You’ve heard it before, a small business plan is important because it’s a road-map for your organization to align their goals in the right direction. But why is it REALLY important?
Let’s just say you go to a bank for a loan, the first thing they’ll ask you is “Where is your business plan?” A business without a plan is like a teacher without a curriculum, a sports team without a game plan. Organizations that perform at the highest levels have some sort of formalized business plan, but that does not mean small businesses like yours does not need one. Your business plan is like your resume that you can provide to potential partnerships, suppliers, vendors, and investors that you’d like to do business with.
A business plan is defined as a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals. Read 5 Reasons A Small Business Plan Is Important
Your plan should conform to generally accepted guidelines regarding form and content.The Small Business Administration (SBA) also provides helpful resources and information when it comes to business plan writing.
Many wonder how to put together a business plan, essential components include:
- Executive Summary – a brief description of your statement of purpose and synopsis of the entire small business plan
- Company Summary – a description of the business, the industry, and your success factors
- Products or Services – often included in the company summary, a description of your products and/or services and their competitive advantage
- Market Strategy – based on diligent market analysis, define your market, the competition, projected market share, and your position, pricing, distribution, and promotion plans
- Strategy and Implementation Summary – describe how you will develop your product, market, and organization; include procedures, scheduling, costs, and risks
- Management Summary – lay out your organizational structure, personnel requirements, and costs of overhead
- Financial Plan – include the income statement, cash flow statement, and balance sheet
- Projections—your monthly income, cash flow and balance sheet for the first year, second year, and third year
Each section should include specific elements and address relevant questions that the people who read your plan will most likely ask. View a free business plan sample.
There is no single right approach to do business planning. The most ideal approach to do it is the way that best suits or serve your company. That is going to rely on your resources, capacity, engagement of your staff, and the objectives of your organization.