The Importance of a Business Plan for a Small Business

If you’re one of the many people thinking about starting a small business, having a business plan is one of the first things you should have on your list of things to do. It doesn’t matter if you’re starting a small business from home or away, having a plan for your business is considered a blue print for a successful small business. What is a business plan and why do you need one?

A Business Plan
A business plan is simply a plan of what your goals are for the business, and how you plan to go about accomplishing them. Some people refer to it as a vision for your business. I like to refer to it as a blue print or a road map to accomplishing your goals.

Your plan should be spelled out in clear and defining terms and be kept simple. It should be a written document and used as a tool in managing the business.

A plan should include but is not limited to the following:

1. A statement of your business purpose
2. A description of your company
3. The goals of your company
4. The structure of the company (sole-proprietorship, partnership or corporation)
5. The product or service that you are selling
6. A market analysis of your product or service
7. Resources spent (time and money)
8. A financial plan to include financial statements
9. Information about the managing principals in the company
10. How you plan to manage and operate the company

The Importance of a Business Plan
The success of a business starts with a business plan. The plan defines your business as to what it is and how you plan to achieve the goals of the business. It presents a clear picture of your business in terms of goals and objectives.

The plan reflects how you plan to operate your business. How you plan to market your product or services. It provides a financial picture of the company.

If you are looking for money to fund your business, you’re going to need a plan for your business. When you go to borrow money, lenders and investors are going to want to see written documentation in a business plan of your financial situation. Why do they want to see this information? Lenders and investors want to see this information because they are the ones taking the risk in lending your business money.

Once you have a plan in place, it’s important that you follow it. If you’re achieving your goals you should stick with the plan. If you are not achieving your goals then you will have go back, analyze your plan to find out what is working, what is not working and why it is not working.

A plan is not etched in stone. It is subject to change. As time goes on, things change in this world and businesses like everyone else are subject to change. A good plan will reflect changes that a company has to make to keep it competitive and successful.

Where can you find samples of a business plan for a small business? If you go into any of the search engines such as Google or Bing and type in “samples of a business plans for a small business” you will find websites with this information.

This is why it is important that a small business should have a business plan. If you look at those small businesses that are successful, you will find that most of them all started with and have a plan for their business.

The Author
Larry Zinamon has been involved with taxes for over 35 years. He is a registered tax preparer and authorized e-filer with the IRS. Larry has had his own tax consulting and preparation business for over 20 years. Prior to starting his own business, Larry worked for the IRS. During his 14 years with them, he worked as a Revenue Officer, Taxpayer Service Specialist and Tax Examiner. Within the past couple of years, Larry has been doing some network marketing.

Grow Your Business With a Growth Business Plan

Are you at a point with your business where you just don’t know what to do next?
Do you have a business plan?
How about a growth business plan?

Have you looked at a lot of different ways to grow your business and nothing seems to work?

The right growth business plan could be your answer. If a growth business plan is done the right way it may open up some opportunities you have never thought about before. A growth business plan can be developed many different ways but I would like to discuss a growth business plan that you may have never thought about.

Here is the way I would encourage you to set up a growth business plan:

• Do some dreaming about what you would like your lifestyle to be
• By dreaming decide on an average income you would like to have over the next few years
• Decide how many years out you would like your plan to cover
• Decide how much profit you would like for your business to generate above the income you want for yourself.
• Set up a profit and loss statement of your existing business or your proposed business
• With the right business knowledge and a profit and loss statement you can actually use that data to see what your business would need to do for you to give you that income and profit
• Even better you can determine what size market you would need and even determine whether your market would support your business presently and in the future.

To me a small business is one of the best things you can have if you enjoy operating a business; however, it does require a lot more than just enjoying ownership and running a business. Especially if you are starting a small business and even if you have had a business for many years, you should know what you want for your future. Never guess about your business. You see, without a plan, you are just guessing. We business people work hard and we always continue to hope for the best but when we guess, we’re taking a lot of risks. You’ve probably heard the old saying from an unknown author that says, “If you fail to plan, then plan to fail.”

