Insights into the world of small business lending and development
Write a Business Plan
Starting a small business is hard work. The list of things you have to do in order to turn your dream into reality may seem overwhelming at first. When faced with such a formidable to-do list, it is easy to think of a formal business plan as something to table for later. After all, organizing a list of responsibilities and checking off items one by one as you accomplish them is itself a form of planning. Why waste time creating and perfecting a business plan at this early stage of the game?
The answer is that even the simplest business plan will help you:
- Prioritize. You’ve created a to-do list, but which items on the agenda should come first?
- Create accountability. A business plan will help you and your team track individual tasks and responsibilities. Even if you’re running your business by yourself, a map that tells you when you’ve reached and surpassed specific milestones is invaluable.
- Get inspired—and reinspired. A business plan is a mission statement. It is an affirmation of the reasons you wanted to start a business in the first place and want to stay in business in spite of all obstacles. It is also a living document; it can and must change as you and your business change. Nothing is set in stone except your commitment.
Better one than none
A one-page business plan is a great way to get started. A one-page business plan is exactly what it sounds like—the purpose, goals, and strategy of your small business set down on a single page. One page is less daunting than 10 or 20, and the tight framework will force you to focus on the essentials. The document should include the following:
- Product or service value proposition. What does your business do? What is the problem facing your customers, and how does your business solve that problem? If you are a startup, be sure to mention any market research you have conducted to establish your product as a valuable way to solve a problem that will sell.
- Monetization model. How do you make money? What are your distribution channels, and how much does each channel cost?
- Competitive advantage. What exactly sets you apart from other small businesses that claim to offer a similar service? Why do these unique characteristics give you an advantage? In what ways do your strengths expose your rivals’ weaknesses?
- Target market. Who exactly are your customers? Knowing your customers as well as you know your friends and neighbors is vital to building a successful small business. How old are they? Do they have kids? What is their average income? Are they internet-savvy? The more questions like these you can answer, the better. As a separate but related project, consider creating buyer personas that will embody the types of customers you think will walk through your door. What can you do or do better to attract those people?
- Management team. If you have partners in your small business venture, who are they, and what do they bring to the table? What are their individual strengths and primary responsibilities? This is especially important for startup businesses or those that have been in business for less than two years.
- Customer relationships. What is your strategy for both finding and building strong relationships with your customers? If you’ve been in business for a while, how well is that strategy working? How can you turn your customers into brand advocates for your business?
- Key financials. As you build, grow, or sustain your business, you’ll want to keep track of key metrics such as annual revenues, monthly sales, and gross profits. Having detailed balance sheets and profit and loss statements will be particularly important if you are seeking outside funding. Lenders will also want to see on your business plan how much funding you are seeking.
Getting it done
Always keep in mind that your business plan is an evolving, living document. You should focus on short, strong declarations of what you are doing now to build your small business and what you intend to do in the future.
Some information on this page is adapted from content that originally appeared on Nav.com, a Venturize supporter.