10 Steps to an excellent Small Business Plan
Small Business Plans for Success
10 Steps to an Excellent Small Business Plan
A small business plan is basically the document that can help you, whether you are a current or potential small business owner, to guide the objectives of the business and the plan of action to reach those objectives. Unfortunately most people use them to obtain funding or loans to grow or start a business, a bank or financier will want you to have a good plan before they consider whether they will lend you money or not,then it will sit on the bookshelf and collect dust.
There are many great benefits to having a good small business plan (that is perhaps not so big as one that you would present to an investor), that you refer to on a weekly or monthly basis when planning your actions to grow your business in the way that you had hoped to. The simpler this plan is (3-4 pages max) is a good place to start and is not so overwhelming.
For your investors though it is extremely important to have a good solid plan when applying for your smallbiz loan or finance through a private investor. Some things that you might use it regularly for including whether or when to take on new staff, monitoring your finances or budgeting for things like marketing or employing new staff.
10 Steps to an Excellent Small Business Plan
1. What are product and services to be offered: - This is the first step to starting a small business and you need to be able to define the products and/or services that you are going to offer to your customers. Defining this will help the lender define if you have really thought about how you will make the business viable. What is your niche? What's your point of difference? What is the main product or service that you have that is different to your competitors? There may be a number of products that you add to or are in addition to your key product or service but the focus here is on what you will offer to make you stand out.
2. Awareness of Market and Your Competition: - Before starting a small business, you need to be aware of who your competitors are in the market and of what it is that you can do that they are not already doing. What makes your product or service different to your competitors? Why would they choose you over someone else? Your investors want to know that you are all over this and they can usually read between the lines. They have seen many business plans before and there are very simple things that can trip you up if you are not careful. Knowing who your competitors are and what you bring that is different is very important to an investor and if they don't see this in your plan it is likely that you will be rejected.
3. Describing all the tasks that need to be completed to run the business effectively: - This step involves describing the operational tasks that need to be completed to run the business well prior to starting your small business including setting appointments, bookkeeping, marketing, operations, etc, etc. You can have the best ideas in the world but if it is all pie in the sky and you don't know how to implement it on the ground that it is unlikely that your business will succeed and investors understand this. You need to know exactly what you will be offering and how much work that will be involved in moving it forward. If you are not clear about this in your business plan then the investor will not be so confident in your ability to get the job done.
4. What do you need to do to start the business: - This is defining what it is you need to do and how much it will cost you to set up the business or the steps you need to take to get the business to the next level that you are proposing. This could include things like the location, inventory and what type of manpower is required. There is a lot of work involved in starting or growing a small business and it is tricky to find the right balance between the extra work involved and what money and manpower will be required at the right time. You need to be as clear as possible about what you will need, the estimated costs of those needs and the estimate timeline for completing that work.
5. Understanding the legalities of running or growing the business: - This step is all about the laws and the regulations that need to be complied with before the business is started or can grow. Have you spoken to the local or state or other authorities about the legalities of your business and do you understand what you need to do? Have you spoken to your local council about extensions or additional services at your premises, if you are planning on employing staff have you thought about and spoken to the appropriate authorities to ensure that you have crossed all your t's and dotted your i's in regards to employing staff? This needs to be clear to an investor that you have thought this all out and know what you are doing. If you don't have this right it can bring your whole business down and then the investor will lose out.
6. Analysis of the Small Business Insurance: - This step involves thinking about what kind of risks a business can have and finding out about the small business insurance that is specific to you to protect your business and the interested parties from those risks. Speaking to a insurance broker would be your best option for this. They will be able to find out the best insurances for your industry that you need to protect yourself and your investors if something was to go wrong
7. Selection of Business Organisation: - This step involves selecting the best way to operate your small business - are you going to operate the business as a company, a partnership or as a sole trader. There are a number of disadvantages and advantages for each of the different options and you need to outline how you have determined the best option for you business. To find out more about the best option for you, you are best to speak to an accountant or solicitor that knows your personal circumstances. This is not something that you should make up or take advise from your neighbour. They don't know your circumstances.
8. Financial Plan outlining all estimated potential sales and costs: - This step involves calculating the potential budgeted sales and costs and how you determined those amounts. This can be difficult to estimate but it is essential that you get this as close as possible to actual as you can. Your investors are savvy and they know the standard/average numbers and they will know if something is way off. You need to be realistic about your projections but you need to include as much in there as you can. When you are new or growing your sales can come later than you would think so I would underestimate your sales and overestimate expenses as there is always something unexpected popping up in small business!
9. Considering Cash Flow and Funding Options: - This step involves preparing a cash flow statement so that you can give the lender or financier an idea of the changes in cash flow and how you will cover those ups and downs. Based on your financial projects above how will your business be influenced by your cash flow. There will be times (different seasons) that incoming cash is lower than expenses and you need to prepare for this. It is important that you show your financier that you are projected and thought about this as this demonstrates an ability to manage your cash flow which is totally erratic in business.
10. Valuing Your Family’s Support: - This step involves communicating with your family members and keeping them involved in the process so that they understand when you need extra support. There are going to be times when you are working in your business 12, 14 or even 20 hours a day to get it off the ground or take it to the next level. You need to be sure that you keep your family involved and updated so that they can support you as much as possible during this time.
After owning and managing small to medium businesses for over 18 years Tammy Love is Ms Small Biz -- she has a love/hate relationship with business! She believes that it is really exciting to grow something and provide the best possible service/product for customers but yet it can also be tiring, hard and down right exhausting! She knows that it can also be lonely being a business owner. She is using her website | Facebook page and Twitter to help others achieve their dream of starting or getting through the beast that is small business!