Planning well is a huge key to success, whatever you are planning to do. Failing to understand the importance of planning is what leads to failures. The main reasons for start-up failure are improper planning, lack of goals or insufficient research. It is, therefore, essential to understand how to write a small business plan before you get started.
Generally, it is assumed that the only people who need a business plan are those who seek to secure start-up financing. However, this is not true! The only person who don’t need a business plan is the one not planning to start a business at all.
Also, it is not only large scale business ventures that need to be planned out. Even if you are starting a very small business, you need a plan. A business plan outline provides you clear direction in which you plan to lead your business and a path to follow in order to achieve it. Starting a business without a plan is like travelling without any sense of direction and with no clear idea of your destination.
Writing your business plan can be overwhelming initially, particularly if you are making a start-up plan. Planning requires a lot of time, effort and research to be implemented successfully. Following are some guidelines to create a business plan for a small-scale business.
Set up a Vision, Mission and Goals
Setting up a vision, mission and goals is essential in order to determine where your organization will be headed. But more important is to differentiate between them, integrate them and align them in the same direction.
- A Vision statement defines what the firm ideally wants to be in the long-run, providing a source of direction to the employees.
- A Mission statement spells out the purpose of an organization, also defining the agreed path and code of conduct the organization plans to follow in order to achieve its ultimate vision.
- A Goal is a broad, long-term aim that an organization wishes to accomplish over a measureable period of time. A goal should always be aligned in the same direction as the vision of the company, contributing towards its accomplishment.
The right approach to setting business goals is to set up SMART goals – that is, goals that are Specific, Measurable, Attainable, Relevant and Time-based. This will help you in making a realistic action plan for future.
Make sure to specify evaluation points in your business plan after certain time intervals. This will help you track your progress in successful implementation of your business strategy plan and will allow you to make timely changes if things seem out of order.
Determine Your Financial Situation
For starting up a business, however big or small, some initial capital is required. There are a number of alternatives you can consider in order to raise initial capital. However, each alternative has its own pros and cons.
Many young entrepreneurs are willing to accept any source of equity to get started, without paying proper heed to repercussions. Be careful of what you are getting yourself into.
- If you are willing to go into partnership, you should be willing to give up a certain amount of control.
- A bank loan needs to be assessed in term of its cost that is; the interest you will be paying back.
- If you seek help from a venture capital investor, you cannot expect a large amount of investment from a single investor.
Both your organizational goals and your financial goals should be formulated considering the potential of the company you are starting. It is essential to determine the value of each business idea through industry analysis before selecting it.
Writing a Business Plan
Next, you need to write your business in a proper, formal manner. When writing a business plan to start a new business, there are a number of essential elements that need to be included in the document. A business plan should be specific and concise, not more than 50 pages. Here is a list of essential elements that make up a business plan:
Executive Summary – An executive summary is a review of your entire business plan including summaries of all other elements included in the plan. It is the most important communication tool when you are looking for financing and needs to be highly effective.
Company Overview – It is an account of an organization’s vitals like its origin, background, objectives, operations and ownership structure.
Products and Services – This section provides a detailed description of your products and services including their feature, lifecycle projections, their competitive advantage and the value they offer to consumers.
Market Analysis – this section outlines details of the industry in which you are operating and provides information about the market conditions and your competitors.
Operations and Management – Here you provide details of your management team, your organizational hierarchy, your human resources plan, your production plan, your business facilities and an overview of day-to-day operations.
Marketing Strategies – This section will highlight your target segment, your unique selling proposition (USP) and your competitive advantage. You also need to formulate a strategy about how you are planning to market your product to consumers.
Financial Projections – You need to provide a three to five year analysis of your financial needs. It includes a projection of your financial statements, your income and expenses reviews, market share analysis and your projected growth rate.
Appendix – It is an optional but advisable section which includes all the evidences required to support any claims you might have made in the plan.
Summary – How to Write a Small Business Plan
Now that you know how to make a small business plan, make a PLAN to START!. To help get started, the U.S. Small Business Administration (SBA) offers a free business plan template online. Once completed, review your plan several times, share it with trusted advisers, making sure you are starting with the right idea. Analyze the changes you think you want to make, carefully identify evaluation points throughout your plan and start looking for the right financing sources. If you plan right and keep checks on your plan, you are right on the path of success!