Every Small Business Needs a Business Plan: Establish Goals and How to Reach Them with a Detailed Business Plan
No matter what the business, product or service, a business plan is essential for any small business. A business plan helps determine strengths, weaknesses, competitive edge, growth objectives and financing. Every small business needs a plan.
Start with a Business Plan Summary
In two to three sentences, determine what the small business is about, what it offers and to whom. The summary is essentially the 30-second elevator speech. The summary will help determine exactly what the business is and isn’t.
Small Business Plan — Business Profile
The business profile includes all of the business basics, such as the business name, how the business is organized (corporation, limited liability corporation (LLC), sole proprietorship, etc.), who the business owners are, and outlines the product or services.
Small Business Plan — Product/Service Overview
What are the product or service offerings? Provide a detailed description of how the product or service helps customers. What sets it apart from similar products or services? Having a clear understanding of the offering will make it easier to sell and market. In the overview, include the cost. If it’s a product, what does it cost to produce the product? Be sure to include the wholesale cost (just double the production cost) and the retail cost (just double the wholesale cost) as well.
Small Business Plan – SWOT Analysis
A SWOT analysis helps business owners determine a small business’ strengths and weaknesses, which may include how the business is run (e.g., online versus brick and mortar) or the product and service offerings. A detailed SWOT analysis will help identify strengths (S), weaknesses (W), opportunities (O) and threats (T). Create a grid with four quadrants. Each SWOT item gets its own box. Brainstorm all of the possible strengths, weaknesses, opportunities and threats the business may have. Then begin to think about how to overcome the weaknesses and threats while leveraging the strengths and opportunities.
Who is the Business’ Ideal Customer?
Small business owners should determine what their customer market looks like, including demographics. Begin to think about what a typical customer of the business looks like and acts like. For example, the market could be for 40-something stay-at-home moms who like to shop at malls. Another example is avid male runners, aged 40-60 who spend $1,000+ per year on sports equipment that live in the Northeast. The more specific the customer market, the more precisely a business can sell and market to those individuals.
Determine Competitors With a Market Analysis
Who are the business’ key competitors? How are the competitions’ offerings different? As business owners identify their ideal customer, simultaneously, identifying competitors will help uncover strengths and weaknesses — both in the business and the competition.
The market analysis should also include geographies the business will target. Is it a global business, domestic or geography specific?
Small Business Plan – Operations
The operating plan is just that, how the small business will operate on a daily basis, and it should include details such as hours of operation, staff members (current and projected), the business’ organizational structure and how it may change as the business grows.
Are there any core processes that must be followed in order for the business to be successful? Those would also be included in the operating plan.
Small Business Plan — Finances
The next step is developing a financial plan. How will the business be funded, and how will revenue be generated? It’s important to consider all of the expenses involved, from a website and employee salaries, to inventory and rent. Create a budget of all of the necessary expenses to get the business up and running, as well as expenses that could be incurred down the road (i.e., cost of expanding the business).
The financial plan should also outline how the business will be financed. Is there cash available from a savings account? Will there be investors? Will credit cards be used to finance the business? Will a business loan be obtained? Obviously, cash is king and the most minimal expenses are the best way to start a business, but that isn’t always an option.
Small Business Plan Revisions
A small business plan isn’t set in stone. Things may change and the business plan may evolve over the times. The most important thing is to have a plan. It’s difficult to get from point A to point B without a map. Business is the same way. Understanding the purpose of the business, its key differentiators and how it will operate are essential to its success.
Get started on a small business plan today!