As a matter of fact, did you know that the Small Business Administration says that 50% of small business owners will fail sometime during their first 5 years? There are lots of reasons but one big one is that owners don’t have a plan. Another is they have picked a product or service that doesn’t have a big enough market to sustain their business and sometime during their future they will run out of customers.

Now as I said, there are many other reasons too.

After graduating from college, I started out in manufacturing as an engineer in a pretty large company and now, 45 years later, retiring as a of Director of Manufacturing, I have discovered an awful lot about business. Not only did I learn and teach a lot about business, I worked with small business owners as well. I’ve learned that it comes down to this. Too many owners work hard in their business but less on their business.

Do you work on your business as much as you work in your business? Do you ever dream about having a good lifestyle but just haven’t quite figured out what to do about it. Have you ever thought about seeing what your business would need to do to give you those dreams? Developing a growth business plan could be the answer.

So, why should you make a growth business plan? Well in simple terms you need to know where you’re going and how and when you’re going to get there.

Some of the questions a growth business plan might ask you are:

– Are you comfortable that the market wants and is willing to buy your product or service?
– Is your product or service priced so it is competitive in your market?
– What’s different about your product or service? Why would a customer purchase it over someone else’s?
– Is your market big enough to support your business? What about 15 years into the future?
– If you wanted a better lifestyle, what would your business need to do to give you that lifestyle?
– How much sales would your business need to generate to give you that income?
– How much sales would your business need to generate to give you the income you want 15 years into the future?
– What will be the cost of your labor and material?
– What will your expenses run?
– How much will it cost to overcome the capacity constraints that will occur as your business grows to meet your income requirements?
– Will your profit give you the income you want in the future and at the same time maintain a healthy business for you as well?

If you develop a good Profit & Loss Statement for your existing business for the current year or for the first year of your proposed business, you can use this data to actually project how much sales you would need to yield the income you want and the profit margin you want. You can plan ahead as far as you want. Sound impossible? It’s actually pretty simple and can be pretty accurate plan.

A plan like this would show you how much sales your business would need to do, what your fixed and variable expenses would be, what your material cost, labor cost and profit would need to be to provide the income and profit margin you want. You can see pretty quickly if it’s possible for you to get your business to that level. I don’t know of any better way than to have your business give you the income and profit you want. What’s neat is you can determine what you want your income to be and your profit to be over the next few years and develop a plan that can show you exactly what your business would need to do to give you that income and profit.

And with just a little more data you can actually determine how many customers you would need for each year you plan for and how many leads you would need. From that you can actually determine what size market you would need and whether your market is big enough to supply those leads that could be converted into customers.

How to Make Your Business Plan Efficient and Effective

If you are an entrepreneur thinking about business planning for your startup or to develop your existing business, consider an effective way to write your business plan. With a plethora of software accessible, it is more often than not that business owners lose their core objective while they start business planning. Business planning is a continuous process not an event where you write and forget about it. Planning an effective business plan needs plenty of work and time. Do not rush yourself or your consultants while planning.

The key to having an effective business plan is dynamic adaptability. Recognize these key concepts before you start making a plan.

1. Make your strategy the soul of your plan- Strategy is the key. It is important to focus on your target market using specific products or services. Your strategy should be based on your niche or your unique characteristics that links you to your customers. It should define how you want to set your business apart from the rest. Strategy should be a concept, which can define you, your product, your market and your specific branding focus. While you can change most of the business planning aspect quickly; your strategy is the slowest and the hardest to change. Before you finalize your plan, make sure to develop a backup plan in response to changing conditions of your available resources, time and quality.

2. Do a little more research- Before you build your plan, research thoroughly about your target market, key customers and branding. While you don’t need to elaborately write your research in the plan, try to summarize your key concepts with bullet points or graphs or even pictures. Understanding your competition and the volatility of the market in depth prepares you to expect the changes gradually than severe swings. Research brings more focus to your strategy, strengthens your products or services and defines your niche aptly.

3. Plan milestones – Plan your entire operation with milestones.Track your progress with milestones, achievements, lists and tables. The most important part of milestone planning is to run a business on strict budget and resources. Resources can be time, material or services and human effort. Milestones should be practical, measurable and concrete. Keeping your expectations reasonable will benefit in achieving short term goals. Again do not lose heart if you are behind on your milestones, just do an overview of your plan periodically and modify changes accordingly.

