Planning for a small business can be difficult, especially if you don’t have much experience managing start-ups. However, there are steps you can take to make the journey a lot easier. One of them is writing a good business plan.
If you have a robust and detailed strategy that gives you a clear roadmap of what lies ahead for your company, you can be better prepared for all the future decisions you will have to make. It will also help you evaluate your financial situation and your competitors in the market.
Typically, a business plan maps out three to five years, and it includes all the goals you want to achieve in that timeframe. If you’re trying to attract investors or take out a loan, having strategic planning for small businesses will help you look prepared and ready to take on such a venture.
In this article, you will be able to take a look at all the steps you have to go through in order to write a good business strategy for your startup and why you have to do it if you want to have a successful venture.
Why Do You Need to Write a Business Plan?
You can indeed start a business on a limp without any strategy for the future. However, that will make your job really difficult. On the other hand, if you invest the time into writing your business plan, it will surely pay off in the future in more than one way. Let’s see precisely how.
Grow Your Business Faster
Writing a business plan will help you in building a solid foundation for the future of your company. Now, this isn’t about trying to predict the future. More so, it’s the process of creating a core strategy that you will be able to follow in order to identify and reach your goals.
This initial document is not meant to be perfect. It’s used to set a baseline that will let you track your progress, make adjustments, and have past data available when you have to make decisions in the future.
Banks and investors will need to know you have a solid idea about what you want your business to become in the future. One way to prove that is through a great strategy that shows your company will be able to become financially sustainable. Essentially, you will need to have the correct financial forecasts, statements, and an explanation of your entire business model so that you can present them to potential investors or bank employees.
Planning for a small business will allow you to create the story of your brand. By writing this plan, you will be able to tell why you started and what you want to achieve in a convincing way that will make people believe in you and your idea.
Make Decisions with Confidence
As a business owner, you will often have to make essential decisions for your company under challenging circumstances. More than that, you will have to decide on the spot without a lot of time to really consider all the options. If you lack essential data about your business, it will make your job even more complex, and it may cause you to make the wrong decision.
If you have a business plan written down, you can review it every few months and thus make decisions confidently, without doubting your expertise. That’s because you’ll have all the information needed when hiring new employees, launching a new product, or making a new deal. Additionally, this strategy will allow you to have options available in case any failures happen.
6 Key Components of a Business Plan
There are six essential sections that your business plan needs to cover, no matter if you’re writing it just to know how to grow your company or you simply need to get some investments. Let’s take a quick look at these six components.
Most people write the executive summary last. It represents an entire overview of your business and the future goals you have. Usually, it’s only one or two pages and comes at the very beginning of your strategy. The aim of it is to introduce your company, explain what you do and what you want to achieve with your company. In an ideal situation, the executive summary will be able to serve as a stand-alone document that describes all aspects of your business without a ton of detail. In fact, more often than not, investors will initially just ask for the executive summary and, based on it, will decide whether they want to schedule another meeting or not.
When planning for a small business, this part of the plan can also be considered the most vital one. The idea of this section is to give answers to the following questions:
- What are you offering to the market (product or service)?
- How does it solve a problem?
- Who are your target market and competition?
You need those answers, as this section will be the place where you demonstrate what makes you different from your competitors and how you plan on showing that to your potential customers. This is where you have to expand on the points you made in your executive summary by providing more details and answering any additional questions.
This chapter of your business plan is to explain how you plan to take an opportunity and turn it into a profitable company. It has to cover your sales and marketing plans, operations, and the milestones and metrics that you will use to measure your success in the future.
Basically, here you have to show to all the readers that you know how to run a company once it has been created. You need to go over all of the details regarding the operations of a business: how you will make the product, market it and then deliver it to your customers.
4.Summary of Your Company and Management
Great ideas are not the only thing investors look for. They also want to find excellent teams. Use this part of your business strategy to talk about your team and about the potential hires you will need. Give a quick summary of the company structure, location and discuss your history (if you already have one).
A financial forecast is necessary for any business plan to be complete. There are a ton of documents you need to feature in this chapter, including a sales forecast, personnel plan, income statement, cash flow statement, balance sheet, use of funds, and exit strategy. Your financial plan has to help you figure out what your expenses are, what you have to do to be profitable, and how much money you need to have on hand in order to survive.
This isn’t a required chapter, and you can skip it. However, it is beneficial if you need a place to put in your charts, tables, legal notes, definitions, or any other important information that didn’t fit into any of the other chapters. Additionally, if you have illustrations of your product or a patent pending, you can include such information here.
5 Tips for Writing a Great Business Plan
Now that you know what your business plan has to contain, let’s talk more about the “rules” you have to follow when writing it. The goal is for you to be able to finish it quickly and efficiently so that you can go back to building your company.
Don’t Make it Too Long
A business plan needs to be short and straightforward. There are two reasons for that:
- Your business strategy has to be read by someone. It cannot be 100 pages long, as no one will take the time to read all of it. If you need to include minor details, their place is in the appendix of the document.
- Another thing you have to consider is that your business strategy is a tool you can use to grow your company in the future. You need to revise and refine it over time, and you won’t want to do that if your plan is incredibly long.
Consider Your Audience
When writing your business plan, you have to think about the people that will read it. Use a language that your target audience will understand.
Even though creating a company is a complex process, your investors aren’t all going to be scientists or experts in your field. You should avoid using acronyms, jargon, or any terms that are too niche. When trying to explain your products, keep it simple and direct, with terms that everyone understands. If you need to provide complete details regarding a specific component, you can use the appendix to do so.
Test Out Your Idea
You can use a one-page pitch to test out your business idea before you ever decide to launch a company. Working through the whole process, from your branding and mission statement to your opportunity and execution can give you a chance to collect feedback from prospective buyers and investors. It can be done with something as simple as conducting market research or directly asking your target customer base.
Determine Goals and Objectives
From the start, you need to know what you want to get out of your company. Do you want to turn a side hustle into a full-time startup? Are you trying to expand an already existing company? If you know what you’re trying to accomplish from the start, you can set out goals and create a business plan that will help you achieve them.
That doesn’t mean you have to have each and every milestone defined from the get-go. You can add in objectives as you go and that will help you further develop your strategy for the future. In the beginning, you just need to create a vision with aspirational goals so you can know what to focus on, and then you can always make changes along the way.
Don’t Doubt Yourself Too Much
Most business owners aren’t exactly financial experts. Many of them start with very limited knowledge but learn along the way by finding the right tools and resources that can help them. If you’re a young entrepreneur, planning for a small business may seem like a massive hurdle you have to overcome. But it doesn’t have to feel like that.
Consider this: you may not be a business expert, but you’re an expert on your company. You know why you started it, and you know what you want to accomplish with it. This knowledge is the most vital part of writing a business plan.
Also, you don’t need to have a detailed strategy from the very beginning. It can be much easier to start by using one of the dozens of free samples of business plans available online and filling in the blanks.If you find that challenging as well, you can just write a simple, one-page business plan and then come back to describe all the details later.
Don’t forget that planning for a small business is a continuous process. The market, your customers, and your competitors will constantly evolve over the years. If you want to have long-term success, you will need to adjust your business plan continually.
You don’t have to feel so pressured to have everything figured out from the beginning. Write your business strategy to the best of your knowledge and abilities. Try to fill in all the gaps that you can think of without going overboard with details.
If you’re totally unsure of how to do it, you can reach out to a seasoned business plan writer to give you some tips and tricks on how to create a strategy that will make you and others excited about your company.
However, hopefully, this article will give you enough information and tips so that you can do all the business plan writing on your own.