We’ll get right to it: A small business plan is an essential company asset.
Are you starting your business? Seeking funding? Looking to grow your business sustainably? Expanding product offerings or selling points?
The importance of a business plan is often undervalued in many business stages. However, a well-crafted small business plan is critical to achieve all of your business goals.
With this brief guide, you’ll come away with a solid understanding on:
- What a business plan is.
- Why they’re so important.
- What to include in your business plan.
- The different types of business plans.
- How to put your business plan into action.
With this newfound knowledge, you can create a winning small business plan that helps propel your company to success.
What Is a Small Business Plan?
Some people might think that a small business plan is just a tool that helps startups attain funding. While that’s certainly a use case, they are so much more than that.
A thorough business plan acts as a detailed roadmap that helps you understand how to organize, run, and grow your business to reach its goals.
In other words, it acts as a pillar to guide your internal business processes.
When it comes to external use, a small business plan provides investors with a means to understand your business vision and viability. It also shows funders that you have taken the time to carefully understand all angles that can impact your business, covering opportunities, challenges, and risks.
In general, business plans should include seven core areas. They can come in a few different shapes, but there are tried and true structures that work better than others. We’ll get into all of this below.
Why Is a Small Business Plan Important?
There are many reasons to allocate the time and focus to writing an excellent business plan for your small business.
Wherever you are in your business journey, you’ll surely recognize most of these situations.
- Business clarity and direction: A clear roadmap keeps you focused on your goals and strategy.
- Unique value proposition: You need to define what sets you apart from competitors. A small business plan forces you to sit down and craft a compelling UVP.
- Credibility: Show investors and funders commitment and financial foresight, which will help you fast, flexible funding to power your business growth.
- Risks and opportunities: With the right planning, you’ll be able to spot challenges before they surprise you, and take advantage of growth opportunities before they go past you.
- Decision-making and progress: A small business plan acts as a reference point for evaluating success, making strategic choices, and pivoting in response to performance and the market.
- Cash flow: To keep cash flow under control, a business plan helps you understand your overall financial health, optimize expenses, and avoid financial surprises.
- Marketing strategies: The first part of your marketing efforts are done before you even start, as a business plan already outlines your ideal customers, and the best ways to reach them.
- Industry changes: If you know where and how you’re headed, you can easily adapt to market shifts, emerging technologies, and new regulatory updates.
- Accountability: You and your team will always know where you stand, as you have clear milestones and performance indicators.
Is your current small business plan helping you in these areas? If it’s not, it’s time to review it and find what’s missing.
How To Write a Business Plan for a Small Business: The 7 Key Elements
Your small business plan should focus on seven core areas. The more of these areas you cover, and the more detail you get into, the better your plan will serve your business.
Incorporating these seven elements of a business plan communicates key information of your business to you and your team, and potential funders and investors.
However, don’t worry about making it perfect. Start with an outline, and make sure to complete it as your progress.
1. Executive Summary
This is your business’s elevator pitch. It should highlight your company’s mission in precise and concise fashion, briefly touch on its unique value proposition, and mention key information about your leadership team and location.
Think of the executive summary as a snapshot that provides an enticing high-level overview of what’s to come in the rest of the plan.
2. Company Description
This is where you provide more detailed insights into your business, including its mission and vision. Describe the problems your products or services solve, the market needs that you’re addressing, the commercial opportunity that you are pursuing, and what sets you apart from your competitors.
This section should clearly and succinctly convey your business’s purpose and the unique value you bring to the market.
3. Services and/or Products
Here is where you really get into detail on your product and unique value proposition. Discuss your offering, explain how it benefits your customers, and outline your pricing strategy.
If you have any pending patents or proprietary technologies, you can mention them here as a way to showcase your innovation and commitment to safeguarding your business’s interests.
4. Market Analysis
Demonstrating an exhaustive understanding of your industry is a critical part of your small business plan. This must encompass thorough market research and competitor analysis, including its size, expected growth, and demographics.
Analyze your competitors’ strengths and weaknesses, lay out how you will surpass them, and identify market trends that could influence your business’s progress.
This section should be data and metric-heavy, with ample research and investigation showing that you have a broad and deep understanding of your market and how you will navigate your business to success within it.
5. Marketing Strategy
You should be able to define a clear path to commercial growth, both for yourself and your team, and for funders and investors.
In this section, discuss your marketing and sales strategies, any organic and paid advertising plans, and the offline and online channels you’ll use to reach your audience.
It’s also recommended to include information on your company branding, pricing models, and any other notable promotional activities. This is where you can illustrate how you plan to generate revenue, grow, and achieve profitability.
6. Management Team
While your product and its business viability is essential, many investors actually pay closer attention to the people behind it when ascertaining whether or not to invest.
This section should provide bios of your management team, highlighting their experience, roles, the skills they bring to the table, and any impressive facts.
You really want your team to create a rounded impression of your company. Demonstrate the unique profile that each person brings, and how you all complement one another.
If you have an advisory board, include their profiles as well. This is especially important for inexperienced and young entrepreneurs. Investors will ideally want to see direction provided from seasoned, proven industry figures.
7. Financials
A clear and precise picture of your business’s financial health and realistic future projections is fundamental.
Include the fundamental financial documents: Income statements, cash flow statements, and balance sheets. Also provide forecasts for upcoming years, detailing expected revenue, expenses, and profitability.
Without these financial statements, funders and investors will be unlikely to offer you financing.
Having your financials ready and up to date also informs your team with crucial cashflow, budget, and growth goal insights.
Different Types of Business Plans and Choosing the Right One
Business plans aren’t a one-size-fits-all document. Your plan should fit your stage of growth, industry and vertical, and goals.
There are two general business plan types: Traditional and lean.
A traditional business plan is detailed, structured, and best suited for securing funding or guiding long-term strategy. A lean business plan tends to be much shorter, more flexible, and focuses on key elements only.
Beyond these core two types, you can choose to focus yours on a different underlying theme. For instance, you might opt for a growth or operations-focused business plan.
Whatever you choose, the key is to opt for the type that best supports your business in achieving its goals. In other words, make your small business plan your own.
Making the Most of Your Business Plan
Many companies make the mistake of writing their business plan once and never updating it.
In reality, your business is best served by viewing it as a living and evolving business asset, and should change to reflect your business growth and market shifts. Regularly reviewing and updating your plan helps you stay on track, adapt to changes, and seize new opportunities.
Use it to set goals, support progress, and make decisions. If you’re pitching to investors, always keep financials and market research up to date.
And for internal use, it’s a good rule of thumb to periodically review it with your management team and make sure that everyone is informed and aligned.
Need a starting point? Check out this business plan template to get going with your own business plan today.
Aim for Success With a Winning Small Business Plan and Bitty
A well-crafted business plan gives you clarity, direction, and the foundation to grow your business.
It also helps you see blind spots and problematic areas that you may not have otherwise. Often, such revelations can help you take preemptive action to address such issues.
Spending the time to create a strong plan and keep it updated as your company progresses will form a foundational pillar for success over the entire lifecycle of your business.
At Bitty, we root for your business success. That’s why we encourage you to develop a solid small business plan. And whenever you need it, we’re here to offer the flexible funding you need.
