So, you’ve thought of a great business idea and want to bring it into fruition. To do so, you’ll need to come up with a business plan. Your small business needs a plan that allows it to act as a guide for your company and provide transparency to any potential investors, customers, or future lenders. But where do you start when it comes to putting this plan together? Here are eight areas your business plan needs to cover and how to come up with them.
- How you’ll stand out
One of the first steps in your business plan is determining your target market and why they should be interested in investing in your business. Be specific about what you’ll offer to an identified niche audience. Consider how your services or products uniquely cater to that audience and focus on how you can stand out just by being yourself. You wouldn’t want to burn out your small business by trying to be a jack-of-all-trades.
- Executive summary
Your executive summary tells the reader what your company is, where it’s at, where you want it to be, and why it’ll be a success. It helps to think about what your business is all about: who are you as a company, and who do you want to be? Include some basic information about your business as well as bare bones information regarding your services or products, financial information (if you’re seeking financing), and future plans.
- Company description
The company description is a high-level review of your business. This is your elevator pitch (albeit written). Quickly and clearly explain your small business and its goals so investors, financial lenders, or potential customers can understand more about your startup and what it offers. Think of the nature of your small business, its place in the market space, needs it satisfies, and how it satisfies them. You should also consider including any other companies or organizations that you plan to serve and what competitive advantages you bring to the table.
- Market analysis
Here is where you’ll go over your knowledge of the industry. Think about what market you want to target, research information about that target (demographics, psychographics, future projections, etc.), and how much of a gain you can get in that market. You’ll also want to go into detail about your pricing structure, gross margin levels and discounts and promotions you plan on using in your small business. A competitive analysis shows that you know what’s happening in your industry, how well your competitors are doing in it, and how to potentially beat them. If your city or state has any customer or governmental regulatory requirements that could affect your small business, include those as well.
- Organization and management
How will your small business be organized? Who will manage it? What are their experiences and how much of a share will they hold? These are some of the questions you need to answer in this section. An easy way to show the organization flow of your small business is to make a flow chart. You should also include the ownership information (names of all the owners, their percentage of ownership, how they own it, etc.) and information about your employees (names, positions, experience and education, number of years with your small business, etc.).
- Service or product line
This one is straightforward. You want to explain, in detail, what services and/or products your small business will offer. If you’re opening a seasonal business, include what seasons they’ll be used in. If you own a product, include the shelf-life if it has one. If you have any unique products that you created and have filed a patent on, include those as well.
- Marketing and sales
You want to include your overall marketing and sales strategy to show how you plan on generating enough revenue to stay in business. Your marketing strategy should include how you’ll enter the market, grow in the market, where you’ll distribute, and how you’ll communicate with your customers. Your sales strategy should include your sales activities and any sales force, if you plan on having one.
- Financial projections
This is important for investors or lenders to see should you ever need funding as it shows your previous, current, and prospective financial data. You shouldn’t work on this section until after you’ve analyzed your industry’s market and set objectives to succeeding in that market. Financial projections should show what your small business will be able to do within the next three-to-five years.
The Kabbage Team is here to not only fund the small business loans you need but to help you grow your business through free marketing tips, webinars, tools and more. Kabbage empowers small businesses through straightforward, flexible access to capital. We’ve extended more than $3 billion directly to small business owners and powered automated funding for other organizations all over the globe – all while maintaining a remarkably high laughter quotient.