Welcome to the second part of our “How to write a business plan for your small business” series. In the first part, we discussed how to prepare for business plan writing. Part 2 is entirely focused on the writing of your business plan.
Your business plan is a roadmap that will lead your small business to success. This document will project at least the next 3 years of your small business development. So you might as well write a strong business plan and use it as your business development guide.
First and foremost, you need to understand how to format your business plan document. You can choose to format your business plan sections in numbers or in Roman numerals I, II, III etc.
The introduction section of your business plan is always the Executive Summary. This is an overview of your small business. While it is the first section of your business plan, it is best that you write the executive summary as the last piece of the business plan puzzle. And why is that the case?
Because, you should outline the entire business plan in it. So basically, your business plan executive summary is a preview of the business as a whole and explains your main business goals as well as your company profile.
The company description in your business plan gives your investors information on what does your small business do, how your small business is different from your competitors and what market/s you’re going to serve with your business. Here, in short, you should also describe your target customers and how are you planning to win them over.
For instance, if you want to start a bakery, your description may sound something like:
“Jon Doe/Jane Doe’s bakery is a small and city-based business concentrated on selling nothing but a quality and fresh pastry in a relaxed ambient. Jon Doe/Jane Doe’s bakery sits near the town’s college and its main goal is to provide a delicious pastry and relaxed ambient for students, teachers, and employees where they can socialize and relax between work and studying. By concentrating on delicious food, good location, and relaxed ambient, Jon Doe/Jane Doe’s bakery will differentiate itself from the competition.”
Before launching your small business, it is crucial to research your industry, your target market, and your competitors. The main purpose of the Market Analysis section is to show the investors that you have the necessary knowledge of your target market where you want your small business to operate.
In the market analysis section, you need to cover your target market. You will need to answer some questions about your target market for example, who are your target customers? What are their needs? Their wishes? Are they of a certain age? Where do they live?
Make sure that you have a competitive analysis included in your business plan too. This is research that tells your investors who are your competitors and their position in the marketplace. Your competitors have their strengths and weaknesses and you should outline both of them in your competitive analysis.
It’s a highly important section of your business plan, as it tells your investors how your small business will capture a share of the market by taking advantage of competitor’s weaknesses.
Organizational structure and management
You need to have your organization structure already in place when you structure your business plan. Every business success depends highly on personnel. In the organizational structure and management section, you should include details about the business owner/s and the management of the company.
Here, you will talk about yours and your team expertise. You will talk about your decision-making process. If the staff and the managers are experienced with successes in their field, or they have a huge amount of education for the business, highlight that in this section.
What do you sell exactly? Is there a great feature that your product or service has? How will your target customers benefit from using your product or service? And of course, how is your product better from the competition?
In the product description section, you should list the product development cycle and tell investors if you’re still developing the product or you already filed a patent request. Every product development activity needs to be carefully noted.
For example, if you are opening a bakery, in the product description section you will include your menu and what product are you planning to make and sell in your bakery in detail. You can also incorporate a brief summary that shows why your pastry (products) are better than the competitors.
“Our bakery will provide our customers with several types of pastry including 5 different types of croissants, 10 different types of doughnuts and 5 different beverages. The variety of doughnuts that we offer will be of key advantage because our competitors currently are offering less or no variety.”
This is one of the crucial sections of your business plan, as it explains how you are planning to enter your market and thrive in it. Your marketing strategy shows your investors how you are going to manage your business growth, your communication with your customers and how you are planning to spread your products or services in the marketplace.
Define your sales strategy too. Outline what kind of sales techniques are you planning to use. Is it your sales team’s outbound marketing, digital inbound marketing, billboards, publications or social media marketing?
If you’re creating your business plan to get funding from investors, then you should definitely include a funding request in your business plan. Describe how much money you will need to achieve your business goals. How are you going to use the money exactly?
Your funding request should be supported by carefully calculated financial statements. In order for this to be perfect in your business plan, you might need help from professionals. The financial statements in your business plan need to incorporate projected financials, forecast statements, balance sheet/s, statements about the cash flow, profits and losses and budget for expenditure. Consequently, these financial documents are set in the Appendix of your business plan for small business, which will be discussed in part 3 of this series.
Having a business plan is important because it will help you set realistic goals for your startup. It will serve as an excellent tool to secure investor funding. It will also serve to establish the financial forecasts for your business and ROI (Return on Investment). To be a strong candidate for receiving investment funds, you must prove that you thoroughly understand every aspect of your business. And to prove that you know how to create profit from it.
As a first-time entrepreneur that has a great new idea, we advise you to not jump into business waters without a plan. There are important questions that need to answer first before you even start the company. The BizzBee team of experts is here for you to help you. Together we can answer all those questions and guide you through the process of successful business planning.