Business plans for small business are an essential element of the start-up process. Not only does a business plan assist you with funding, it compels you, as the business owner, to analyze, devise, and come to terms with the reality of running a business. Your business plan also demands that you examine your preconceived ideas about the value of your product or service and investigate ways to market and meet supply and demand.
With slight variations, most business plans follow a similar structure. It is best to follow traditional form when writing a business plan. Business plans are formal documents that are seen by a variety of people. Bank and loan officers, attorneys, and other professionals expect information in a business plan to be presented in a consistent manner.In general, business plans for small business contain the following sections:
- Cover Page: The Cover Page consists of the business name, owner’s name, and contact information.
- Table of Contents: A Table of Contents section is required for readers to quickly find each section.
- Executive Summary: The Executive Summary is the first and most widely read section of the plan. The Executive Summary includes a business description, highlights the main points of the business plan, and gives a concise explanation of planned strategies. The Executive Summary should be at least one page and no more than three. Since the Executive Summary is a summary, it is generally the last section of your plan that you write.
- Business Description: Beginning with a business overview, the Business Description outlines current and future industry prospects. A description of the proposed business and how it fits into the current market follows. Also included is the business type, whether it is a wholesale, retail, or service-oriented business, and the legal structure. All business principals are identified, as are descriptions of individual skills and qualifications. Business strategies are outlined that indicate how the business will successfully compete.
- Marketing Analysis: The Marketing Analysis analyzes the demand for the business product or service and explains how the business principals will take advantage of these opportunities. Markets are defined, competitors analyzed, marketing research is cited, and the marketing plan for capturing a share of the market is outlined.
- Operation Management: Business plans for small business include outlining day-to-day operations, defining the number of required staff, and systems used for conducting business. Benefits of the systems and set-up requirements are explained.
- Personnel: The Personnel section defines the projected number of employees, the required skills for each position, and the number of work hours projected for each, both initially and as the business grows.
- Competitor Analysis: The Competitor Analysis is a thoroughly researched record of current competitors in the marketplace. It includes an outline of competitor strengths and weaknesses, as well as a plan to compete effectively. Location in relation to competitors, pricing comparisons, product desirability, unique services, and market advantages of the proposed business are outlined.
- Financial Data: The Financial Data section outlines loan terms, funding, list of assets, balance sheets, income projections, profit and loss statements, breakeven analysis, detailed first year financial analysis divided into months, a three-year financial summary, and a five-year financial summary. The Cash Flow Statement is included in the Financial Data section. The Cash Flow Statement describes how the business owner plans to pay expenses from month to month and defines the money source from which the expenses will be paid. All expenditures must be accounted for.
- Appendix: Data reports and other technical information is placed in the Appendix. Market analysis numbers, charts, spreadsheets, loan documents, financial statements, trademarks, patents, and owner resumes are included.
Approaches To Writing Business Plans For Small Business
Writing business plans for small business is a way for you to map your road for planned success. The research you conduct while preparing your plan is invaluable when it comes to making business decisions. A well-researched business plan is an essential tool for starting a business and keeping it on track. Business plans for small business are not only for start ups, but also are valuable tools to use when considering expanding your business.
As you approach writing a business plan, you have several options from which to choose. Business plan consultants are available for hire. These professionals have experience in writing business plans for small business and are generally knowledgeable about what it takes to write a compelling document. Software options are available as well. Most business planning software includes templates and the necessary sections. The ideal choice is the one that works for you.
Most business owners choose to write their own business plan. A low cost option, writing your own plan gives you a wonderful opportunity to learn about your industry and business. As you conduct your marketing and competitor analysis, write and gather data, pull numbers together, plan, devise strategies, and assess your business and its potential, you think critically about your future business operations and develop your analytical skills.
Writing your own business plan is an ideal way to learn and cultivate a business mindset. You will also learn a great deal about yourself. Analyzing, visualizing, and defining strategies prepares you, not only for starting your business, but also for turning it into a success and helping it grow over time.
Writing your own plan does not mean you can’t ask for help. Many entrepreneurs use a combination of writing their own plans and meeting with an experienced consultant to refine the document. Free and low-cost business plan consultants are available through Counselors to America’s Small Business (SCORE), the local Small Business Administration (SBA) offices, or often through local college and universities.
Take your time when writing your business plan. Examine as many business plan examples as you can. Find examples in your industry. Get a feel for the methods of writing, organization, and details that are most often included. Visit your local library, Chamber of Commerce, and search online sources for useful business plan examples.
Starting a business is an ongoing learning process. Writing business plans for small business is not only essential when looking for funding, it is an ideal learning and training tool for small business owners.