Most successful small businesses start with a unique idea or innovation, bringing a useful product or service to the marketplace. A distinctive product is a great place to begin, developing a commercial enterprise, but your venture won’t come together until a solid business plan takes shape.
Whether you’re in the early stages of an entrepreneurial endeavor, or reimagining an existing operation; a well-articulated business plan is a critical asset, helping to form a firm foundation, on which to build a better business.
Do I Really Need a Business Plan?
Upstart entrepreneurs may be tempted to operate without a traditional business plan. After all, markets are fluid, so plans often change before being carried-out. Though conditions do evolve, eschewing business planning can leave you unprepared to adapt when circumstances change. And without a viable business plan to attract investors, your self-employment dream may be short-lived.
In addition to securing capital for a startup, a comprehensive business plan can also be used to draw investors for your company’s growth and expansion. Fundraising is only one of the valuable functions your business plan serves; consider these added benefits of a well-crafted plan:
- Puts everyone on the same page – Your entrepreneurial vision has less of an impact if it isn’t widely shared among staff, investors, and even prospective customers. A sound business plan gathers all your business stakeholders on the same page, ensuring everyone is working to reach the same organizational goals.
- Provides a roadmap – Not only does a business plan send a consistent, unified message to your employees and outside partners, but the document also provides a blueprint, outlining the steps you’ll take to reach your professional objectives.
- Keeps you focused – With so many business concerns competing for your time and attention, a detailed business plan helps keep you focused on your most important priorities.
Your business plan serves as a reference, preserving valuable information about your operational mission, in a lasting record. As critical as the finished product may be, the process of creating a comprehensive business plan may be as beneficial as the document itself. The task forces you to look closely at every aspect of your business venture, identifying strategies for success. If you’re already doing business, crafting a midstream business plan provides an opportunity to pinpoint what’s working and change your approach in areas needing improvement.
If you’re not yet sold on the benefits of a well-conceived business plan, consider survey results from Palo Alto Software, quantifying the value of a plan. According to the data, entrepreneurs with business plans are more likely to get loans and generate investment capital than those without plans in place. The survey results also found commercial ventures with business plans to be twice as likely to grow as companies without comprehensive plans.
Features of a Good Business Plan
Each venture is unique, so a business plan takes on individual character, depending upon the business type and particulars of a distinct commercial operation. Despite varying specifics, a general structure can be followed creating business plans.
Comprehensive planning accounts for several key business elements, including these critical components:
Executive Summary – An executive summary captures the essence of your business, in a nutshell. The abbreviated explanation condenses important aspects of your business, highlighting key points in each area. The concise summary includes a brief overview of each of the business plan sections following it. For that reason, it may be easier to create an executive summary after other parts of your business plan have been drafted.
Business Description – This part of the business plan tells your story. It’s your opportunity to describe your business and exactly what it does. How did the concept emerge? What steps have you taken so far? What’s your mission statement? Your business description should answer these questions and also provide details about:
- Revenue sources
- Competitive advantages
- Growth projections
- Legal structure
Market Research – The more you know about your business climate, the better chance you have of finding prolonged commercial success. Thorough market analysis should be a top priority for any business owner, so it is also a prominent part of a comprehensive business plan. The market analysis should account for area trends, as well as industry cues shaping your niche. The market research section of your business plan should answer questions such as:
- Who is the competition?
- How does your business fit in to the market?
- What sets apart your product from others on the market?
- Who is your ideal customer?
Structure and Management – In addition to outlining the activities leading to your commercial success, your business plan should also include information about your company’s organization and management. Use this part of your plan to showcase unique expertise and qualifications of top team members.
Sales and Marketing – A complete business plan outlines sales and marketing strategies, including future promotional plans. This part of the plan addresses social media and web marketing, including optimization, as well as describing your pricing strategies and how they align with the rest of your business planning.
Financing Needs – Of particular importance to entrepreneurs using a business plan to court investors, the funding section should outline how much money your small business needs. The figure is often expressed as a range and including a timeline can help clarify your finance objectives to potential investors.
Financial Projections – Though projections are speculative, your financial forecast should draw upon market trends for accuracy, illustrating how your sales strategies will help you reach growth goals. For accurate analysis, interpreting your balance sheet, you may wish to involve accounting software capable of crunching income, loss, and cash flow statements.
Research shows crafting a comprehensive business plan directly contributes to commercial success. Whether you’re just getting started or tweaking an existing operation, use a well thought-out business plan to grow your business and attract capital investment.