Whether you’re an aspiring entrepreneur or a small business owner looking to refine your strategy, read on to discover how to make a business plan for a small business that affirms to stand by you through thick and thin.
Yes, it’s true! Starting a small business is exciting, but navigating the murky waters may be challenging without a solid plan. Ensure you have a well-structured business plan, no matter how small or large your business may be.
In this blog, you will learn how to make a business plan for a small business by following these simple steps that can help you create a robust business plan.
1. Executive Summary
Your business plan’s executive summary is your chance to make a powerful first impression. If an investor wants to get a quick peek and make a snap judgment, an executive summary is the first to catch the attention.
In this “Executive Summary,” ensure to provide a brief but complete overview of your entire business plan and maintain the element of objectivity. It should also include key highlights such as your business’s mission statement, a brief description of your products or services, the demographics of your target market, and your financial goals. This section should be captivating and engaging enough to grab readers’ attention and make them want to dive deeper into your plan.
Tip
Keep the “Executive Summary” restricted to one or two pages, at the most, as it serves as a quick reference for potential investors or partners while making an informed decision.
2. Explain Your Company and Background
Start by giving readers a clear understanding of your company’s background. Include details like your company’s name, location, and legal structure (e.g., sole proprietorship, LLC, corporation).
Moreover, every company or idea is an offshoot of thought leadership, where you elaborate on the founders’ or people’s experience and credentials. Explain the story behind your business, including your motivations, values, and the problem you aim to solve. Highlight any unique features or qualifications that set your business apart.
Did You Know?
U.S. Small Business Administration states that there were approximately 31.7 million small businesses in the United States as of 2020, accounting for 99.9% of all U.S. businesses.
3. Express Your Business Goals
Setting clear and achievable business goals is vital for long-term success. These goals can encompass financial targets, market share, customer acquisition, product development, or any other relevant aspect of your business.
Outline both short-term and long-term objectives for your small business. Ensure the goals are specific, measurable, attainable, relevant, and time-bound (SMART). Short-term goals are those which are achieved in less than a year. At the same time, the long-term goals span over a period of 2, 5, or 10 years. Crafting goals is useful as it sets the direction of your business’s scalability.
Tip
Use statistics and market research to support your goal-setting process. For example, you might aim to capture 5% of your target market within the first or second year. When will you achieve economies of scale or breakeven point? Always avoid setting unrealistic targets, and also avoid sandbagging.
4. Define Your Products, Services, and Brand
In this section, discuss the product offering and how you want to position your brand. What is the unique value proposition of your brand, the people, process, and product, and what sets it apart from the rest of the competitors? Don’t forget to provide a comprehensive description of your products or services, stressing their unique features and benefits in a language that is easy for the target market to understand.
Explain how your offerings meet the needs and demands of your target audience. Consider including images, diagrams, or prototypes to illustrate your products or services visually. No matter how descriptive or textual your content is, having illustrations, infographics, or an explainer video will increase the bandwidth of your sales funnel.
5. Perform Your Market Research
One of the cornerstones of a successful business plan is to conduct market research and employ both qualitative and quantitative tools. Once you have analyzed your industry, target market, and competition, identify market trends, consumer preferences, and potential opportunities or threats.
Stat Attack
Statista projects that the global e-commerce market will be valued at $6.38 trillion by 2024, emphasizing the significance of online presence and digital marketing for businesses.
6. Frame Your Marketing and Sales Plan
Your business plan should detail how you intend to generate leads and retain customers. Describe your marketing strategies, including online and offline tactics, social media marketing, content creation, and advertising campaigns. This section is the roadmap to make your brand visible in the market. Explain your sales process, including pricing strategies, distribution channels, and sales projections.
Tip
Employ SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to effectively evaluate your marketing and sales strategies. Identifying the SWOTs of your business can help you prepare for any contingency when it comes to threats. Transform your weaknesses into strengths, as in every crisis lies an opportunity.
7. Perform a Business Financial Analysis
Now, it’s time to get down to the numbers—the core of any business proposal. Give an overview of your business’s financial health, including your current financial status, historical performance (if applicable), and any outstanding debts or obligations. Create a comprehensive financial statement, including income, balance sheets, and cash flow statements.
This analysis will help you and potential investors understand your business’s financial stability. And that’s not all! You must align your short-term and long-term goals to your financial statements. If you can provide income projections for the next 3, 5, or 10 years, it shows the investor and reader how meticulously you have labored scaling your business from small to large.
8. Make Financial Projections
In this section, project your future financial performance. Create realistic financial projections for the next three to five years based on your market research, business goals, and financial analysis. Include revenue forecasts, expense estimates, profit margins, and breakeven analysis. Your financial projections should reflect your business’s growth potential and the steps you’ll take to achieve your goals.
Did You Know?
According to the National Small Business Association, access to capital is a top concern for small business owners, with 73% indicating it as a major issue.
Conclusion
Creating a business plan for your small business is critical to success. It serves as a roadmap, guiding your decisions and keeping you on course. Remember that a well-structured business plan helps clarify your business vision and attracts potential investors, partners, and lenders.
Following the steps outlined above, you’ll be well-equipped to understand how to make a business plan for a small business covering all your essential aspects. Remember that your business plan is a living testament, and it’s of paramount importance to revisit and revise it as your business evolves and market conditions change.
Whether you’re seeking financing or simply striving for a clearer path forward, a well-executed business plan will be your trusted companion, helping you steer the challenges and seize the opportunities that come your way. So, roll up your sleeves, gather your data, and start your journey to entrepreneurial success. Your small business’s future awaits!