Did you know that December is National Write a Business Plan Month? Regardless of whether or not you learned of this important month, now is a great time to get that business plan developed. Just before the New Year, you have an opportunity to step back, refocus and think about where your business currently stands and where it might be heading in 2022.
There are numerous reasons why small businesses can benefit from having a solidly developed business plan. National writing a business plan month is as good a reason as any to create your project. In this article, we review some of the critical components of business plan creation.
Why Write a Business Plan?
Mainly if your small business is already up and running, you may be thinking to yourself, why do I even need a business plan? After all, business plans are just for companies first starting. Not the case. Any business during any phase of its life cycle can benefit from a business plan. Here are some of the key benefits:
• It allows you to outline key milestones…and then go after them. If you are steering your business randomly, with no immediate goals in sight, then things are probably not going to go as smoothly as you hope. With a business plan, you have an opportunity to focus on critical goals, important milestones that you wish to reach, and meaningful metrics.
• It’s not as hard as you might think. Entrepreneurs tend to shy away from business plan writing because they imagine the task to be quite complex. This isn’t the case. Beyond the numerous helpful resources available to help you create such a plan, it is a matter of just “putting down on paper” some of the nuts and bolts of your business.
• It can help you procure funding. Let’s say your credit history isn’t great, or you’ve only been in business for a year or so, it could be more difficult to get commercial financing. However, some lenders like to take a big picture approach; they will review multiple aspects of your company, including a business plan.
The Keys to Writing a Solid Business Plan
Now that we’ve seen a few of the reasons why you should have a business plan for your company, let’s go over some of the key components of your plan.
1) Executive Summary
This is usually the very first part of any business plan. Essentially it is a brief overview of the business. People reading your plan should want to continue to do so after this section. The Executive Summary should include general company information, mission/vision, product/service offering descriptions. You might also touch on why you are presenting the plan in the first place, i.e., getting funding for your company.
2) Products and Services
Here you will go into a more detailed analysis of the products/services you sell. So, for example, you will include any relevant patent or copyright information. You will also discuss how your product/service benefits your target customers. You might go into the reasons why your products offerings are superior to those already on the market. The key is to include all relevant details that highlight the actual value of what you are selling.
3) Market Analysis
In the market analysis section of your business plan, you will offer readers an overview of the industry and market. Here is where you definitely will need to do your research to demonstrate your expertise and insights regarding your market niche. Not only do you want to provide historical data on your market, but also, you need to be able to give projections as far as where the market is heading and what the future holds.
4) Sales Strategy
Beyond just understanding your particular market, you also need to show that you have a sales strategy moving forward for competing in this market. This section will offer details on how you might promote your company, attract customers, create pricing models; you will also talk about your employees and how you will run the company to generate the most sales possible.
5) Company Structure
In other words, what does the company look like? Here you provide details regarding the setup of the company, leadership, and the management team. You can include an actual chart that illustrates the structure of the business. You will also want to insert profiles of the members of your management team in this section of your business plan.
6) Financial Data
The financial data for the company should come toward the end of the business plan and should encompass all relevant financials—past, present, and future as well. The more you include balance sheets, income statements, P & L reports, the better picture you paint for prospective investors or lenders. You also need to provide financial forecasts for the business and keep any such estimates realistic.
A business plan is an essential document for any company. As the business grows and evolves, you will want to revisit your plan and adjust accordingly. Think of it as a vital blueprint to help the company along.
First Union Lending is Here to Help
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