If you are considering either starting or buying a small business, then you should also consider creating a business plan, but if you need a loan, you need a business plan! A business plan is an essential step to outline how you will start, develop, and grow your small business. It may sound complicated, but the professionals here, at Collin SBDC, are here to help!
What is a business plan?
A business plan is a formal document, outlining your specific business’ goals and the timeline planned for achieving these goals. Think of your business plan as a road map. You want to take your business from point A (a new business) to point B (a successful, profitable business.) Your business plan outlines the “route” you are going to take.
Why do I need a business plan?
If you plan to obtain a loan, either an SBA loan or a conventional loan, the lender will want to see your business plan. Business plans are a valuable tool, used to attracting investors, obtain small business loans and keep the business on track. A good business plan can guide you through each stage of business management starting from the loan process to purchasing equipment or hiring employees. A business plan is a great tool to help business owners think through each detail of their business, the associated costs, and how the business will run.
What is the difference between an executive summary and a business plan?
When applying for a job, most professionals use a resume and a cover letter. The cover letter outlines your resume, highlights things that are important to getting the job you are applying for and prompts the reader to look at the resume. In a business plan, look at the executive summary as your cover letter, and the business plan as your resume. The executive summary will outline your business plan and give interesting highlights of why your business is going to be great. The business plan contains the nuts and bolts of the planned business and includes the fine details of when and how your business will succeed.
What needs to be in a good business plan?
There are several main components that make a good business plan:
- Executive Summary: Look at this as the “Cover Letter” for your “Resume” or Business Plan. It should briefly outline and highlight important parts of your business plan. It should be no longer than 3 pages and you should strive to make it 2 pages if possible, after all, it is a summary. The executive summary should include:
- What the organization is and does
- Who will purchase your product or service?
- Why you are uniquely qualified and skilled at managing the business
- What are the financial results expected?
- How much capital is required, how do you plan to use that capital
- What risks could derail your plans
- Business Plan: This part of the document contains the “nuts and bolts” of your business. A good business plan should include a lot of detail:
- Vision, Mission, what is your value proposition and why are you unique
- Products and/or services you plan to offer
- Market analysis, covering the industry, your target customer, your competitors and regulatory environment
- Operations plan and management.
- Personal experience in this specific industry, key managers, functions and qualifications.
- Marketing strategy, including tactics supporting and the budget that you will use to achieve your goals.
- A three-year financial plan from start-up to profitability with future projections. It includes income statements, cash flow statement, breakeven analysis, a source and uses table and a balance sheet.
- Critical risks
Are business plans difficult to create?
A business plan doesn’t need to be difficult, but it does need to be thorough, especially if you are going to seek financing. It’s important to give the lender the best first impression of your business, so they are willing to finance your endeavor. First impressions matter, and we at Collin SBDC are here to help you create the best business plan for your small business. If you live or work in Collin or Rockwall County, contact us. To contact us you can fill out the form here.
For additional resources on small business plans, executive summaries, and how to prepare the best small business plan for your company, please contact our experts at the Small Business Development Center – SBDC – serving Collin and Rockwall Counties, Texas.
Blog by: Steve Shalosky