Top 10 Tips for Creating a Small Business Plan
A small business plan could be one of the most efficient things you could do. Are you thinking of bringing your creative idea to life, planning to open a new business, or expanding your existing business? In that case, you could benefit from creating a small business plan.
Even though it seems like this might be easier to do than a more in-depth business plan, it might even be more difficult.
The less you tell, the more you have to be precise, crystal-clear, and convincing with all your information. But don’t worry. We’re here to help you out with these 10 tips for creating a small business plan.
Ready to get detailed guidance on what to look out for and what needs to be included?
Let’s dive right in.
Table of Contents
- Be prepared and do your homework
- Know the intention of your small business plan
- Don’t be afraid to ask a professional for feedback
- Don’t miss out on essential facts
- Craft your executive summary well
- Address these 5W’s in your company description
- Do a thorough competitive analysis
- Keep it simple yet powerful
- Be realistic with time and resources available
- Pay attention to detail
#1 – Be prepared and do your homework
If you ever listened to an interview of a successful person, preparation will probably come up as a topic.
There is an excellent quote of one of the founding fathers of the US:
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
The same goes for the creation of your small business plan. Put as much time in the preparation as you would in the actual creation of your plan.
Focus on gathering accurate, reliable, and precise information.
Always have an eye for the overall picture.
Everything you display must be put in a way that benefits you.
Tip: Don’t leave out important details, even if they work against you!
Elsewise you will lose your target group’s trust for not being transparent and honest enough. You will lose the pitch for not being realistic enough with your given information in the worst case. The solution to this is simple.
Be prepared to give excellent answers to possible questions regarding your provided information.
It’s the old “turn your weaknesses into your strengths”.
———————— Plus point ————————
If you’re able to handle your weaknesses like that, investors will be more likely to invest in your business.
#2 – Know the intention of your small business plan
This one can be a bit tricky.
First of all, you need to be crystal clear about your target groups – the ones for your business itself and your small business plan.
Are you going to present it to conservative banks?
Then a more conservative language and design might be a clever idea. Or are you trying to attract modern investors with a sense of innovation and sustainability?
Then a more modern professional language and design might work well for you.
Or is it meant for the public to raise some attention, get a seed launch going, or create a Kickstarter campaign? Then you might need a good balance between a modern and a traditional approach while abstracting some areas that are not necessarily needed for the public reader.
Bonus Tip: You might also want to find out what that exact target audience of your small business plan wants to see.
As an example: A potential investor will be more interested in knowing the possible return on investment and how you will be able to push through potential challenges.
It sounds like it might be a good idea to make these areas stand out a little more with your used language and your chosen design, right?
Counter to that, a more traditional bank manager might be more interested in seeing proof of your ability to pay back the loan timely.
#3 – Don’t be afraid to ask a professional for feedback
The old saying “four eyes see more than two eyes” also stays true when it comes to creating a small business plan.
Sometimes, we can be so focused on our project that we can’t see the overall picture well enough.
Here’s where a professional comes in.
There are two important reasons why working with a professional might be a must-have for your business success.
- A business plan professional has experience in the field.
- A business plan professional has a unique point of view.
Through their unique point of view, business plan professionals can see, gauge, and optimize your small business plan exactly as it needs to be to convince your target audience.
Business plan professionals can pinpoint within their first reads where exactly your small business plan can be improved through their experience.
Plus Point: Investors will acknowledge that your small business plan is well-thought-out and that it went through a few revisions and got perfected by time and effort.
On a side-note: Make sure that anybody whom you ask for feedback has had their own experience with creating a small business plan and was successful doing so.
Even if you just want to ask some friends, colleagues, or even your family, make sure they are the right persons to ask for feedback.
#4 – Don’t miss out on essential facts
To emphasize a point we made in #1: Don’t miss out on essential facts!
You see, investors will sense that there is something fishy going on when you’re hiding something. It’s way better to be fully transparent and show the level of leadership to be able to deal with it.
But maybe you didn’t even try to hide any information on purpose. Maybe you just forgot an area or a few words here and there. It happens to all of us, right? While we’re all human, and it’s normal to make mistakes, this one can be critical. Having missing information might result in a feeling that you’re not taking this seriously.
It might create the feeling that this “investment” you’re trying to get is not worth to get your business plan checked for missing information.
