If you are going to ask investors or lenders to help finance your business, you need to know what to include in a small business plan. A good plan will follow a general format, so busy executives can quickly assess whether your plan merits their attention. Also, you do not want them to miss an important point that might make the determination whether they write you a check.
Every good business plan has eight key elements. So, unless this is your area of expertise, you will want to hire someone to pen your plan and include:
1. The Executive Summary
2. A Description of the Company3. The Product or Service Overview
4. Target Market
5. Competition
6. Marketing Plan
7. Management
8. Strategic Alliances
9. Operations and Facilities
10. Risks
11. Capital and Return on Investments
12. Financial Expectations
13. Appendices
If your business plan is missing any of these key features, it will adversely affect your chances of getting the financial support to make your business successful. As mundane and difficult as getting all the reports and papers in order may be it will definitely be worth the trouble to get it right.
The Executive Summary
The executive summary is the most important part of your business plan. If you can get the attention of investors and lenders in the summary, you have won half the battle. In fishing terms, the summary is the hook. The rest of the plan is simply reeling them in, so the financing will be forthcoming.
So, you can see why a poorly written summary can also slam financial doors, before you have a chance to say a word. It will not matter how well your business ideas are expressed in the other sections.
A Description of the Company
With enthusiasm, briefly explain what your company is all about. Why did you start the venture? What is your mission statement? You want to give the executives considering your plan enough information to retain their interest. But, do not drown them in wordiness. Make each sentence count; and then move on to the next section.
The Product or Service Overview
Of course, you will need to describe your product or service. Do not embellish your description and try to be cute or clever. Stick to the points of what your customers need and why your product or service will fill that need. In other words, why will people purchase your product or service? Finally, what do you need to bring this much needed item to the public?
Target Market
Be honest. Explain who will buy your product or service. Do not try to exaggerate marketing potential. You will come across as unrealistic and ill-prepared to make this business venture a success. For example, you are not going to sell unicycles to a geriatric community. Although an extremely silly example, you can see why knowing your target market is so important.
Competition
A business plan is a complete assessment of your chances of success. Therefore, you must include an evaluation of the competition. Do you have a product or service that will rise above the competition, or is your expected sales area already saturated with similar businesses? Small business financial backers want to know your business has a reasonable chance to succeed.
Marketing Plan
Simply put, how do you plan to get the word out about your product or service? Have you studied what methods do/do not work? Do you know how to efficiently promote your business, monitor the results, and get an adequate return on your advertising investment?
Management
You can have a great business idea, a well-researched and product ready target market, but you will need the proper management in place to make this venture work. Small business investors want to know that good management is in place to help ensure your small business success.
Strategic Alliances
In order to help make a profitable small business, strategic alliances can be extremely advantageous. For example, one business may have a product or service you need, and you have what they need. The barter system is still implemented to help both entrepreneurs achieve success with less cash flow.
Operations and Facilities
A brief description of your small business operations and facilities is required to explain what you need to provide the product or service. Also, what kind of financial assistance are you going to require for keeping the doors open?
Risks
Although it is tempting to make you business sound all grand and wonderful, you will need to be realistic and honest. If investors or lenders are going to give you money for your small business, what are the risks involved. In truth, no business can guarantee financial success. The executives understand this concept and want you to be honest.
Capital, Return on Investments, and Financial Expectations
The necessary capital required, expected return on investments, and the financial expectations for your business are all separate sections of the small business plan. But, they are all about crunching the money and getting down to the bottom line. What kind of money can you and your small business financial sources reasonably expect spend, and what kind of money will come back in return.
Appendices
To conclude your business plan, and this reading, be sure to have an appendices at the end of your presentation. Quick reference to all the key points will help reviewers down the line to quickly assess you plan. It will likely go through several hands, before you receive financial confirmation either way. Your business plan may seem like a daunting document to compose. But, if it achieves its intended purpose, it will be well worth the effort.