defining their markets and strategies.  Keeping to our example, there are many types of clothing retail stores: general versus specialised; sporting versus regular; gents versus ladies, etc. Thus, businesses operate in the same market but within very different segments and niches. Their objectives and strategies may also differ given these dynamics.  Each would, therefore, need a strategy the reflects its aspirations given the market and industry dynamics it faces. This has to be reflected in the business plan, hence the need to avoid generalisations.

Commonly generalised information include:

  • Pricing
  • Location
  • Industry and market data
  • Staff numbers
  • Sales and distribution strategies
  • Capital and operational expenses

The SMART approach can guide the business plan drafting process in avoiding generalisations as well as in producing an objective and realistic document. SMART is an acronym for Specific, Measurable, Attainable, Realistic and Time-Bound.  It is a common approach applied in strategic management and other disciplines to guide goal development processes. In business planning, it challenges the writer/writing team to seriously think through the various aspects of the business plan.

With the marketing aspect of the business plan,  a SMART approach challenges the writer to clearly define the market, its characteristics, its segments and niches. It also challenges the writer to identify other market and industry players including competitors as well as market size and efforts it may take to establish the desired market share. Below are examples of SMART questions one might need to answer when drafting a business plan:

Specific: 

What kind of market am I in and what are my objectives in it? Who will I sell too, and what will I sell and how will I meet my sales and market share objectives?

Measurable:   

What measures can I use to gauge the market size, and my targets in this specific market?

Attainable:      

Are my objectives in this market attainable? For instance can I get the targeted 1% market share that I require to break-even?

Realistic:         

Are my goals realistic? The marketing and market outreach goals should be realistic. The writer should gather enough information to conclude whether the 1% market share per year realistic given external factors such as the economy, political environment, competition, the threats of substitution, etc. Additionally, internal factors such as levels of funding, team skills and commitment, business and market strategies should be considered.

Time-bound:  

How long will I need to meet my objectives and at what intervals will I assess my performance to see if I’m on track?

The SMART approach will help you as an entrepreneur to be more objective about your business, making you more prepared to meet and deal with specific realities that can pop up anytime. It also helps your potential funders and investors to understand your business more and this can increase their interest in it. Importantly, a SMART approach also shows your investors that you know what you are talking about. Thus, always ensure SMARTness in all the functions and areas of your business plan.