Even though you’re creating a small business plan, you still need to keep the essential information with the right amount of depth.
It helps to write down all the information first, restructure it, look for better ways to put it, give it a day’s rest, and then reread it and narrow your data down to something easier to digest.
Doing it that way, you will make sure to not forget essential facts.
Bonus points for being as precise and realistic as possible.
Remember: If you miss out on key facts, it will not reflect well on you when you present your plan to others.
#5 – Craft your executive summary well
The executive summary of your small business plan might be crucial to your success.
To keep it simple: The executive summary is an overview of all the key points of your small business plan. It must be clear, concise and motivate the reader to keep on reading. It outlines what your business is about, what problem you are going to solve, and what your needs are.
It should include historical information and the notable growth benchmarks, if you have any. Funding goals and a quick overview of your niche might also be necessary. Especially if you’re a relatively young start-up with not much historical data on your own. Clearly mention the company’s corporate structure. The primary purpose of the executive summary is to sell to the reader. Think of it as the USP of your small business plan, targeted to convince your target audience. If your executive summary lacks the structure of these clear-convincing facts, it might already be reason enough for the readers to decline your offer. Therefore, this area needs unique treatments.
Your primary intent with the executive summary should be to capture attention and save time while still keeping it realistic.
Using bold headlines to get attention is great. But when you can’t back it up, it’s a no-go for us.
#6 – Address these 5W’s in your company description
While the executive summary is the most critical overview, the company description is not meant to be overlooked either! A great company description is an opportunity to pitch to investors to captivate their interests. To help you out in the simplest way, we give you a very easy to understand five-w-structure.
The 5 W’s of a successful company description
The 5 W’s of a successful company description contain the questions who, what, where, when, and why. There is one more important question we need to have a look at. We’ll deal with that after the 5 W’s.
In general, your company description should include the following information
- business name
- business goals
- target audience
- business location
- mission statement
- product or services
- opening date
- business structure
- competitive advantages.
To be more applicable, let’s have a look at the 5 W’s.
In this section, you have to answer mainly two questions:
- Who are you as in the name of your company and name of the owner(s)
- Who is your target audience, as in who are you trying to sell to
Both are important information that you should be able to answer shortly, even without needing to write this simple business plan. It might help to imagine you’re one of the audiences that you’re trying to sell to figure out all the W’s in a good way.
If the lenders do not understand what exactly it is that you want to sell, they may decline your inquiry.
In this area, you need to answer the following two questions:
- What is it that you want to sell (What kind of product/service)?
- What are your short-& long-term goals?
Focus on being precise, straightforward, and easy to understand.
And don’t worry about going a bit more specific when talking about your goals. Investors will appreciate that you’re realistic, and you can differentiate in your estimations between fast short-term growth and sustainable long-term growth.
This one is rather simple.
State where your business is located or will be located, and you’re done here. Future plans to expand are also welcome.
The when-part can be quite tricky. The answers to these questions will reflect in the confidence you have in achieving your business goals and your business model’s efficiency.
The three main questions here are as follows:
- When do you want to open your business? Or when did you open?
- When will you assumably achieve your business goals?
- When will you leave your business?
Even if you might not know 100% definite answers, it’s important to predict a time range.
Plus points: If asked, be able to state why you believe these numbers to be accurate.
Why is a very interesting section.
It’s about answering the question of why you’re different from your competitors and why your business even exists (also called mission statement).
That’s where you can get a lot of points for marketing knowledge.
- Why is your business unique?
- Why would customers want to buy your product?
- Why would customers prefer your product over the other products?
If you’re in a more innovative, sustainable, or customer-friendly market, use this to your advantage answering questions like:
- Why does the world need your product?
- Why does the customer need your product?
- Why does your product benefit the customer more than other products?
If you don’t have a product but a service, simply ask yourself the same questions but with services instead.
Bonus Tip: Having a clear unique selling proposition, also called USP, might serve you well.
Here’s an extra section that’s not part of the 5 W’s but an important addition.
The three main questions here are:
- How will your business look structure-wise?
- How do you plan on achieving your business goals?
- How does your business look like in the future?
The how-questions go hand in hand with the why-questions.
While the why-questions deal with reason-focused information, the how questions have more to with taking these why-answers and establishing them in a business model.
