Writing a Small Business Plan – Part One, An Overview

Small business plan One of the most important tasks to carry out when you are planning to launch a brand new small business, is to take time to prepare a fully functional small business plan.

Writing a small business plan will not only allow you to focus on your business start up, but it will also be a valuable asset to present to your business bank manager or indeed any potential investors who may wish to inject vital funds into your new small business.

Another key benefit of a well written business plan is that it becomes a permanent reference point for you to view as needed and will assist you in maintaining your focus for the life of your business.

I am writing this guide in small sections to allow you to follow the plan in your own time. This article will demonstrate the complete overview of what you will need to consider when writing your small business plan.

Small business plan – an overview There are 6 key elements to consider when preparing to write your business plan they are;

  1. Your business aim): this section should indicate your businesses generic goals and should also identify what areas you will need to research (such as marketplace, route to market etc) and also pinpoint an accurate timetable for your small business development.
  2. Stock): this section should demonstrate your products and/or services that your are planning to specialise in, where you may source your products and any legislation you may need to be aware of and comply to.
  3. Promotional): here you should plan to demonstrate how you intend to get your products and services to the marketplace, how you are to proceed with advertising media, where you plan to retail your products and services and also note any restrictions that may apply to certain products or services.
  4. Operational): This is where you should identify the time constraints that may apply (production time, supplier lead time etc), delivery timescale’s to your customers, supplier conformance, shipping options and the limits that will apply.
  5. Financial): This is a key section and should clearly demonstrate your total costing’s, direct expenses, projected stock holding (if applicable), accounting methods, sales tables and your sales targets and company budget controls.
  6. Timetable): When writing your business plan, you will need to focus on ‘forward planning’. This will encompass you projecting a timetable of development …where do you see your company in 5 years for example.

When Do I Need To Hire A Business Plan Consultant

Every new business owner knows that a business plan is critical – it is drilled into them by potential investors and every banking officer they meet. So why is something that is so important to the launch of a new venture so difficult to write? Good question! In this article I will try to address when you should go out and hire a business plan writer versus taking on the task yourself. First time entrepreneurs often cringe when sitting down to write their business plan. Some spend 6 months agonizing over each period and comma, and even worse others spend 6 months procrastinating and do nothing. So lets break it down and see where / when a business planning company should be brought in:

Who will read your business plan and why?

First you need to really understand the purpose of your business plan and who your audience (reader) will be. This is an important point as a business plan being written for a $100,000 loan is VERY different than a document needed for a $10 million round of venture capital! Since this article is focused on first-time small business owners, I will focus on preparing business plans raising less then $1 million in capital. For this “startup” or “seed” business plan 30-35 pages are perfect. You are not expected to deliver a thick book (and no one will read it anyway!). Once you have this down, you can honestly assess which sections you are qualified / comfortable writing and which may need consulting help.

Here is what you should write on your own

It is important for you to write a basic draft / outline of your business plan. Without this direction you are probably asking too much of your consultant. Once you have your thoughts organized on paper you can see what you are comfortable completing. Here are a few suggestions:

Executive Summary: Draft the opening of your business plan – then hire a pro to come in and re-write it. Your executive summary will be read first and first impressions are critical!

Marketing: You need to write your own definition of your target customer / audience. For the market research on industry growth and fancy charts go ahead and hire a consultant.

Competitive Analysis: You should put together the first draft of this section, as it is almost as important to understand your competitors, as it is your customers. If you find a consultant that is an expert in your field, then you can work together and add to your initial list.

The Dreaded Financials

This is the most difficult part of a startup business plan, as you are making projections and assumptions on products / services that you have not even produced or sold yet! If you are stuck on this section you can hire a business plan consultant to just assist you with completing your projections (income statement, cash flow, and balance sheet). Figuring out the cost of goods, delivery costs, and return rates can be simplified by breaking them down into a “light” spreadsheet. Next you need to understand your startup and operating costs – items like electricity, travel, phone expenses, etc. Again just organize these and your consultant can make all the fancy charts and graphs. Just make sure you understand all of the assumptions – for example if you are opening a retail business, you should not look towards your consultant to “guess” your rent – go out and meet with a realtor and come back with real data. If you work closely with your consultant, the financials are a great section to bring in professional help.

Managing Expectations

Now that you know a bit more about when to hire a business plan writer you also need to manage your expectations. You can’t expect a $1,000 business plan to have 20 pages of competitive analysis and a full-blown marketing strategy! If you carefully work through which sections of your business plan need outside help and then manage your consultant closely, your final document will be a success! My next two articles will focus on “How to Find / Hire a Business Plan Consultant” and more importantly “When to Fire your Business Plan Consultant!”

Howard Schwartz is a partner in several business strategy groups, including HJ Ventures International, Inc. Howard has worked with hundreds of entrepreneurs worldwide with a focus on writing business plans for companies interested in raising capital from Venture Funds and Angel Investors. Howard?s business plans have secured several million dollars in funding.