Starting a small business requires a leap of faith. But continuing that venture and making it grow into a prosperous, successful business with longevity takes more than faith and luck - it takes thoughtful planning. Hundreds of small businesses start and fail because of a lack of planning, both for good and bad times. A carefully crafted and well-thought-out business plan is a key to the long-term success of your business.
What goes into a business plan? This is an excellent question that many new and potential small business owners should ask, but often do not. Your business plan should be a blueprint for every aspect of your business - a map that you can turn to time and again to see where you should be going in the future and to check where you have been. A business plan can be divided into four distinct sections: the description of your business; the marketing plan; the financial plan; and the management plan. It should encompass the background of your business, overviews of the industry and the market, descriptions of your product or service, as well as forecasts of your financial growth.
Start with the Basics
A good way to begin thinking about your business plan is to ask yourself a question: What business am I in? In answering this question, include your products, market, services, and an assessment of the competition. Following are some major categories that should be included in a thorough business plan:
By taking the time to develop such a business plan, you will be rewarded with a valuable management tool. This plan will become a gauge that guides future decision-making for your company. Without a plan for success, a goal is never achieved because none exists. Successful business owners know their plan and think in terms of how their daily actions will impact upon the plan.
Almost any owner of a successful small business will attest to the value of a business plan. Consider John Smith, who owns a parts distribution business. When he wanted to expand his business and add a new product line, he relied on his business plan to formulate cash flow projections and analyze his new potential customer base. With that information in hand, he was able to secure the financing necessary to grow his business. And Jim Adams, a small business owner, was able to sell his business after only four years to a big competitor in the industry for a large premium over book value. The larger company was able to recognize the value of Jim's business because his business plan was detailed with monthly activities, including strategies and tactics, and financial reporting details to monitor and track results.
These small business success stories are due, in large part, to the commitment by the owners to a business philosophy that involved a strategy of following a well-thought-out and detailed business plan. Developing and following a good business plan is one of the tenents of every successful business. Make sure that you create - and use - a plan to drive your business.
Updated: January 1, 2013
This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and particular needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.
© 2013 Wilmington Trust Corporation.