That’s why you will have to explain these answers.
If these explanations align with your already answered 5 W questions, you’re probably doing a decent job.
If you’re already imagining having specific challenges on the road, name these and state how you will deal with them to still achieve your goals. That’s what investors love.
#7 – Do a thorough competitive analysis
Investors love a decent competitive analysis. If you’re having a local service/product, this section will be a lot easier for you.
In that case, chances are you might already know your competition quite well. Elsewise, you’ll need to take time to search online and find a list of competitors.
Be sure to filter them out and be clear on who your competitors are and who not.
Some questions that might help:
- Are they offering a similar product or service?
- Are they selling to the same or a similar audience?
- Are they placed at a similar price segment?
To figure these questions out, you might try to answer these questions first:
- What is the market segments your competitors serve
- What are specific benefits that they offer to the target audience
- What is their pricing and promotion strategy for product/service
- How do they generate a need in their customers
If youre somewhat new in competition and market analysis, these sections might be hard to figure out on your own.
That’s precisely where business experts can help you.
Bonus tip: If your competition exists locally, don’t hesitate to visit their stores and put yourself in your target audience’s shoes.
- Which things catch your eye?
- What makes you feel a certain way?
- What attracts or pushes you away?
Observing your own behavior in a rational business way and abstracting it onto your target audience is probably one of the most essential skills in marketing. If your business and competition focus on online channels, you can try the same questions regarding your competition’s online channels. Even if they just have a website, specific things will draw you to them or push you away from them.
Figure these out, answering what, why, and how, and you’re good to go.
Remember that the competition analysis should always be aligned with the decisions you will be making.
It’s all meant to support your business model, positioning, and price strategy.
You might also figure out that there are particular segments that your competition has overlooked, and that might be an opportunity for you to establish your business right away!
The key here is to either do something different or do something better than your competitors.
#8 – Keep it simple yet powerful
After all these steps, you still want your small business plan to just flow nicely. Keep your business plan easy to read and easy to understand. Use a clean layout and readable fonts.
Remember tip #2: Know the intention of your small business plan!
Your business plan should specifically be tailored to its readers.
While people like to use many business and marketing terminology to establish their expert status, too many of these words after another can harm your readability a lot. Don’t worry about trying to prove that you’re knowledgeable by language. Just make sure to get your numbers right and have everything well thought out.
Being able to convince your readers with having the perfect answers to what, why, and how questions is way more important than using 20 business words in one sentence.
People nowadays are too busy, and they often skim through any document they get.
In some cases, they will go through your business plan while talking on the phone. That’s why making it as easy and catchy as possible will benefit you.
Here are some steps to help you with that:
- Keep the plan short
- Polish the overall look and feel
- Don’t use long and complicated sentences
- Use straightforward language instead
- Avoid jargons, buzzwords, and acronyms
- Don’t use confusing colors or graphics
- Proofread it to avoid any possible errors
- Let others proofread as well
- Use page breaks to separate sections
#9 – Be realistic with time and resources available
Setting realistic goals is a difficult skill to master. You might already have heard about the smart strategy, so we will not go deeper into that here.
Instead, we will focus on the things you’ve already done.
Mainly your competition analysis.
You might be able to figure out how your competitors have grown. When did they open? When did they reach specific numbers? When did they expand? Through questions like these, you’ll be able to base your time-focused assumptions on facts. Thus have a more realistic feel to everything you say and display.
Having these competition facts as your base will also allow you to have a certain amount of credibility in your business endeavor.
————————Bonus Tip ————————
From our experience, most companies experience high growth within their first year and settle down to a more sustainable growth rate within their first three to five years.
#10 – Pay attention to detail
Lastly, the most essential thing that will make your small business plan stand out is attention to detail.
Everything that you write in your business plan should make sense.
Everything that you state should create synergy within the other parts of your small business plan. You should understand each and every sentence, so you can answer potential questions perfectly.
We know that this is a tricky thing to get right.
And that’s why we’re here to help you.
As business consultants, who’ve already won awards for their business plans, we precisely know what it takes to get your business plan right.
We can pinpoint exactly what needs to be changed.
Curious to see how we can help you to improve your small business plan?
Grab a free initial consultation call right here.
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