Creating a business plan is one of the first steps in starting your own small business, but it doesn’t have to be an arduous process! This step-by-step guide will walk you through how to create a business plan and cover everything from how to make your budget to how to use your goals and metrics to evaluate whether your business is succeeding or failing over time.
Best of all, the whole process can be completed in just seven steps!
Define your business
The first step of the process is defining your business. What does it do? Who does it serve? Who are its competitors? These are important questions to ask and answer before moving forward.
A simple way to define a product or service is asking Who am I? For instance, if you’re opening up a dog walking service, then the answers would be I’m the person who walks dogs.
The next question to answer is, What problem am I solving? For example: If someone needs their pet taken care of while they’re away during the day, but they don’t have time to do it themselves.
Step 1 – Define your business.
Step 2 – Estimate how much it costs to run your business in one year.
Step 3 – Create a rough draft of what the final plan will look like.
Step 4 – Write about what investors might want from you when reviewing your proposal.
Step 5- Determine which kind of organizational structure best suits the needs of your company (i.e., LLC, C Corp., etc.).
Step 6- Fill out all legal documents needed for registration with state authorities as well as federal authorities (i.e., IRS).
Do your research
Knowledge is power and it can also be the difference between success and
failure. You need to do your research before taking any action related to starting a new business or making changes in an existing one.
Do you know what your target market wants? What’s their price point? Who are they? How do they use the product or service you’re trying to sell them? These are all questions that need answers before going ahead with any of these steps, and the more thoughtfully you answer them, the easier it will be.
The first question would be Who is my audience? It sounds like a simple question but when it comes down to targeting demographics, this question may not be as straightforward as you think.
For example, if I wanted to create marketing material for people who have just had children, I would want to ask myself questions like: What do these people want right now?, Where do they get information on products? and What channels are they most likely looking at?. Do your research before deciding on who your audience is!
Write a mission statement
A mission statement is the fundamental document that defines the organization’s goals, values, and what it hopes to accomplish. The purpose of this statement is twofold: first, it will help you make decisions as you build your company.
Second, it will help you attract and retain employees who share these goals and values. Below are seven steps on how to write a mission statement that helps you achieve both of these purposes. 1) Define Your Company Goals Write down the five-year goals of your company.
These should be ambitious yet achievable – in other words, they should not be too easy or too difficult for your company to do within five years’ time. And remember: there are no wrong answers here!
Set goals and objectives
Setting clear and well-defined goals and objectives is a fundamental step in creating a business plan for your small business. Your goals serve as the guiding star, directing your efforts and providing a sense of purpose to your business endeavors. Objectives, on the other hand, are the specific, measurable targets you aim to achieve within a defined time frame.
Here are some essential considerations when setting goals and objectives for your business plan:
Clarity is Key: Start by articulating your business’s overarching mission and vision. What is the ultimate purpose of your business, and where do you see it in the long run? Your goals should align with this vision.
SMART Goals: Utilize the SMART framework for setting goals: Specific, Measurable, Achievable, Relevant, and Time-bound. SMART goals are more actionable and less prone to ambiguity. For instance, instead of saying “increase revenue,” a SMART goal would be “increase monthly revenue by 15% within the next 12 months.”
Short-Term vs. Long-Term: Distinguish between short-term and long-term goals. Short-term goals are achievable within the next year, while long-term goals span several years. Having a mix of both ensures that you’re addressing immediate needs while planning for sustainable growth.
Prioritize Objectives: Under each goal, outline specific objectives that will help you achieve it. These objectives should be specific tasks or milestones that contribute to your broader goals. Prioritize them based on importance and urgency.
Measure Progress: Define key performance indicators (KPIs) to measure your progress toward achieving objectives. Regularly track and analyze these KPIs to gauge your business’s performance and adjust your strategies accordingly.
Flexibility: While it’s essential to set concrete goals and objectives, allow for some flexibility in your business plan. Market conditions and customer preferences may change, requiring you to adapt your goals and strategies.
Alignment with Resources: Ensure that your goals and objectives are realistic given your available resources, including budget, manpower, and time. Setting unrealistic goals can lead to frustration and burnout.
Communication: Share your goals and objectives with your team if applicable. Having a shared understanding of the business’s direction and purpose can motivate and align your workforce.
Review and Revision: Your business plan is not static. Regularly review your goals and objectives, assess your progress, and make necessary revisions. A dynamic plan can help your business stay agile in a constantly changing market.
Creating a successful business plan involves crafting effective strategies. Here’s how:
- Market Research: Understand your audience and competition.
- Unique Value: Define what makes your business stand out.
- Goals: Set SMART objectives aligned with your vision.
- SWOT Analysis: Evaluate strengths, weaknesses, opportunities, and threats.
- Marketing & Sales: Plan how to reach and convert customers.
- Financials: Budget, project revenue, and secure funding.
- Risk Mitigation: Identify and prepare for potential challenges.
- Execution: Implement and adjust strategies as needed.
- Measure: Monitor progress with KPIs.
- Seek Guidance: Consult mentors or experts for insights.
Strategic planning ensures your small business is well-prepared for success.
Create a financial plan
It’s important that you create a financial plan before you start the business. Your first step is going to be determining how much money is needed and when it needs to be raised. You’ll also need to figure out how much revenue you will need in order to break even.
This can seem like an overwhelming task, but it will be worth the time and effort put into it. A good idea would be putting together a list of all expenses, including fixed costs such as rent, utilities, insurance and other costs that are not dependent on how many products are sold like advertising or marketing materials.
Once you have created the list, evaluate them in order of importance and determine whether they can be reduced or eliminated altogether. For example, if you don’t use any form of advertisement and there isn’t any possible way to cut back on the rent, these should be items which require most attention during this phase.
Put it all together
Now that you have all the pieces, it’s time to put it all together. Create an executive summary and introduction. Outline your company description and mission statement (what is the main purpose of the company?).
Write out your goals, objectives and strategies. Outline what you will be selling or providing, pricing strategy, competition analysis, marketing strategy (if any), channels of distribution (distribution channels), and sustainability.
Finally, create a marketing plan that includes steps for maintaining an ongoing marketing campaign and outlines all necessary costs including startup capital.
It also helps to map out a timeline so you know when certain tasks need to be completed by in order to meet deadlines. Put it all together in one comprehensive document and make sure each area addresses specific needs related to managing and running your new company successfully.
Sometimes, visualizing the process of creating a business plan can make it easier to understand and implement. That’s why we’ve included this insightful video.
In just a few minutes, you’ll gain valuable insights into the ‘7 Steps to Creating a Business Plan for Your Small Business.’ This video breaks down each step, making it more accessible and helping you grasp the core concepts.
So, whether you’re new to business planning or looking to refine your strategy, take a moment to watch the video below and gain a clearer perspective on building a successful business plan.
In conclusion, there are seven steps that you can take in order to create and finalize your own business plan. You can do this by thoroughly thinking about what you want the company’s products or services to be.
You can also think about how much money it will cost and how much you’ll need to raise. After all of this has been done, it is important that you have a firm idea of the strategies and tactics that the company will use for their marketing.
The other essential part of any business plan is the financial forecast which provides an overview of where any earnings or losses are going. Finally, once everything has been put together on paper then it is time for revisions and edits so as not to miss anything before presenting it!