A business plan is essential for every business and contains pertinent information about your business, such as its mission and objectives, sales and marketing plans, financial goals, as well as profit and loss statements. Regardless of industry, all businesses start with an idea, and a business plan turns that idea into a viable and sustainable plan of action.
Your business plan is more than just an important piece of documentation. It serves as a tool to help convince prospective investors, a management guide to identify goals and overcome obstacles, an operational plan to strategically develop corporate solutions, and a roadmap to guide your business in the right direction. Without a well-constructed business plan, your venture might not be ready for all the challenges that lie ahead.
You want to know how to come up with a small business plan fit for micro to medium entrepreneurs. What are the things to remember and what are the things to avoid? Check out these tips and tricks below.
Speak to your audience
Your business plan won’t be presented to just one person. From the management team to bankers and capitalists, there are several diverse groups of readers who will turn its pages. Each group has its own interest, profession, principle, and view regarding your business concept. Studying the needs and wants of your audience will prepare you for questions and clarifications that might come up along the way.
With specific audiences, there is also an opportunity for customization; however, keep in mind that customized business plans should be used with great caution. You don’t want to present a proposal far from its original content just because you’re adapting it based on the audience. Emphasize the information and keep alterations along with modifications as minimal as possible without distorting its main purpose.
- For investors, concentrate on the summary and explanation of your business idea.
- When talking to bankers, focus on your balance sheet and cash flow statement.
- Managers will use this to review your objectives, market condition, and profitability.
Use a template or existing document for reference
Writing a small business plan isn’t easy. It requires a great amount of knowledge and paramount expertise in certain areas that need to be highlighted. There are tons of business plan templates out there that you can use as a guide for creating your own. However, the extent of similarity should only be with regard to the structure of your trade, since every business has its own share of unique frameworks and complexities.
All business plans follow a certain format, depending on the nature of your business. Generally, a business plan contains seven sections, namely the executive summary, business description, market strategies, competitive analysis, design and development plan, operations and management plan, and financial factors. Here are some tips you need to consider:
- Each section should be carefully drafted and analyzed in relation to your business.
- You can use specialized software solutions that deal with writing a business plan.
- Gather all the available information you’ll need from data to statistics and resources.
Provide a market solution
Before writing your business plan for small business, determine first if you actually have a market. The industry is not without competition, and there are likely many businesses like yours that already exist. Almost half of businesses fail due to the lack of market need, and, as the owner, it is your main responsibility to explore the market. Is there a need for your business to exist? Can you win market share?
First, you must define a problem in the industry. This can be a gap, a missing component, a wrongdoing etc. that your business can actually solve. Then, find a solution to that problem and determine if people are willing to pay to address the issue. Business planning isn’t all about objectives and financial forecast, it’s partly to identify and clearly articulate a consumer need.
- Is the problem meaningful or valuable? Will people care about what you’re doing?
- Who would benefit from the solution? Will it improve people’s lives?
- Is the solution significant enough for them to shell out financially?
Support your story with stats
When writing a small business plan, it’s easy to come up with flowery adjectives and believable stories. But behind your motivational goals and lucrative opportunities, there should be a market analysis including statistical data to support your claims. Small businesses find gold in facts and figures to understand the competition, and knowing your industry better will help prepare you for any challenges and obstacles.
Extensive data collection is required to build an accurate market analysis, but only the most important data and statistical information should be included in the plan. The basics of market analysis should contain the following subsections: industry outlook, target market, market research results, lead time, and competitive analysis.
- Conduct thorough market research and explore all potential materials.
- Source from reliable sources such as government and recognized organizations.
- Relate everything you’ve gathered to the type of business you are considering.
Analyze your competition, and do it better
Your plan for your small business wouldn’t be complete without doing a competitive analysis. Competition is everywhere, and even if you have unique products and services, someone will likely offer the same in a matter of days. Determining the strengths, weaknesses, and key factors of your competitors will give you an edge towards business growth and survival. Also, analyzing your competitive advantages is essential if you’re considering crowdfunding for your business.
The first thing you need to do is to profile your current competitors. Search both local and online businesses that directly share the market with you. Recognize their objectives and the marketing strategy they use, evaluate their materials, and visit their locations if need be. Other things you need to consider include:
- Your potential competitors including primary, secondary, and direct challengers.
- Determine the opportunities to gain access and grab the market share.
- Don’t assume that you’ll do it better, identify your risks and adapt to changes to win the game.