Many small businesses in the United States fail because they either do not have or do not follow a business plan.
Developing a business plan will enable you to examine your business in great detail: past, present, and future. Your plan will help give you a clear picture of each part of your business and how they all fit together.
After you write your business plan you will be certain of your long-term and short-term goals and policies. Short-term planning is especially important for areas that will need flexibility in response to changing situations. Your business plan, moreover, will give you control over unforeseen situations that are certain to arise. Impulsive business owners are easily knocked off track by tempting diversions because their energies become scattered. A business plan will discipline you to stay on track and succeed.
Before you begin to write your plan, it is important for you to know and understand the essentials of a business plan. A good business plan must:
- Be arranged appropriately, with a summary, table of contents, and chapters in the right order.
- Be the right length and have the right appearance: not too long, not too short, not too fancy, and not too plain.
- Clearly state your goals for the company—what you see your company accomplishing in the next three to seven years.
- Clearly explain why customers would benefit from using your product or service.
- Present in depth details of how you plan to market your product or service.
- Explain all the money to be spent in marketing your product or service.
- Detail the experience and skills of employees in your company and how each will help the company now and in the future.
- Have believable financial projections for your company. Your financial projections must be supported by detailed data. Assumptions must also be documented.
- Be concise and easy to explain. For example, if your business needs to borrow money at some point, you will have to present your written business plan and explain it in detail.
The following outline contains all the important parts of a business plan. But there is no model plan on which you can just fill in the blanks, because each one should be designed to fit the business in question. Ideally you should use a computer when writing your plan. If you don’t have a computer, write your plan in a loose-leaf notebook.
The parts of your business plan are as follows.
Cover Page
This should include the following elements:
- Company logo (if you have one).
- Company name, address, and phone number.
- Form of business. Is it a corporation, sole proprietorship, or partnership?
- Contact person’s name, phone number, and position in company.
Table of Contents
The Table of Contents should list the titles and page numbers of each of the main sections and subsections of the business plan.
The Plan Overview
The Plan Overview should only be two or three pages long. Even though it is the third section of your plan, it should be written last because it summarizes the essence of your business. In this overview:
- Write a brief outline and description of the company, describing the products or services you plan to sell and the basic idea or concept behind your business.
- Identify the market segment you are trying to reach and how you plan to reach it. In other words, describe the people to whom you expect to offer your product or service and how you expect to reach them. Describe why you think the marketplace needs your product or service at this time.
- Describe the unique selling features of your product or service. Explain why your product or service will succeed over others. Briefly discuss the competition in order to show the niche you will occupy in the marketplace.
- Present the overall strategy and direction of the company.
- Describe your goals for your company and where you see it in the next two or three years. Explain why you have these goals for your company and how you plan to reach them.
- Detail an overall financial picture of the company. Include a forecast of your sales and earnings.
- Describe the background and responsibilities of all employees in your company and explain why they are suited for their positions.
- Explain how much money the business will require to achieve its objectives and how it intends to use the profits from the business. When you describe how the business will use money always be specific. For example, say it will be used to pay salaries, build inventory, or buy equipment. Always give an exact amount, never a range.
Your Plan Overview is possibly the most important part of your business plan. Investment statistics show that if you are trying to borrow money for your business, only 10 percent of all business plans get read beyond the plan overview. Make your Plan Overview section effective, so people will keep reading.
