Some businesses don’t plan to fail—they fail to plan. But the successful ones can identify what resources they have, what goals they want to accomplish, and how they’re going to get there. Essentially, those are the makings of an effective plan. Here are five key elements that you should consider when creating a killer plan for your small business.
Why It’s So Important
Killer business plans aren’t just a “nice-to-have.” They can help you:
- Secure financing – Lending institutions want to assess your ability to make good on a loan. Your plan helps them do that by demonstrating your knowledge of key success factors.
- Measure progress – Plans help provide mile markers for your business. It’s the standard by which you can look back and see how far you’ve come.
- Use resources wisely – Most businesses don’t have unlimited resources. A plan can help you make better decisions about where you spend resources to achieve the goals you set.
5 Essential Elements for a Killer Plan
Successful business plans commonly adhere to a few best practices. These five elements are found in many of them:
- Executive Summary –This is the first and often the most important section. It’s where the reader (or investor) will decide whether it’s worth reading on to find out more. So be brief, compelling and to the point. Talk about what your business is, what you want to accomplish, why you think it will be successful, and what you need to make it happen. Some find it easier to write this last so the detail that follows supports it.
- Target Market – Provide a deep profile of your potential customers and the market. Describe how desirable the market is and what’s missing. Look at factors like who’s the competition, what’s the current/future size of the market and how much of that could you capture, what profit margins you expect, and what barriers exist (e.g., regulatory requirements). Some include supporting quotes from interviews with potential customers.
- Your Offering – Describe what product or service you plan to provide. Why it’s better than what’s out there now? How far along are you in its development? For example, is it at the idea stage, have you test marketed it or is it already at market. Include details about any arrangements you have with potential suppliers and whether you have secured any intellectual property rights.
- Game Plan – Given the analysis you did on the market and what you can uniquely offer, this is your chance to describe how you’d do it. Some refer to this as the marketing plan. It should include your strategy for establishing yourself in the market, making your product/service available, and growing your business. It will also describe your promotional strategy to get and keep customers.
- You – You can have the best analysis, a dynamite offering and stellar promotion but if you don’t have the right leadership, you may not succeed. In this section, sell yourself and any other individuals who will run the business. Describe any previous entrepreneurial success, special skills/contacts, education, or community involvement. Quantify your achievements to demonstrate results (e.g., 5 percent increase annually in net customer acquisition).
For More Information
The Small Business Administration offers a free Business Plan Tool. It’s a step-by-step guide through these elements and more. When it’s completed, you can also discuss next steps with a counselor or mentor from one of their partner organizations like SCORE or the Women’s Business Center.