In a business world that is changing constantly, planning is key to preparing your business for what is to come. If you are considering becoming an entrepreneur or already are a small business owner, a business plan is a foundational document that can help establish the specific steps that will allow your business to develop and grow.
A business plan is a written document that projects three to five years ahead, outlining the path your business intends to take to grow your revenue. It is a way to think through and detail the key elements of how your business will run. It assists with the decision-making process as you move your business forward. Business plans often are required to obtain funding for your business or to bring on a new business partner.
There is no right or wrong way to write a business plan. The important thing is to pick a format that works best for you while meeting the needs of your business. It should be straightforward, and easy-to-read and understand. However, while a variety of formats exist, there are a few universal elements that all business plans need to include. When preparing your business plan, make sure that it contains, at a minimum, the following components:
Your executive summary should be the first thing to appear in your business plan. It should provide an overview of the rest of your plan and what it will cover. It should include the company’s mission statement along with a brief description of the products and services you plan to offer or currently offer. You also may want to include the reason for starting your company in addition to your experience working in the industry your company serves. Because the executive summary is meant to highlight the rest of your plan, you may want to wait and write this section until after you have a complete understanding of your entire plan.
This section of your business plan needs to include a comprehensive description of your business and its goals, products, and services, in addition to the customer base you want to target. You should include details explaining what sets your company apart from the competition giving your business the advantage it needs to succeed. This is accomplished by talking about your strengths and your work experience, and relating those to how you can offer solutions to the needs of your potential customers.
The purpose of this section is to research and identify your company’s primary target audience and where to find that audience. The goal is to allow you to be able to make key estimates as to how your product or service will perform with this audience. Types of items to include in this section include:
- Where your target market is located geographically
- The demographics of your target customers and their buying habits
- Where your target market spends most of its time, such as certain social media platforms or physical locations
- The prominent needs of your target market and how your products or services can meet those needs
- The primary issues or problems experienced by your target customers
Marketing and Sales Plan
This part of your business plan should describe how you plan to market and sell your products and services to your target customers. Since the needs of both your business and your customers will evolve and change, there is no single way to approach a marketing strategy. However, you want to detail how you will get your products and services in front of your target customers, why they should purchase from your company as opposed to your competition, and how you plan to attract and maintain customers.
Operating and Financial Description
Here, you will describe the legal structure of your business and how you plan to run your company. You should introduce the company’s leader (or leaders) along with their responsibilities within your business. You may want to include the resumes and CVs of these key employees and describe how they will contribute to the success of your business.
In the financial part of this section, state the amount of capital that your business will require for either startup or expansion and funding of operations. Provide a description of how you will use the funds. Include your financial goals and expectations for bringing in revenue and how your cash flow will allow you to pay back any money you have borrowed.
While knowing how to start a business plan can seem overwhelming, there are resources available that can make writing your business plan less intimidating and time-consuming. One that offers a wealth of information at no cost is the Small Business Administration (SBA). They have an online learning center that offers a business planning tool, along with courses on how to write a business plan, including sample plans and business plan templates. If you want a more hands-on approach, you can get assistance to help complete your business plan from an SBA counselor or mentor by contacting a local Small Business Development Center.
Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” As a blueprint for your business, a business plan helps your company to achieve its goals, thereby enhancing the chances of your business’ longevity and success.
Dana Rogers is controller for the National Wood Flooring Association (NWFA) in St. Louis. She can be reached at firstname.lastname@example.org.