As you research the best ways to start a small business, you’ll read a great deal about the importance of a business plan. You’re full of ideas and excited to get going, so how do you organize that energy into a cohesive strategy?
Harness that excitement and ambition before you apply for any loans; you’ll want to know what your first step will be before you take it. Put together a sturdy business plan to show potential lenders and investors you know your next steps.
What are those first steps, though? You’ve probably already read about the importance of a business plan, but the actual process of putting one together can be daunting. Read more thoroughly about how to complete a business plan and get inspired to create your own.
Summarize Your Ideas and Goals
The first page of your business plan is called the executive summary, and it should neatly and succinctly outline your goals. It should answer questions such as: what is the purpose of your business, why are you the best in your field, and how will you achieve the growth you need?
Think of this step like writing an introduction to an essay. Your executive summary is just that—a concise overview of exactly how you’ll execute your goals. Take some time with this page, and keep the summary limited to that single page.
Before you show your plan to anybody, make sure you’re impressing yourself. Put yourself in the shoes of a potential lender or investor; which elements will jump out to them? What are your most marketable skills and ideas? Your executive summary is like an elevator pitch. Keep it short, powerful, and to the point.
Once you’ve completed the rest of your plan, revisit this first page and revise if necessary. Some people find it easier to do this step last, but it does provide a preliminary sketch of the rest of your plan.
Describe Your Company
Now it’s time to go into more detail about your business itself. Include all necessary information, like your business’s name, contact details, and address of your physical location (if you have one).
Delve into the problems your business aims to solve. Identify gaps in the market and demonstrate how you plan to fill them. Which areas and demographics do you want to serve?
Highlight what makes your business different from the others in your niche. If you’re pioneering a niche of your own, explain how your company plans to serve the community and why your services are needed.
If you have experts on your team, especially in new technological fields, brag a little bit about their skills and how they will be an asset to your company. Design this section of your business plan to accentuate your strengths and advantages.
Include Market Research
Much like with academic papers, business plans don’t hold up without sources and hard data. Without researching the market you wish to join, your plan is merely a fantasy. If you want to secure new business startup funding, you’ll need to prove to potential lenders that you can reasonably compete with other businesses.
Before you start a business of any kind, you’ve got to know who your competitors are and how their businesses work. Keep an eye on recurring themes and trends in your field, and outline how you plan to work with those trends.
Make Marketing and Sales Plans
All business plans should answer questions of what, where, when, why, and how. Enter the how portion of your strategy and demonstrate the different ways you plan to grow your business.
You already know that the community needs your products and services. You’ve identified a niche to fill, and you’ve shown potential lenders why your business is important. However, without smart and dedicated implementation, your business will fizzle.
Identify and demonstrate how you will reach your community. What are your marketing tactics, and why are they the most effective? Once you’ve drawn potential customers towards your business, you’ll need a talented team to make that final sale. Sales strategies are crucial when first getting started; some businesses go for the hard sell, while others prefer a more friendly and relaxed approach. Choose strategies that fit the purpose of your business while enticing customers.
Create Financial Projections
One of the main purposes of your business plan is to convince a lender or investor to offer you startup capital. Above all, they want to know how you’ll use that money and why it will help your business flourish. Reassure lenders that you’ll easily pay off your loan, and convince investors that your plan will create a good return on their investment. And if a loan isn’t the thing for you, you can also go with our DreamSpark Plan—a 401K business financing option (also known as ROBS).
Lay out a five-year forecast for your business. For the first year, go on a month-by-month basis. Identify your budget and where all that money will go. If you’re a brand-new startup, it’s difficult to predict the future based on the past.
However, if you’ve been in business for a little while, you can provide financial statements that demonstrate the stability (or growth!) of your company. Provide your current ratio—the measurement of your liquid assets and your ability to pay off debts—and your net profit margin.
These pages of your business plan really stand out when you include graphs and charts that measure your financial growth. Visual aids are a powerful tool to demonstrate your worth and convince lenders to help you grow even more.
Add an Appendix
If you’ve got any other resources, like the resumes of your expert employees or any patents you’ve obtained, add them at the end. The more information you present to a lender or investor, the more opportunities you have to win them over.
Lenders will often ask for extra documents like receipts and tax forms, but they may not flow seamlessly into the rest of your plan. Add them to the appendix and, if necessary, create a table of contents for that section. Make your business plan accessible and easy to read without omitting any key elements.
Many how-to guides on starting your own business will tell you to make a business plan without going into too much detail. However, when you sit down to write out that plan, you want as much detail as possible. This step-by-step guide on how to complete a business plan will help you visualize your plan in a more concrete way.
