Most small business owners create a small business plan as a necessary evil in securing financing from venture capitalists, angel investors, or traditional lenders. However, your business plan can offer more benefits than simply acquiring capital for your business. It can also serve as a road map for your small business, forcing you to think more objectively about your business.
Here are five tips for writing your small business plan to help lead you down the path of success.
1) Write down your vision. Let’s face it. It’s tempting to jump right into the garden and get your hands dirty. But without envisioning what you want the garden to look like when all is said is done, your garden may end up looking overly crowded in spots and too bare in others. The same goes with your business. Before plunging yourself into the details of the business, outline your vision for your company. Include both your company’s mission statement and values. This “big-picture” view of your company will help you define both the short-term and long-term goals for your company.
2) Understand your risks. Creating a business plan doesn’t necessarily mean you need to avoid all risks. The key is to manage risks through internal controls, risk management policies, and small business insurance. Your business plan can include strategies to meet challenges and ways in which your business will mitigate calculated risks.
3) Discuss business finances. Potential lenders and investors need to ensure that the business makes sense financially. State your budget by presenting realistic projections of both expenses and revenues. That is, avoid presenting revenue projects that are highly unlikely to achieve. If your business is a start up, don’t underestimate startup costs. Additionally, include the level of income level will result in your business breaking even financially.
4) Include your customers and competitors. If you don’t have a clear understanding of your customers and competitors, your budget and financial forecast won’t likely reflect actuality. Your business plan should take into account how your are going to learn more about your customer’s needs and desires.
5) Chart your timeline. Your business plan should include a business timeline that details the short-term (one-year), medium-term (two to five years), and long-term (five years and longer) goals of your business. An at-a-glance visual business timeline overview will help guide your through your businesses lifecycles.
One of the most important tips for writing your small business plan is to not skip writing the plan in the first place. For additional assistance in writing your small business plan, the nonprofit organization SCORE offers this workshop.