A business plan is a broad framework laid out for a new business or a future course of action for an existing one. A sound business plan shows the direction in which a small business is headed. It shows the path ahead, the resources being used for running the business, the focus of key areas and the opportunities that are going to be availed in the coming period of time.
A business plan is not meant for bankers and lenders alone who are being pursued for funding the business. It is even needed for reference in the business itself. Writing a good small business plan requires time, effort and skill in being able to elucidate details of the past, outline the present and visualize the future course of actions. All the researched information has to be listed in appropriate sections with a balance of rhetoric, optimism and facts that seem achievable.
The following steps need to be followed for writing a business plan for a small business:
- Collecting information from various sources is the most difficult part of writing a business plan. This has to be collected from all the divisions of the small business, however small the division may be.
- In the case of an existing business, the previous business plans reveal a pattern, format and information about the company history remains the same. For a new venture, the exercise has to begin from the scratch, and is more time-consuming.
- Combining the researched information and putting together a first draft that includes all the vital sections of a business plan.
- Writing the summary which will become the first introductory part of the business plan.
Sections of the business plan must include the following:
- Company information – past and present. This should give a brief history of the company, its mission, accomplishments and its goals and aims.
- Executive Summary-this may be placed before or after the company information, and is ideally finalized after completing the entire business plan.
- Products and services provided by the company- this must explain the product, the benefits it provides, its clientele, and its uses
- Market Analysis- This must detail the market structure for the product, the demand for it, competitors and their market share, the methods being adopted for communicating with them, for example, advertising plans and so on
- Strategy for business- this will include the future plan of action, how to achieve targets and the role of the management
- The organizational structure and the management team- the business plan can have a chart displaying the management hierarchy, however small it may be for a small business. The board of directors and the division they are responsible for, gives a fair idea about the division of responsibilities.
- Financial plan-this include all the money related aspect of the small business like the profit and loss statement in the previous year, the cash flow situation, an analysis of the break-even point, and projected earnings for the coming year, loans and outstanding payments.
The small business plan must be written out in a legible form. Page after page of descriptions make for a boring plan, while one with charts and diagrams, balance sheets and spreadsheets, bulleted highlights, will make for an easier and more interesting plan.