Do you need a small business plan? If you’re starting a business, or even if yours is already up-and-running, you may be wondering that – and at Pursuit we say, yes!
Why you need a business plan
Operating without a small business plan is like taking a road trip without a map – it could be interesting but it takes much longer, costs much more and causes unnecessary hassles and headaches.
Similarly, if you don’t have a small business strategic plan, you don’t have anything to guide you. Developing a business plan helps you:
- Communicate your small business goals and strategy for future growth
- Calculate financial projections for your small business
- Honestly assess strengths and shortcomings against your competition
- Think through critical issues and prepare for challenges and success
And with a small business plan, you’ll have something in-hand that demonstrates to potential lenders and investors that you’ve done your research, understand your markets and competition, and know why your business is a viable and profitable venture.
How to write the best plan for your business
Business plans include basic elements that you can tailor to your small business. Yours doesn’t have to be long or difficult to create, and Pursuit’s Business Resource Library has excellent articles to help you develop information about financials, marketing, and more.
This gives potential lenders, investors and others an overview of your business so they want to learn more. Ideally, it will only be 1-2 pages and although it’s at the beginning of your plan, it’s the last piece you’ll write because you’ll create it from brief summaries the other sections.
How long this section is will depend on your business, but provide enough detail so that your readers gain a good understanding of the products or services you offer and how they meet the needs of your customers. Include your mission and vision; the need that your business will address and how; and a description of what’s required for operations. Explain your business structure, length of time in business, location, as well as short and long terms business goals. It’s also great to describe your brand and anything else that sets your company apart.
Industry and Competition:
This is one of the most important elements of a great plan and a successful business. Here, you’ll outline market and competitive research that you’ve done and describe target markets. Organize a competitive analysis to outline your direct competitors and how your business compares in terms of products and service and pricing. How are you different and/or better? What are your competitive advantages?
It is crucial you know your target audience. Do you serve businesses or consumers? It is possible your business is a B2B or B2C or both. Your marketing and sales strategies will differ depending on your customer base so be sure you know your audience. What is your typical customer profile and what trends are you seeing within your customer base?
Marketing and Sales:
Not marketing your business is like throwing a party and not sending out invitations, and even basic marketing helps. With so many online options available, too, you can create a cost-effective and engaging marketing plan that includes a website, social media and email contacts. And if you need traditional outreach like advertisements in print or radio, your plan will help you make better investments. Organize a budget for marketing and sales activities to use as a guide in promoting your products and services.
Organization and Management:
Here, you’ll present your qualifications like experience, education and information about partners and day-to-day management. Who is responsible for doing what? What type of legal structure have you selected? Add that kind of information here. Do you have mentors or advisors, affiliations (like memberships to Chambers of Commerce or industry-based organizations) or anything else that potential lenders or partners want to know?
When you’re starting out your business won’t have a financial history, but thorough research can help you develop realistic financial projections and a budget to guide your growth. Financial projections will help articulate anticipated monthly revenue and expenses. Setting a budget will help you meet short-term financial goals and adjust your spending accordingly.
It’s an important way to see if your business will generate too little revenue or have too little cash early on (did you know that underfunding is a leading reason why small businesses fail?). Knowing this means that you can start shopping for excellent loan options and address existing issues like little or bad credit. Your first-year financials should include your budget, and three-year financial projections.
Additional points for a great business plan:
1. Be descriptive but concise – you don’t need to have every detail down.
2. Include images of your products, location or other strengths that are visually interesting.
4. Know that your business plan isn’t set in stone: As your business and experience grow, update it to keep it relevant.
A great business plan is an invaluable tool to guide your business decisions from startup through growth. It can help you find and address issues early on; demonstrate that you understand your new business and what it takes to make it successful; and help you identify opportunities along the path to success. Use these starting points and check out free resources like the U.S. Small Business Administration’s website for more comprehensive information, too.