Before you set out on the road to business ownership, you'll likely want to have a strategy on daily operations and how it all folds in to generate revenue and profits.
It's been said that listing goals on paper gives you a better chance at success in any life pursuit and with that in mind, most entrepreneurs would do well to establish a formal small business plan. A business plan structure can be either simple or complex but essentially, it's a document that outlines financial objectives and how you plan to achieve them.
A basic business plan shouldn't take too much effort, so if it's just you carving out a niche as a self-employed contractor, putting some written thoughts together on marketing and finance, for instance, will help you get organized. On the other hand, if your looking for seed capital through investors or lenders, a more detailed and compelling new business plan will be an absolute must. Neither a bank nor an investor will be willing to provide funding for a business without first assessing your game plan and your numbers.
How Does a Business Plan Help Small Business Owners?
As a new business owner, you will wear many hats and while you may have a firm grip on sales and marketing, perhaps there's more to learn about small business accounting tips. If that's the case, you may want to take on a partner who has expertise on the numbers side or hire a bookkeeper to help manage invoices, bills, and basic tax reporting. In either circumstance, carefully developing a business plan will benefit you.
From one angle, making a business plan will help you woo a worthy partner. To be able to sway another individual to come aboard, they're going to want to know that your marketing plan— and the path toward profits— are viable. It would be difficult to convince someone to leave a job or another equity position in a company if your own small business plan is ill-conceived. On another front, you'll need to know if hiring an employee in any capacity is economically feasible.
A Basic Business Plan Outline
If you're wondering how to do a business plan, here's a look at some of the key elements you must include:
An investor or lender should be able to look at this section and get a good overall feel for who you are and what you do.
This will dive into a little more detail on your business: where you're located, how long you've been in business, and how you plan to gain traction in the market.
Market and Competitive Analysis
This section should give a synopsis of your particular market and how you feel you will get a leg up on existing competitors.
Business Structure and Ownership Information
This section should contain your corporate structure as well as the experience brought to the table by owners, partners or key employees.
Product and Services Outline
Here you should include a detailed description of what you plan to bring to the market, and how that product or service sets itself apart from the competition.
Sales and Marketing
The name of the game is generating revenue and a solid marketing strategy will exhibit how you will advertise a small business, and present investors or lenders with your customer acquisition plan.
Here's where banks will focus if you're looking to secure funding. You'll need to have a concrete projection of pricing, volume, etc. and how these amounts will cover expenses and debt service.
The Most Important Aspects of a Business Plan
If you're seeking the most effective method of building a business plan, you'll want to know where your focus should be.
Depending on your audience, the emphasis you place on segments of a business plan for small business will vary. For example, if you're bootstrapping a plumbing and heating business, a basic business plan might be used as a guiding light for your own organizational purposes. If you commit to pricing for service calls on the final draft of a small business plan, you should stick to that structure since wavering from job to job may thwart your financial projections and ultimately your livelihood.
A new business plan will also be the way potential creditors will view your standing a fledgling business. While the numbers are always important when seeking funding, a prudent observer will want to know what you can do to set yourself apart in a market full of plumbing contractors. In essence, what is your competitive advantage? If it involves a service-level agreement to provide emergency services within 24 hours, then that practice is a detail you undoubtedly want to highlight.
The Devil is Often in the Details of a Business Plan
The level of detail you should include in a small business plan is subjective, yet it may hinge on the familiarity a potential lender, investor or partner has with your line of work. In regard to contracting, it's highly probable that a commercial loan officer has dealt with a number of similar businesses. So, if the goal is to secure a small business loan, your financial health will have a lot more weight on approval than how you plan to advertise a small business (although that's important, too).
On the other hand, if you're a startup developing an app that performs an unprecedented task, you'll want to provide as much information as possible in pondering how to create a new business plan. An interactive demo would work wonders if you have a functioning model of the program in the prototype stage.
Pulling it All Together
Creating a business plan does little good if the execution isn't there. So, since you have a written guideline in place, it's prudent to stick to your new business plan.
You'll want to lay out goals and the time frames to reach those milestones. And be sure to retain an accountant for tax purposes and have a comprehensive plan in force to protect your company from any unforeseen circumstance that could have crippling financial consequences. Next Insurance supplies you with small business expertise of their own, and in-depth guidance and business insurance coverage is just a click away.