4. Make your business plan lean – You might be surprised about the term lean in business planning. However understanding the lean concept of planning is a must if you want to make it effective and efficient. Lean doesn’t mean thin or lack of details. Lean means powerful, effective and efficient. Learn to write your business plan according to your vision rather than adapting to a template. If you go to a consultant ask them for more customization rather than trying to fit into one of their packages. Lean concept of business planning helps you to write essential elements that are required for your operation; it helps to promote your brand as unique in the market.

5. A dynamic plan for volatile market- In business, continuous planning matters. Your plan should be dynamic based on your need and extremely customized for your product. Never stop planning if you want be ahead of the curve. Your plan should accommodate volatility of the market to keep you running. Your plan should have enough wiggle room to experiment with new products or services.

6. Writing for specific audience – Keep in mind your audience while writing your business plan. If you are writing to get capital from angel investors, add details of your plans, expansion and practical use of your product or services. If you are intentions are on borrowing money from the bank, their expectations are different. You have to concentrate on providing more financial information like cash flow; balance sheet and financial models to procure the loan. If your are presenting for your future clientele, make sure to add key performance indicators, market analysis and value of your product or service. Adding information about your education, your work background and your association with charity work might fetch you the capital instantaneously.

3 Business Plans Every Entrepreneuer Must Have

I am mentoring small businesses and I am amazed at the ideas I read from the entrepreneurs I have the pleasure of meeting.

Unfortunately, not many have well laid out business plans and most use the Internet for planning.

A big percentage of the documents they use from the Internet are impressive, but what they do not understand is that one cannot use a business plan tailored for another region of the world to fully execute his specific business.

Business concepts are similar universally, but execution and sustainability differ depending on one’s environment and market.

The business plans I have read display glorified projections and their market analysis clearly depicts great profit.

In short, one look at a business plan will tell you that some issues have yet to be thought out clearly. For example, competition, risk, challenges and so forth.

Before embarking on your venture, draft at least three business plans.

Individual

This plan is the truest of them all. I refer to it as the naked business plan. It covers almost everything including risk and possibility of failure. No business life lesson can be complete without a discussion on risks and risk management and no business can be started without embracing risk.

Risks are inherent in everything we do – business risk management is the key to ensuring risks are identified and a plan-B or C thought out. Some risks we can control while others we cannot.

This plan should cover who you are as an individual, what your honest strengths and weaknesses are and how you will handle stumbling blocks or closure.

It should address questions like; Can you persevere through tough times? Do you have a strong desire to be your own boss? Do the judgments you make in life regularly turn out well? Do you have an ability to conceptualise the whole of a business? Do you possess the high level of energy, sustainable over long hours, to make a business successful? Do you have specialised business experience?

Financial projections in the plan should cover, at the very least, five different modules. You should work on the plan yourself and get prepared for any outcome.

Investors

I like to call this the headlines business plan. You only have one shot at getting investors – make the best out of it.

This is a plan that shows what team you will be working with and how you plan to invest to make money for investors. Show a well laid out plan that includes short and long term financial gains.

The confidence, coupled with experience, shown in this document will determine whether you get the initial investment you seek.

Financial projections in this case can be three to five years. They are there to show sustained profit. You should not glorify the plan nor try to get a lot of money for the start-up.

You must mention what your competition is and how you plan to create your own niche market – having a business plan that does not have a thorough SWOT analysis could raise the red flag. You might end up not getting financial support.

Pick the right team, get professional advice, try to separate your product from the rest in order to achieve your own niche.

Do not spend too much money. Most people think that having a lot of money is fundamental in starting a business. That is a fallacy – you can make a lot out of very little.

Universal

This is the plan that you started out with – the ”sitting research” through which you came out with pros and cons of the venture. The plan that has been developed from different Internet searches to better understand what you will be dealing with.

This is the longest business plan. This plan has a lot of data, but you should sieve out information that is irrelevant for your business. Without this plan, it is difficulty to cover everything that needs to be covered in your proposed venture.

Starting a business is not for everyone, but great planning initiated through a solid business plan will always bring in the results.