Your business plan helps lay the foundation for your success. Our guide will help you learn how to write a small business plan and start your business on the right track.
Do you have a business idea that has been bubbling for a while? You’re not alone. Turning the spark of a potential business idea into something real is a dream of many.
However, before you jump in and get started, you have a lot to consider. Ask any other small business owner for advice, and they’ll tell you that growing a small business depends on being in control of everything from your finances to your target market – and having a plan helps.
Making a business plan can help you determine if your business idea is viable. Going through the business planning process can help you determine if your idea can grow into something more, and understand some of the challenges you might face along the way. Another added benefit: if you’re interested in getting outside financing, having a business plan can speed up the process.
To get started, check out our guide to writing a business plan.
Presentation: What is a small business plan?
Before you can call yourself a small business owner and promote your services on Small Business Saturday, you need to make sure your idea can turn into something. A small business plan helps you do that. A plan helps you consider all kinds of details, from how you’ll approach marketing to how best to set up your legal structure for paying your small business taxes, and everything in between.
Your business plan serves as a guide. Think of it as a roadmap for your business over the next three to five years. Having a plan in place before you start helps you think about your business goals and the best ways to achieve them.
Diving into the planning process also allows you to better understand your financial needs. This is crucial if you decide to apply for loans or grants in the future. Plus, knowing your business inside out means you can create better propositions for your products or services to close more deals.
What should you include in a small business plan?
Are you worried about needing to be a business or accounting expert to get started? Do not worry. Anyone can create a business plan. In general, most people use a fairly standard business plan template to get started.
You will want to include these items in your business plan
The executive summary is the first page of your small business plan document. It provides an overview of your business, including your mission statement, the products or services you offer, the ownership structure of the business, and a general summary of your business plans.
2. Description of the company
Next comes the description of your business. Here you will list your legal business name and structure, ownership and address.
3. Activity overview
This section is a summary of your industry and how your product or service fits. You can view current market trends as well as projections for the future.
4. Market analysis
Here you will provide a comprehensive overview of the target market where you plan to sell your product or service. Be specific, especially when thinking about your competitors’ strengths and weaknesses and how your product or service will fill a need.
5. Operational plan
Your operational plan will provide a business model showing how your business will operate. It should include the ownership structure and the roles of the management team and expected employees, if any. Be sure to include any external resources you may need, for example, an accountant for your small business, lawyers, etc.
In this section, you will also want to include any real estate and logistical needs for office space or production and any special equipment or supplies to get your product manufactured.
6. Sales and Marketing Plan
Your sales and marketing plan might have several sections. First, you want to cover the products and services you will offer in detail. Include your pricing models, the costs of manufacturing your products, and how you plan to sell and distribute your products.
Get details on the marketing side here. Today, digital marketing plays a crucial role in growth. Many solo entrepreneurs and mom and pop stores rely on social media and their professional website to sell goods. Consider this and other methods you plan to use to promote your brand.
7. Financial plan
If you plan to seek funding, in the form of investors, a bank loan or a grant, for example, this section of your business plan is very important. Highlight here how your business can become profitable and grow over time.
Include estimates of your cash flow, income statements, and balance sheet. From there, you can estimate your finances over the next three to five years.
At first, your appendix might be a bit thin. Once you have determined that your idea can become a viable business and have started, use this section as a place to keep essential documents.
These documents may include:
- Your credit report
- financial state
- Articles of incorporation
- Promotional material
- Tax information
If you decide to apply for business financing, you will need to have these documents handy and include them in your business plan. Make sure you have a record keeping system to keep everything in order.
How to write a small business plan
Now that you know what’s going on in your small business plan, you can start filling your template with real information. Here’s how.
1. Do your research
The research phase is the most time-consuming part of developing your business plan. The more research you do, the better.
You will need to compile research on your industry, as well as your direct competitors and the audience you will be targeting.
Research your industry and competitors thoroughly – this can have many benefits. A thorough understanding of the industry is important, especially if you need to set up manufacturing and distribution channels.
And it never hurts to learn more about your competition, including their strengths and weaknesses. This can help highlight opportunities for your brand.
2. Gather your financial information
Financials play a huge role in setting up and running your business plan, so don’t cut corners here.
Remember that when you start managing and growing a business, money matters. So you need to find a way to keep track of all of this. Accounting software, such as QuickBooks, can help you monitor everything from scheduled billable hours you’ll need to pay accountants or contractors, such as freelance web designers for your site or copywriters for your marketing, to invoices. and inventory.
Once you have a complete and realistic picture of your finances, you can start planning your projections.
3. Follow the plan structure
With your research and data in hand, you can start writing your business plan, section by section. Something to remember when writing: keep it concise.
Most business plans end up being between 7 and 20 pages, depending on the type of business. For something relatively simple, like a solo consultancy, you don’t have to worry about manufacturing and logistics in your operational plan section, for example.
4. Write your summary
Although this is the first part of your business plan, it’s usually the last thing written so you can wrap it all up in a few concise paragraphs.
Example of a business plan
To help you start your business plan, here is an example. This plan is an example of a Small Business Administration (SBA) template.
You will start with the executive summary. You can see this one gives a quick overview of the company, product, and customers.
Next is the business description page. The company has noted its principal members and its legal structure for tax purposes.
In the market research or market analysis section, the plan goes into more detail than what you see in the summary. You will find more detailed descriptions of the industry as a whole and the target market. The plan also outlines its competitive advantages over similar brands in the industry.
The operational planning section is also quite straightforward. As the company is a consulting company, all product lines are services, with no assembly required. So there is no need to list manufacturing, shipping or logistics needs or concerns. It’s just a description of services with prices.
As a small service business, the marketing and sales plan is quite simple. It outlines a simple strategy for growth along with some marketing channels the company plans to use and the person responsible for most sales.
SCORE, which offers a nationwide network of free business mentors, has more detailed instructions on what you can include in your financial plan.
You have the roadmap – now follow it
Creating a business plan is a great way to stay focused and on track. Starting a business is an exciting time, but it’s also easy to get distracted. With a business plan, you have a roadmap that can guide you through the ups and downs of setting up your business.