Writing a business plan is compulsory when you want to raise capitals or convince your banker. Many entrepreneurs wonder why making a business plan is imperative.
A business plan is a written document that comprehensively presents what a business is, the direction of its activities, and the strategies to achieve it. The business plan describes in concrete terms the financial objectives of the company and how it will position itself in the current market environment. Besides, a business plan is an essential tool for attracting capital. Today, we gonna discuss how to write a business plan for a small business.
Determine the type of business plan you will use.
All business plans describe the purpose and structure of the company and analyze the market. These plans also help to develop a cash flow forecast. There are some differences between these plans, which allow them to classify it into three broad categories.
- The mini business plan. This is a small document. It consists of less than ten pages. It helps identify your business’s potential interest, explore a concept further, or begin a more comprehensive document. It is an excellent beginning point.
- The work plan. It can also be viewed as the full version of a mini-plan. Its main objective is to describe exactly, without emphasizing aspects, how to start and run the business. Every business manager should consult this document frequently to make their company succeed and approaches its objectives.
- The presentation plan. It is intended for people other than the owners and managers of a business, i.e., potential investors or bankers. The presentation plan is identical to the work plan. However, it emphasizes a clean commercial presentation and appropriate terminology and business language. The work plan is designed for reference purposes for the head of a company. While the presentation plan must be written, taking into account the investors, bankers, and the population.
Understand the basic structure of a business plan.
No matter what model you want to write, you need to know the basics of a business plan.
- Your business idea is the first significant element of the business plan. It emphasizes company description, market share, products, and organizational and management structure.
- The study of the markets is the second important aspect of the business plan. Your company will operate in a particular market. It allows you to understand the demographics, preferences, and needs of your potential customers. Besides, it also helps to know the buying habits of your patrons.
- The third part is the financial analysis. If you’ve just started the business, you need to assess the cash flow forecast, capital expenditure, and balance sheet. Also, estimate when your business will not profit or lose.
Write a Business plan for a small business
1-Use the correct format.
Use the Roman numerals in order for each title (I, II, III, etc.)
The first section of the business plan is commonly called “Summary”. It gives a small overview of your business. It was usually written last because it encompasses all of the project information.
2- Describe the business in the first section.
Describe your company and identify customers’ needs to adjust your product or service. Briefly describe your main customers and your plan for success.
Suppose you want to open a small cafe. This is what your business description would look like: Smile Cafe in the city center is a small establishment that serves quality fresh coffee. It also serves freshly baked goods in a comfortable and relaxing environment. It is located close to the city’s famous campus and seeks to provide a pleasant environment for students, teachers, and employees working in the neighborhood to learn, meet or rest. Smile Cafe sets itself apart from its competition with its comfortable environment, location, high-quality products, and excellent customer service.
3-Write your market analysis.
This section aims to explore and demonstrate your knowledge of your business market.
Provide information on your target market. Answer the following questions: “Who are your consumers? What are their needs? How old are they? Where do they live? “
Remember to do a study of your immediate competitors. Note the strengths and weaknesses of your competitors, as well as the impact this could have on your business. Competitor analysis is a vital section as it will show how your business will gain market share by capitalizing on the weaknesses of other companies.
4-Describe the organizational and management structure.
In this section, make a detailed profile of your key personnel. It should include details about the business owner and the management team.
Discuss your team’s skills and the decision-making process. If the owner and managers have extensive qualifications in the field or a great track record, expose it.
Also include an organizational chart, if applicable.
5- Describe the products and services you offer.
What do you want to sell? What is the benefit of your service and your product? How will customers benefit from it? What sets your offers apart from those of your competitors?
Provide details on the lifespan of your products. Do you have a prototype, or are you planning to design one? Have you ever applied for a patent or copyright registration? Write down all the planned activities.
With the example described above, you must include details explaining the menu of all the products you offer. Before writing the menu, summarize what sets you apart from your competitors’ offerings. For example, you can write this: Smile cafe has five types of drinks (coffee, tea, juice, soda, hot chocolate). Our wide variety of drinks is a key business advantage, as other establishments do not offer a full range of products.
6- Develop your marketing strategy.
This section explains how you will enter the market, manage your growth, communicate with customers, and distribute your offerings.
Clearly explain your sales strategy. Would you need sales representatives? Would you use billboards, flyers, and social media?
7- Submit a funding request.
If you are thinking of using a business plan to raise funds, write a fundraising application. Include the amount needed to finance the launch and operation of your business. Also, add the detail of how the start-up capital will be used and indicate a date for receipt of your funding request.
To complete the funding request, provide your company’s financial statements.
Your financial statement should include all past financial data. (If you are an existing business. It must consist of the estimates of incoming and outgoing funds, balance sheet, and statement of cash flows, profit statements, losses, and expenditure budgets. Write monthly and quarterly financial reports for one year and financial statements for the following year. These documents should be in the appendix section of your business plan.
8- Write a summary.
The summary will serve as an introduction to the reader. State the business’s vision and mission and outline the products or services, your customers, and your goals. Note: Don’t forget to place this step at the very beginning of the document.