Congrats on the new business! As a new small business owner, the world is full of opportunities. It’s time to take action, develop your product, and show your audience what they’re missing. Before you do any of that, however, you’re going to need to write a business plan.
Whether you’ve just started a small business or struggling to grow an existing one, a good plan is essential. No business succeeds in the long term by doing the same thing repeatedly. You have to adapt and make choices about how you will grow and change.
Trying to start a business or grow without a plan is a recipe for chaos or unsustainable growth. If you want your company to last and have an impact, you need to take the time to do the following:
- Weigh your strengths and weaknesses
- Study the market
- Put together a concrete plan for what you want your business to achieve in the future
- Devise a strategy for how to achieve your goals
What is a Business Plan?
A business plan outlines where your business is now, where you want it to be, and how you will get there. You should use it to lay out your vision for the future of your firm.
Beyond the vision, it must also be grounded in real numbers and research. It needs to be something you could show potential investors to prove that your business has what it takes. That means including predictions for earnings and costs and your market analysis, as well as the in-depth strategies you’ll use to expand your business.
What Needs to Be in a Business Plan?
Critical investors expect a business plan to be neat and concise so they can quickly get concrete, actionable information. You might include an executive summary to make certain information even more accessible. It should include a brief profile of who you are as a company and how you’re organized internally and as a legal entity.
You’ll need to include the research you’ve done on your specific target market and your product. Who is your audience? How does your product or service help them? What is your marketing plan for reaching them?
Then you need precise and accurate data. Include your financial projections for sales and expenses, as well as the data you’re drawing on to make those predictions.
How Do You Write a Business Plan?
What makes more sense:
- Charging into the future and making key decisions as you go
- Devising a strategic plan and then working according to that plan
If you picked B, we’re with you. A business plan will guide you through the ups and downs of running your business and serve as a strategic resource for you, your team, and your investors.
How do you write a business plan? Let’s get started.
1) Describe Your Company
The first essential step of the plan is to describe you and your company. Good businesses, even small ones, must establish an identity—which isn’t your decision alone. Spend time with your management team and other key staff members discussing who you are and what defines your company.
Next, create a new mission statement or revise an old one that accurately represents your company and gives you direction.
2) Craft Your Mission Statement
What is the product or service you sell? Who is your target market? The service you provide and the people you serve should reflect who you are as a company in your mission statement. Your mission statement should also be action-oriented and convey the core function and goals of your business.
If you’re struggling to develop your mission statement or a description for your market and service, it may be time to revisit both jointly. Ensure your mission statement includes your target market and your service aligns with your mission.
Here’s the mission statement that guides our work here at 1-800Accountant:
“Our mission is to provide financial expertise to small businesses in every industry. Our services are powered by a mix of expert CPAs and technology, enabling businesses to minimize tasks while maximizing tax savings. This allows owners to focus their time and energy on growing their businesses while we handle the rest.”
3) Conduct Market Research
Now it’s time to consider how your company fits into the larger market and how that might change in the future. Learn as much as you can about your target clients and conduct a competitive analysis of your services with other similar providers and companies.
What competitive advantages do you or could you have in the market because of your unique mission statement, product, or business composition?
Take time to study growth and sales projections for your business and the market. Find out everything you can about how your business will change and grow. That way, you’ll be better prepared to make decisions about how your own business can change.
4) Envision the Future
Consider your company culture and identity and discuss with your management team what you want your business to become in light of the opportunities you’ve discovered in your research.
Create a financial plan with projections for how your sales and product will change over time. Your financial plan should include how you will afford the investment required to make that growth happen.
5) Lay Out the Steps to Achieve Your Vision
Once you’ve established the end goal, it’s time to name the steps to get there. You can start at the beginning and get going immediately. Do you need to develop a new product, find new clients, or hire new staff? Will you be developing a new marketing plan to connect with the clients in your unique target market?
Even as you get excited and start racing into the future, patience is essential. Realistic business plans can take a long time to come to fruition, but you can get there with hard work and dedicated management.
If you’re looking for a fast, simple way to jump start your business, let 1-800Accountant help. We make registering a legal entity quick and easy, saving entrepreneurs time so they can focus on the more important aspects of running a new business — like writing a business plan, attracting investors, and growing their operations.
How Many Years Should a Business Plan Cover?
The length of a business plan depends on a lot of different factors. It can extend far into the future; however, it should also have a closer deadline, ideally within a couple of years. At this point, you can stop to evaluate your progress and re-assess market conditions for your product or service.
If you’re taking this business plan to potential investors as part of a funding request, the business plan should demonstrate forethought concerning the whole life cycle of your product. How long will it take for your product to be adopted, to become more popular, and then fade as it’s replaced?
The business plan needs to cover enough time that you will have clear results to measure and evaluate at a reasonable end-point. That means considering the revenue cycle for your product and your legal and tax obligations determined by business structure.
A good place to start would be a 3-year business plan. You can always expand or adjust as needed.
Are Business Plans Necessary?
Trying to grow your business without a plan is like exploring a new country without a map. Your business plan should give you a sense of your goals and how to achieve them.
Crafting a business plan means looking out for possible obstacles and finding ways to prevent or overcome them. How will you face day-to-day small business challenges that arise as you try to grow?
You know you want to grow, but growing requires investing. If you want to maintain a healthy balance sheet with investor funding, you need a detailed strategic plan that demonstrates your ability and determination to grow. Whether you look for a bank loan or credit from investors, your business plan will show that you’re a good investment and have done your research.
Even if you think your business is set for success, you need a plan to back that up. Top talent for your business and potential investors want to see that they’re supporting a company with a viable plan for growth and success.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.