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How To Write a Small Business Business Plan

Updated on September 7, 2010

Introduction

Whether you’re just starting out in your business or are wanting to expand into new territory, eventually you’re going to have to write up a business plan in order to try and convince investors or lenders that their money is safe with you. The key to a successful business plan is to show others that you know exactly what you’re doing and that you have a definite plan in effect to make yourself (and them) money. The only problem with this is that it can take a lot of planning to make money, and unless you’re able to convince them that you’ve done the legwork and have everything worked out then you might not get the chance to prove that your plan will work.

That’s why it’s vital that you draft a strong business plan that doesn’t leave out any of the important details that potential investors, lenders, or business partners might be looking for. Before they invest their money in your business, they might have some questions to ask… but the more questions that they have to ask simply to get basic information, the less likely they’re going to be to give you the money that you need. While business plans can contain a lot of information and are often personalized to your specific business, there are several things that you should make sure are included in one form or another.

Some people may use a business plan template, and there isnothing wrong wit getting a business plan for free in the form of a template and filling in the blanks - if you know the business plan sample template is a good one.

Copyright - Carmen Martínez Banús
Copyright - Carmen Martínez Banús

Executive Summary

The executive summary is somewhat interesting, as it should be the first part of your business plan but it should also be the portion that’s written last. This summary should be 1-2 pages in length, and should give an overview of your business plan as a whole. This is why it needs to be written after everything else… it gives readers of your business plan an idea of everything else that they’re going to see.There is no reason to miss out sections like this because your business plan is for a small business! Business plans should be comprehensive whether you are a big company or not.

Industry Analysis

The industry analysis is similar to your executive summary in that it’s an overview, but instead of previewing the details of your business plan it gives a broad view of the industry that your business is in. It should include basic details such as major industry competition, industry-wide trends that are in effect, and any specific opportunities in the industry that your business will be able to take advantage of.

Market Analysis

Much like the industry analysis, the market analysis gives readers an overview of the market that you will be competing in directly. This should be somewhat more detailed than the industry analysis, as it deals with the specific competition, challenges, trends, and opportunities that your business is going to have in the specific region and locale that you will be doing business in. The information in your market analysis shows potential investors and lenders what factors will be directly affecting your business.

Business Description

After all of the overviews and analysis, you’re finally getting into the meat of your business plan. The business description should contain specific information about your business, including how long it’s been in operation (or if it’s still in the process of starting up), who owns the business, the legal structure and organization of it, what the business currently needs, and the various short-term and long-term goals that you have for your business. This section can be more difficult to write than you might think… you want to make your business look as good as possible, but you need to make sure that all of the information that you present is 100% accurate.

Copyright - Dominik Gwarek, Poland
Copyright - Dominik Gwarek, Poland

Competition

Once you’ve described your business, it’s time to describe everyone else’s. Using your market analysis as a starting point, write out information about all of the competition that you will face in your area as well as any major national or international competition that might affect your business. You’re going to want to show to the best of your ability all of the strengths and weaknesses that your competitors have, but you can also respond to this by showing how the strengths of your business will come through and overcome your various competitors. By the time readers finish with this section they should have the feeling that you’ve got everything under control and that you’ve planned for direct competition with each competitor.

Marketing Plan

Marketing is important to any business… it’s how you draw in new customers and keep the ones that you already have. In your marketing plan, you should show potential investors and lenders the strategies that you have for getting the name of your business out to potential clients as well as showcasing any clients that you already have. You need to establish exactly what draw your business is going to have to its customers, and elaborate on items like your pricing plan, any distribution plans that you might have, promotional strategies that you’ve already developed, and any other details which will pertain specifically to the marketing of your business. While you want to make sure that potential investors are confident that you know exactly how you’re going to market your business, you need to remember that many of them may not be familiar with your specific industry; avoid any overly-technical terms or industry jargon where possible, so as to make sure that anyone who reads your business plan will be able to understand exactly what you’re talking about when it comes to your marketing plans.

Operations

This section may be very important to your business plan if you are in the manufacturing industry, but if you aren’t then it most likely isn’t going to be very detailed at all. The operations section of your business plan should include all information on the equipment that your business uses (or will use), the costs of running that equipment, any specific manufacturing or operational information, and any foreseeable maintenance that your equipment may need in the future. This section should also include the specific information on how your business is organized and how it runs on a day-to-day basis, as well as specifics on any departments that your business might have and any plans for future expansion that you might have in place already.

Organization

An important section for showing that your business is well-organized and ready to succeed, you will need to include organizational charts that specify all of the departments of your business as well as all of the pertinent details about your hiring and termination practices. Backgrounds on the business owners and high-level management should be included in this section as well, including any awards or recognition that they have received either in their career or in the time that they’ve been dealing with your business specifically. Employee benefits and specific incentive packages can be included within this section as well, though this information will likely not be required by most investors.

Copyright - spekulator at www.sxc.hu
Copyright - spekulator at www.sxc.hu

Funding Needs

This is where you really get to the heart of the matter… you need to be very specific about exactly how much money you need for your business and what it’s going to be used for. Since most of the people who will be reading your business plan are going to be people who are considering giving your business money, this is going to be one of the sections that receives the most scrutiny and this will need to be the most well-written and specific. Make sure that there aren’t any unnecessary expenses in your plan and that you’re asking for pretty much the bare minimum that you can get by with and still guarantee that your plans will go of the way that you’ve described them elsewhere in your business plan. Take the time to go into detail so that you can show potential investors or lenders exactly why your plan is the best way to spend the money that you’re asking for; they’re going to want to make sure that they’re getting the best return on their investment, so you’re going to need to show them that there’s no better way to spend their money than what you’ve laid out before them.

Financial Statements

This is where you get to show that your business is capable of making a profit for both itself and its investors. If your business has already been in operation for a while, then you need to include your balance sheets and income statements for the past several years as well as projections of income for the next 5 years (broken up into monthly increments for the first 3 years, then quarterly increments for the final 2.) Make sure that your projections cover both sales and cash flow estimations, taking into account any major expenses that may come up during that time.

Appendix

The final section of your business plan should be an appendix that contains a lot of supplemental information which will help investors and lenders to make a decision if they’re still undecided. This information should include recent statistics showing shifts in the local market as a whole, the performance record of your business (provided that it’s not a start-up), references who can attest to both the sound nature of the business and the success of its management and organizers, and any other information that might be useful to your potential investors. You might also want to include expanded versions of some of the information provided in previous sections, giving readers an expanded viewpoint on some of the information that they’re already familiar with.

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Comments

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    • businessesforsale profile image

      businessesforsale 7 years ago from Sydney, Australia

      I would have to say that you have covered the most important factors to consider. Great hub!

    • BrainSpace profile image

      BrainSpace 8 years ago from North Carolina

      This is a very well written article. Your information was very "on point". This is exactly what I learned in my Entrepreneurship class.

    • businessprogramme profile image

      businessprogramme 8 years ago

      Good article. Informative and very detailed. Can help lots out there, for sure. :)

    • linjingjing profile image

      linjingjing 9 years ago

      HOWTOWRITESMALLBUSINESSPLAN

      Good article

    • Julie-Ann Amos profile image
      Author

      Julie-Ann Amos 9 years ago from Gloucestershire, UK

      thanks - I'll be sure to check out your hub!

    • bkoadmin profile image

      bkoadmin 9 years ago from California

      Your hub contains very specific details for writing a successful business plan. I'm going to add it to mine. Thanks for sharing the info.

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