A strong business plan can help you succeed at any stage in your company’s growth.
When you launch, it helps to prioritize and manage your funds. As you continue to evolve, writing a business plan gives you a roadmap to execute new opportunities. And at any point in time, it could be used to apply for loans and grants or set up a crowdfunding campaign.
Find out how to write a business plan for a small business that is designed to help you achieve your company’s unique goals.
The Importance of a Business Plan
Creating a business plan allows you to map out every crucial detail in launching and managing your company. Walking through each step helps you define your business goals, financial strategies, and both legal and organizational structures.
The document helps ensure that you focus on your core areas without getting distracted by opportunities that don’t support the plan. Externally, the business planning process helps identify funding needs and serves as support for financing applications, investor pitches, and even crowdfunding for small businesses.
When deciding how to make a business plan, first identify which type is better suited for your company. There are two primary categories: a traditional business plan and a lean startup plan.
Traditional Business Plan
A traditional business plan is the more in-depth option, discussing the company’s past, present, and future. The goal of writing a business plan is to provide a roadmap for the company. As such, it often includes:
• A discussion of the broader market to identify both upcoming challenges and opportunities the business may face.
• Any relevant expansion plans. The business plan generally outlines where the funding will come from (such as a small business loan) and what hiring needs to be done.
• An explanation of duties for current employees.
• A strategy in case certain setbacks occur.
• A five-year forecast of company financials.
Recommended: How Much Does It Cost to Start a Business?
Lean Startup Plan
For a more basic business plan, you could opt for a lean startup model. Writing a lean startup model business plan requires less detail than a traditional plan and takes a more general approach to outlining the company’s information.
A lean startup business plan typically doesn’t have enough information to satisfy a lender or investor. But it can be a useful internal tool when you’re just starting out. It also provides the flexibility to experiment with business models and other details. In other words, it gives you more room to pivot as you gain experience with managing the company.
According to the Small Business Administration (SBA), elements of the lean startup plan include:
• Partnerships: Highlight the strategic partnerships that will help your business operation. This may include suppliers or manufacturers.
• Activities: In what ways will the company have a competitive advantage in the existing market? Things to consider here may be technology that could set you apart.
• Resources: What resources will allow you to create value for customers? This may be staff, intellectual property.
• Value proposition: What unique value does your company bring to the existing market?
• Customer relations: How will consumers interact with your company? Will their experience be in-person vs online?
• Customer segments: Identify your target market. Defining and understanding who your target market is can help inform overall business and marketing strategies.
• Cost structure: This section should explore the costs your business will face – such as labor or supplies. In this section, it can also be helpful to define whether your company will work on a cost-driven model or a value-driven model. Cost-driven models focus on lowering costs while value-driven models focus on creating premium value for customers.
• Revenue streams: How is the company going to make money?
There are a variety of templates, examples, and online resources that can help business owners navigate how to write a lean startup business plan.
Recommended: What Are the Stages of Business Growth?
The Takeaway
Understanding how to write a business plan can help business owners be better prepared for both requesting funding, like a small business loan, and actually running your business.
Writing a business plan requires quite a bit of research to make sure you can clearly communicate about your company and your industry as a whole. You may not need to follow all of these business plan steps, especially if you’re a new company. But you can still provide a well-informed analysis of your market, your company’s competitive advantage, and your future plans.
As your business grows and evolves, it can be helpful to regularly update your business plan in the appropriate areas. This could give you the agility to jump on opportunities as they arise when you already have a well-prepared plan that only needs minor changes. Writing a business plan is a particularly wise investment of your time regardless of your company’s current stage.
If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.
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