Ten Keys to Writing a Small Business Plan
A small business plan must focus on the essentials. Any successful business plan will address organizational structure, product descriptions and market position, marketing and sales, and finances. Critically important is the how, when, and where you are going to accomplish what you plan. But here are ten key things you need to do for a great business plan:
Write down your thoughts throughout the planning process. Although this may seem obvious, many people plan in their heads and don’t write it down. Later, they forget some of what they thought about. Keeping notes from the beginning is essential.
After you have grouped your notes in some categories, then start writing an organized business plan. Don’t be too fancy or grandiose, just get down as many essentials as you can.
Get help to construct the plan. Resources in business planning can be found in abundance on the Internet. The U.S. Small Business Administration has several online resources devoted to small businesses and planning. With this wealth of resources, you can DIY your business plan.
But, if you aren’t into the do-it-yourself thing, there are tons of companies with websites that want to sell small business planning help, business plan templates, small business accounting software, and on and on. Just type Small Business Planning into your favorite search engine, and you’ll find several sites to choose from. Evaluate carefully what you would get if you try them out.
Describe the business. What’s the nature of your business? What markets needs will you serve? How will your services or products meet those needs? Why will your products or services have a competitive advantage in your defined markets? How will you tell those markets what you have to offer? Will your organization function as well as competitors, or even better, to serve the needs of the described marketplace?
Analyze the market. Think about your target market. It’s not everybody out there. Who needs your products and services? Or, do you need to create a perception in the market that your products or services are needed? That can be difficult, but not impossible. After all, who knew they desperately needed a cell phone 30 years ago?
You must describe a focused, manageable market that you can truly serve. You must research that market and then describe its distinguishing characteristics, its size within the area you will serve, and how much share of that market you can capture. Document your logic so you can explain it to a partner, a banker, or an investor.
Develop a sales and marketing plan. What will your marketing strategy be? How are you going to make your potential customers aware of what you have to offer? Word of mouth will not suffice to kick off a new business. You have to come up with marketing strategies that will make your company and its products and/or services memorable.
Your pricing must be very competitive, or your products and services so superior that people will pay more for them. Potential customers must know where and how to get what you are selling. These are all things to include in a marketing plan.
The sales plan will consist of the specific steps your organization will take to execute the marketing strategy. For instance, will you sell your products online, from a retail location, at in-home parties, or some combination of the three? Will you have your own sales force or use independent reps?
Prepare financial statements. Your new business, or expansion of a previously started business, will need several financial statements. You’ll need a projected income statement, a balance sheet, a calculation of cash flow so you can count on being able to pay bills and employees when those times come, and a break-even analysis, which will tell you when you will actually start making a profit from your business.
Choose your business name. The right business name projects an image in the minds of potential customers. Luigi’s Pizza works. Luigi’s Corner Bank, not so much.
Try out names on people. Talk about the business you are about to launch and ask them to select the best name of three that you’ve conjured up. Note their reactions. Keep trying out names until you can select one you and others like. Does it reflect the mission of your business? Be certain it does.
Register your business name. When you’ve selected your business name, you must register it to comply with the law. If registered in any name other than your own personal name, it must be registered with the various authorities, in most situations as a Doing Business As (DBA) name. The U.S. Small Business Administration is a good source of information on this subject.
Establish the legal structure of the business. Will your business be a Sole Proprietorship, a Partnership, a Limited Liability Company, a Corporation, or an S Corporation? Your choice will have legal and tax implications. You should seek legal assistance in this matter.
Describe the management structure. Who’s the leader of the company, the boss? Will there be other managers or partners? Who reports to whom? Are there other employees? Describe the duties of each manager and employee.
Make certain there are no gaps in the responsibilities in getting all the jobs done that are necessary to the success of the venture. For example, are there products to be manufactured and packaged? Who is responsible for organizing a manufacturing plan and who actually makes the stuff? Will outside services be procured for any reason? Who keeps the books and pays people?