Business management:
Build a business plan
A business plan is a key document for all business types. It’s a great, long-term way to plan your work and work your plan.
A business plan is an essential roadmap for business success. This living document generally projects three to five years ahead and outlines the route a company intends to take to grow revenue. The Small Business Administration (SBA) offers a structure companies can follow to build their long-term business plan.
Business plans can be used to obtain funding or bring on new business partners. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice.
Most business plans fall into one of two categories: traditional or lean startup. Traditional business plans use a standard structure and encourage detail in each section. Lean startup business plans are less common and focus on summarizing only the most important points of the key elements of your plan. Consider a traditional business plan format if you’re requesting financing from traditional sources.
Traditional business plans use some combination of these nine sections. You don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs.
SECTION 1: EXECUTIVE SUMMARY
The executive summary is a snapshot of your business plan. It briefly explains what your company is and why it is/will be successful. Include your mission statement, products or services and basic information about your leadership team, employees and location(s). Include financial information and high-level growth plans if asking for financing.
SECTION 2: COMPANY DESCRIPTION
This provides information on what you do, what differentiates your business from others and the markets your business serves. Go into detail about the problems your business solves. List the consumers, organization, or businesses your company plans to serve. Explain the competitive advantages that will make your business a success. Are there experts on your team? This is the place to boast about your strengths.
SECTION 3: MARKET ANALYSIS
Research your industry, market and competitors. Talk about the industry outlook and target market. Share what competitors are doing and their strengths; look for trends and themes. What do successful competitors do? Why does it work? Can you do it better?
SECTION 4: ORGANIZATION AND MANAGEMENT
Every business is structured differently. Explain how your company is/will be structured and who will run it. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you’re a sole proprietor or limited liability company.
Use an organizational chart to lay out who’s in charge of what in your company. Show how each person’s unique experience contributes to the success of your venture. Consider including resumes and CVs of key members of your team.
SECTION 5: SERVICE OR PRODUCT LINE
What do you sell? How does it benefit customers? What is the product lifecycle? Describe what you sell or what service you offer. Share your plans for intellectual property, such as copyright or patent filings. If you’re doing research and development for your service or product, explain it in detail.
SECTION 6: MARKETING/SALES PLAN
How do you plan to market your business? What is your sales strategy? Your strategy should evolve and change to fit your unique needs. Your goal in this section is to describe how you’ll attract and retain customers. It will also describe how a sale happens. This section will be referenced in the financial projections section, so thoroughly describe your complete marketing and sales strategies.
SECTION 7: FUNDING REQUEST (optional)
Clearly explain how much funding needed over the next five years and how it will be used. Specify whether you’re interested debt or equity, the terms you’d like applied and the length of time your request will cover.
Give a detailed description of how you’ll use funds. Specify if you need funds to buy equipment or materials, pay salaries or cover specific bills until revenue increases. Include your future strategic financial plans, such as paying off debt or selling the business.
SECTION 8: FINANCIAL PROJECTIONS
If you need funding, provide financial projections. Ask what information investors would like to see included. If your business is already established, include income statements, balance sheets and cash flow statements for the last three to five years. List the collateral that could be put against a loan.
Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements and capital expenditure budgets. For the first year, be even more specific and use quarterly or even monthly projections. Clearly explain projections and match them to your funding requests. Use graphs and charts. f
SECTION 9: APPENDIX (optional)
Use the appendix to provide supporting documents or other materials. Common items to include: credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents and other contracts.
Go to https://www.sba.gov/sites/default/files/2017-09/Sample%20Business%20Plan%20-%20We%20Can%20Do%20It%20Consulting.doc to download an example of a business plan.
This article originally appeared in the May-June 2022 issue of Pro Contractor Rentals magazine. ©Urbain Communications LLC. all rights reserved.
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