Through personal experience I learned that a business plan is essential to successfully start and run a small business. In the beginning I dove in and created my product line (woodcarvings) and tried to sell with little success. Soon my records were a mess. If anyone asked what the nature of my business was I would have given them a blank stare.
I soon realized I needed to step back and write a plan. The business plan helped me see what I was doing and where I was going in my business. The plan helped me to set goals for what I wanted to accomplish and helped make my business grow. My business plan served as a guideline on how to keep my business running through challenges.
You can develop a plan yourself or have outside people help you such as a lawyer, an accountant or a banker. There are many helpful books and websites on how to write one. One web site is the Small Business Administration, SBA.com. They have a site to help you write a business plan. Here are the essential elements of a good business plan.
Executive Summary
This is a brief snapshot to show what your company is about and where it’s going. This summary will have company information such as the name of the founders, number of employees and a short statement on how you formed the business. Your executive summary should have your mission statement, one or two lines that explain your business structure. This summery should have ideas about business growth and other financial information.
Organization and Management
This section should provide details about who owns your business, what the management team is and their qualifications. Also organizational structure information defines what and how you will run your business, along with what types of skills the owner has.
Company Description
This section gives a list and definitions of desired customers and other businesses that could help serve the small business. You would need to list the marketplaces that will help you.
Market Analysis
Here you describe target markets and your plans to research them. This analysis will have information on forecasting of your market growth predictions and how to achieve this goal. Your analysis will state how to determine pricing and profit margins. A competitive analysis shows you and your competitor’s strengths and weaknesses. You’ll write a summary on how important your competitor markets are and about opportunities to enter that market.
Marketing and Sales
This is where you will list your marketing strategies such as market penetration, growth strategy, channels of distribution and customer communication strategies. It also includes your sales forecast, what kind of salespeople you need and other sales strategies for customer retention and new prospects.
Service or Product Line
Here you provide product definition and/or service details. You need information on your products’ lifecycle and how those factors influence your product. You should have and understand your intellectual property along with any legal agreements, non-disclosures, or non-compete agreements. List all your research and development (R&D) activities and what you expect these activities will do for your business.
Financial Projections
This is where you should set clear objectives on how you plan to analyze your business for financial success. You should write a short analysis of your financial information on ratio and trends for all your financial statements.
Funding Request
This is a statement to describe how you will seek funding for your business venture. Also you should describe how you intend to use those funds towards your working capital and acquisitions. This request will show a strategic financial situation plan for the future of a possible buyout, when you acquire another business or sell your business.
Appendix
The appendix should include information on credit history, letters and references, details on marketing studies and other legal documents.
Writing a business plan will help you get control of business and provide a clearer idea as to why your customers should buy from you. You’ll understand your target market and how and when to get the most out of your sales plan. A business plan will help you stay focused on product or service development that will keep you accessible to your customers. Creating a niche for your business is important for success.
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