As a small business owner, you’re no stranger to goal setting. Bolster your business for an even better year by preparing a sound business plan to help you achieve greater success in 2023.
What Is a Business Plan?
A business plan lists your company’s objectives and the steps you’ll take to achieve your short- and long-term goals. It’s an invaluable tool you shouldn’t be without.
Why Should You Have One?
Having a business plan is crucial to preparing for the future. Indeed, according to a Harvard Business Review study, 16% of entrepreneurs who develop formal business plans are more likely to have viable companies.
Without question, a business plan can help you better target the right customers and identify the specific ways you’ll go about reaching them. A business plan can also prove invaluable when you need to access capital to keep your business going strong.
Your business plan is a way to document your company goals for the year in one place. It’s a benchmark you can use to track the progress of your business activities, by individual departments and as a whole. Refer back to this document when you consider how certain investments may (or may not) contribute to the goals you’ve set forth.
Assess the Market and Industry
While you likely have a broad view of your target customers, dig deeper to identify what’s going on in your market and industry and include this information in your business plan. Research your competitors and better pinpoint your ideal clientele.
Outline Your Marketing Plan
Your business plan is a place to document what promotional avenues and methods you’ll leverage to reach your target customers. It’s also where you can notate the budget you anticipate and can afford to spend. Refer back to this periodically to make sure you haven’t veered off course.
Access Financing and Attract Investors
Whether you’re a new or established business, there comes a time when you need a boost of funds to get your company where you want it to be. Lenders, investors and potential partners will want to look at your business plan to determine if it’s worthwhile to invest in your venture.
When Should You Develop a Business Plan?
You should develop a business plan when you have a vision of where you want to take your company and could benefit from plotting a map to guide you toward that destination. A business plan can prove beneficial whether you’re a business owner who’s been running your operation for years or a startup entrepreneur beginning a new venture.
With the start of a new year, there will undoubtedly be new opportunities you’ll want to take advantage of. Creating a business plan can help set your business in the right direction.
Keep in mind, as your business changes and grows, you’ll want to adjust accordingly.
What Information Should Be Included?
While business plans can vary in format, one thing’s for sure, lenders and investors will want to see several key details.
This information provides insight as to where your business is today, how it got there and where it’s heading in the future:
- Industry overview and forecasts
- Breakdown of customer segments
- Summary of the competition
- Current business and sales data
- Business forecasts for your company
- Business performance over the past 2 years
- Comparison of business performance to upcoming year’s projections
Ready to start planning? Get our Business Plan Checklist.
How Do You Write a Business Plan?
When you’re drafting your business plan, you’ll want to address these elements. Be sure to create a compelling and detailed summary of your efforts to date and your anticipated trajectory.
1. Executive Summary
Think of this section as a book summary. In a few paragraphs, briefly touch on what you will cover in each section of your business plan.
2. Company Overview
In this section, discuss your business history and the role of your company.
3. Mission and Goals
Clue investors, lenders and your team into why you started your business and where you see your business going.
4. Market and Competitive Analysis
In this section, detail what’s happening in your industry, including market fluctuations, historical performance and projections. Also, identify your competition. Who are you up against for a share of the market you’re in?
5. Operations and Management Plan
Explain how components of your company will contribute to your overall business plan objectives.
6. Products and Services
Use this section to introduce your business’s product or service offering in detail. What do you sell and what customer pain point(s) does it address?
7. Marketing and Sales Plan
Detail how your marketing and sales plan will help you reach the goals you’ve set for the year.
8. Financial Information
- Business performance
- Expected expenses
- Budget for anticipated expenses
- Yearly sales forecast and projections for next several years if possible
- Best-case projections
- Worst-case projections
Be sure your business plan projections can be supported by research or proven results.
9. Additional Supporting Documentation
Create an appendix for any relevant information not included elsewhere, such as charts, contracts, patents and permits.
When Should You Use a Business Plan?
A business plan is an informative tool to map out a company’s growth strategy. It’s also an important resource owners and management can reference before making major business decisions.
Additionally, it’s a critical document investors and lenders review when considering whether to provide a small business with capital for business development or expansion.
Keep in mind, a business plan is not meant to be a static document. Adjust it as needed to reflect the evolution of your business. Here’s to your success!