business plan folders

Business Plan Tips: Key Steps for Your Small Business

A business plan is important for all businesses to have, whether you are self-funding or looking for a loan.  Spending the time to come up with a business plan can help you locate any problems or weaknesses in your business idea early on.  It will give you a chance to plan strategies for potential encounters and show you possible opportunities that you may not have considered.  One main benefit of a business plan is when seeking financial help.  A strong business plan will help you convince partners, lenders, and others that you are serious about your business and can be used to encourage them to help you.

Executive Summary

The executive summary will be at the very front of your business plan to introduce the reader to your business.  It is also, however, the last part of the business plan that you should write.  The information from the rest of the business plan will help you here.  This should outline your entire business plan while remaining short and concise.

Business Plan

Your executive summary should include the following:

  • Your mission statement
  • A brief description of your products or services
  • An outline of your ownership structure
  • An outline of the employees you have or plan to have
  • Information about your location
  • A brief outline of your current finances
  • An estimate of how much money you need with an explanation or plans for what you intend to use it for

Company Description

The company description is a way for your partners, lenders, and others to get to know your business on a personal level.  A good way to write your company description is to use the 5 W’s: who, what, when, where, and why.  Each W may be applied to more than one area or subject, so make sure you outline your company description in a way that makes sense.

Your company description should answer the following questions (not necessarily in order):

  • Who are you? Who is your target customer?
  • What are you offering to your customers? What are your goals?
  • When will you implement your business plan? When do you plan on achieving your goals?
  • Where is your business located?
  • Why are you in business? Why would potential customers choose you?
  • How is your business structured? How are you going to achieve your goals?

Objective Statement

The objective statement defines your business goals and should include a strategy outlining how you are going to achieve them.  This is where you get to tell the reader why it is you need their help or support and what you expect to come of it.  If you are seeking a loan to launch a new product, describe the products you are planning to launch, what steps it is going to take to launch them, what the money will be used for in this process, and what benefits you expect from launching the new product (increase in sales, increase in repeat customers, etc.).

Business Plan Goals

Your objective statement should include the following:

  • Short- and long-term goals
  • Detailed plans to achieve the goals that you listed
  • A timeline of how long it should take you to meet your goals
  • What you need to meet these goals
  • How will meeting these goals help your business

Company and Management Summary

You’ve introduced the reader to your business in the company description, now it is time to introduce them to the key players within your business.  This section is useful in explaining your company and management structure.  It also provides a brief introduction to those that are already involved in the business, as well as descriptions for the job positions that you may be looking to hire.

Your company and management summary should answer the following questions:

  • What is the legal structure of your business? Why did you choose this legal structure?
  • What skills do your key employees possess and what skills would you look for in future employees?
  • Who runs your business? Who manages which business activities?
  • What are the positions you currently have in the business and what does each position do (job description)?  What new positions do you plan on creating in the business?

Products and Services

Business Plan Products The products and services part of your business plan is where you get to share all about your products and services.  This is the most exciting top for most business owners, as they are genuinely excited about what their business has to offer.  Here is where you get to sell your products and services on paper!

Your products and services outline should answer the following questions:

  • What are you selling or what do you plan to sell?
  • How does your product or service work?
  • What is your product life cycle?
  • How does your product or service differ from competitors?
  • Do you plan on seeking patents or copyrights?

Marketing and Sales Plans

The marketing and sales plan is one of the most crucial parts of your business plan.  Your product or service will only be successful if you are able to bring awareness and convince customers to purchase.  You want to address how you plan to build your customer base, increase sales, and gain repeat customers.  Your sales plan, or sales strategy, should clarify how you will sell your product or service to customers and what sales goals you have or plan on having.

Your marketing and sales plan should include the following information:

  • Who is your target audience?
  • What marketing strategies do you plan to use?
  • What marketing channels do you plan to use?
  • How will you sell to customers (online, in-stores, etc.)?
  • How do you plan on developing customer loyalty and repeat customers?
  • What is your marketing timeline and budget?
  • What are your ideal profit margins?

Financial Plan Including Analysis and Projections

This section of your business plan will be heavily scrutinized if you are intending to ask for a loan or investor support, so it is important to spend time here and make sure your figures are accurate.  Your financial plan will outline any plans you have in asking for money, what you need the money for, how you expect the money to perform, and more.  If you are already in business, you want to include an accurate financial analysis of your business.  Financial projections also help show how you intend to pay back a loan or how you will generate a return for investors.

Business Plan Finances

Your financial plan should include:

  • How much funding you need and how you are currently funding your business
  • Your plans for any secured funding
  • Profit-and-loss statements
  • Current assets and debts
  • A cash flow statement
  • Financial ratios to show financial health (Net Profit Margin, Current Ratio, Accounts Receivable Turnover Ratio, etc.)
  • Break-even point
  • Financial projections for at least three years
  • A business exit strategy

Business Plan Appendix

The appendix includes any additional documents needed to support your business plan.

The appendix may include:

  • Key employee resumes
  • Licenses and permits
  • Equipment leases
  • Patents
  • Contracts
  • Business credit history
  • Bank statements
  • Prior financial statements
  • Photos

Business Plan Tips

  • Be honest. Providing unrealistic estimates and plans will not fool partners, lenders, or others.  Starting off on the right foot and being honest about your estimates and plans will help you gain the support that you need.
  • Proofread your business plan. You don’t want to show up to a meeting with an investor and have them point out errors in spelling and grammar.  If you aren’t willing to spend the time to make sure your business plan is the best it can be, why would anyone expect you to spend the time on your business to make it the best it can be?
  • Revisit and revise your business plan. Make sure that you continuously update your business plan to keep it up to date.  We recommend revisiting your business plan at least once per year and revising it as needed.