How to write a business plan for a small business?

Business Plan For Small Business

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Posted: 7/19/11 01:10 PM

Contributed By: Sandeep Bansal FRIEND HIM ON Twitter | LinkedIn | Facebook

Small Business Loan Central -- how to write a business plan for a small business? How to write a small business plan It is always better to have a road-map for your business before you actually get down to getting things moving and executing real operations. That’s where a well written business plan comes in, if done correctly, it solves a very important purpose – it gives vision to your action. A business plan explains your business and identifies your goals. It helps you to allocate resources, handle business contingencies, and make the right decisions.

It contains specific information about the state of your business and helps you to keep track of the money that you owe and how you will repay it. A business plan also acts as a quick start-up guide to help your business associates (like suppliers, venture capitalists etc.) know more about your company. You could consider it as a resume for you business.

These are some of the basic components that every business plan must consist of:

Executive Summary - This section tells your reader where your company is and where you want to take it. It's the first thing your readers see. It should ideally contain your mission statement, date the business was started in, number of employees and member details of the management team, location of business and branches, products manufactured and/or services rendered, information about investors, summary of company’s growth backed by financial data, a brief on management’s future plan.

Market Analysis -The market analysis section should illustrate your knowledge about the particular industry your business is in. The information gathered in this section should reflect the size of the primary target market, distinguishing characteristics of the primary target market, your plan on how on much market share you wish to gain and the reasons why you think you will be able to, your pricing and gross revenue/net profit targets, your media and advertising plan to reach the target audience, trends and potential game changers in your market and purchasing cycle of your potential customers.

Company Description– Without going into excessive details, this section should provide a brief overview of how all the components of your business fall together. The description should include the nature of your business and the factors that you believe will make your business a success.

Organization & Management – This section should include details about the organizational structure of your company and detailed information about the management team. Details about the ownership of the company, the qualifications of the board of directors, the organizational structure of the company and the profiles of the management team must be included. Management profiles should contain details such as – name, position (include brief position description along with primary duties), primary responsibilities and authority, education, unique experience and skills, prior employment, special skills, past track record, industry recognition, community involvement and number of years with company.

Marketing & Sales Management – This section should be dedicated to elaborating your marketing and sales strategy. There are no hard and fast rules or set theories that you can or should follow while making a marketing or sales strategy; it depends on things like which industry you are in and who your potential customers are. But a step-by-step approach to marketing strategy should consist of – market penetration strategy, strategy for growth, channels of distribution strategy and communication strategy. Your overall sales strategy should include a sales force strategy and your sales activity.

Service or Product Line – This is the place where you list out the products that you offer and the services that you provide and the potential benefits to your customers. Be subjective and not objective. For example, instead of saying that “we have 11 flavors of ice cream”, list our which flavors with a brief description of each. Identify a problem that consumers in your target market face and then try to fill the gap. Besides a detailed description of your products and services, this section should also include information about the product life cycle, any copyright/patent/trade secret information that may be relevant and reaserch & development activities being conducted or are planned

Funding Request – In this section, you will request the amount of funding that you need to either start or expand your business, if any. It helps to include best case and worst case scenarios for funding requirements, but you must back these requests up with financial data that supports it. Other things to include in this section are: planned allocation of funds received, the amount of funds currently requested, expected funding requirement over the next 5 years, and any long-range financial strategies that you are planning that would have any type of impact on your funding request.

Financials – The reason this step is kept for the last is that you need to determine your business objectives and target market before estimating the projected financials. Within this, you should be including (1) Historical financial data and (2) Prospective financial data. The historical data should ideally have records for at least the last 3 years and should contain your company's income statements, balance sheets, and cash flow statements for each year you have been in business. The prospective financial data should contain forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets for 2-5 years. The first year data should ideally be broken down into monthly or quarterly projections. This is a brief overview of what a business plan should consist of without going into specific details like how the formatting should be and components like Table of Contents and Appendix are assumed by default. If you need a template to base your business plan on, there are many available free of cost on the internet. There are also many softwares available that assist you in making a business plan. The process just got simpler.

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