How to raise a small business plan in the U.S., U.K, etc..
February 4, 2022
Small business plan cannot be underestimated if you want to succeed as a small business in the U.S, U.K, or any country with a promising and viable business opportunity, hear this; don’t embark on the least of your business ideas without a purposeful plan to back it up.
It’s not guaranteed you won’t fail if you fail to plan, it’s a simple and proven logic over the course of human existence that you should prioritize in the most seamless way.
What is business plan?
Business plan is a written document which describes a company’s core business activities, its objectives, with detailed guideline on how it plans get funding, manage its affairs to achieve its goals.
However, a well thought-out business plan should cite,
- The executive summary
- Products and services it intends offering to its customers and clients
- Marketing strategy and analysis
- Financial planning and
- A detailed budget.
On a wide spectrum, startup firms use business plans to get started, at large attract outside investors who are willing to commit their funds to business ideas, provided it appears smart, measurable, achievable, realistic, and a time frame.
For example, before banks could provide capital to a small business it’s on the premise that such business has a viable business plan, this stands as rationale for venture capital firms too.
Why you should have a business plan
According SBA, a small business should have a good business plan for the following reasons,
- It helps you to steer the business from ground state to a significant growth
- It helps the entrepreneur reach business milestones
- It’s a gateway to access funding from banks, venture capital firms, etc.
On raising a viable business plan, it’s advisable to follow a method that works, in this sense kindly refer to the following.
1. First of all conduct a market research for your product
It’s an ideal scenario that market research helps you to find ideal customers/clients for your business. There’s a standing competition already, it suffix as an idea which should gear you to make your own business as much unique as possible so you can stand out of the crowd.
How you should use a market research to your advantage
- Use it to find customers
- Use competitive analysis to discover/identify a market advantage
As a tool to find customers: To improve your business idea, market research provides an avenue to match customer behavior and economic trend, which should reveal a unique spot to conquer.
With adequate market research you stand to understand your customers, in-turn reduce risk borne out of ignorance.
Opportunities and limitations are based on availability of demographic information at your disposal. In this category, determine the age, interests, wealth, family, etc. of the market sample/population.
To understand the market real good you should have studied closely and provide answers to the following questions too,
- What is the extent of demand for your product, is there any?
- The market size says a lot, are there a good number of buyers for your offering?
- Then the economic indicators; consider the income and employment rate of the area?
- Consider the location, where exactly do your customers live, can your business penetrate the area?
- Saturation, are there too may products already that are similar to yours and serve same purpose?
- Price, what are the customers willing to pay for the product?
You must conduct a research to provide genuine answers to these questions, advised methods in conducting your research should include the use of
- Distribute questionnaires to the target sample/market
- Carry out in-depth interviews.
To discover the market with a competitive analysis: A good competitive analysis will avail you the best idea about your competitors who supposedly should be competing with your customers.
Identify your competitors by product line or service, then market segmentation, find and address the following,
- The entire market share
- Strength and weaknesses
- Identify an opportunity to penetrate the market
- How important is your target market to your competitors
- Identify possible barriers that may impede your market entrance
- Identify competitors who may impact your breakthrough.
2. Write your business plan
You should understand that your business plan is the requisite foundation for your business, get yourself acquainted with how to write one with a template that makes you the most comfortable.
There’s no perfect way to structure your business, ideally your small business plan should meet your need.
Either you choose the traditional business plan or go for the lean plan, either way make your plan detail oriented.
If you are using a traditional business plan it should go thus,
You are required at this point to tell your reader in brief what your company is and why it would be a success.
Cite your mission statement, product, service, basic introduction into your company’s leadership team, staff and location.
If you plan to ask for financing include financial information.
Describe your company
Kindly provide in details what problem your company solves, you are required to provide a detailed information regarding your company’s strength and Unique Value Proposition at this point.
List out the consumers, organizations and possibly businesses your company plans to meet their needs.
Are there competitive advantages, do you have experts in your team, boast about your strengths.
Competitive research on your target market will make you understand how other businesses operate in the market as well their areas of strength and weakness. Pay detailed attention on what successful competitors are doing, how they do it, are their strategies working, why are they working?
Organization and management
You readers need to know how your company affairs would be managed and who would be in charge of its affairs. Do you have incorporation, or you intend to, either C or S corporation, with a view to partnership general or limited, etc?.
Show how each unique experience in your team will contribute to the growth and transformation of your business, CVs and resumes of your team members could be a good pointer to their individual strengths.
Put in writing a detailed description of the product or service you offer, how does it benefit the market, what does the lifecycle look like.
Do you have plans for intellectual property say patent or copyright , is there going to be a research or development for your line of product/service? Explain these.
Marketing and sales
What is basic in this section is to explain how you would attract, serve and retain your customers, put a detailed explanation on how sales will take place.
Describe your complete marketing and sales strategies since you’ll need this idea for your financial projections.
You probably would be requesting for funding, so outline your funding needs, outline the extent of funding you’ll be looking up in view of five years coming and how you’ll use it.
Debt or equity, clarify and to what extent, funds could go into equipment, materials, salaries, so specify your future financial plans.
Are you likely to set off debt or sell your business in the future? Include it.
At this point your aim is to convince your reader that you have a stable business plan that’ll materialize to financial success.
For established business, it include the following,
- Income statements
- Balance sheet and a
- Cash flow statements for the last five years running at least.
Ensure to mention collaterals at your disposal that could go against a secured loan.
Also, there should be a forecasted income statements, balance sheets and cash flow statements, monthly or quarterly projections may just be fine.
Your projections should be matched with funding requests.
Your appendix should cite/provide supporting documents where requested. Items to cite in your appendix include,
- Credit history as it stands
- Product pictures
- Reference letters
- Operational license
- Legal documents, etc.
3. Calculate your startup costs
In view here is how much you will need to start your business
Identify your expenses.
Is your business a brick-and-mortar business, online business, or service business. Whichever it is you will require different funding.
Common startup costs, kindly pick and add any of the following as it applies to your business,
- Office space
- Equipment and supplies
- Licenses and permits
- Lawyer and accountant
- Employee salaries
- Advertising and marketing
- Market research
- Printed marketing materials
- Making a website
Estimate how much your expenses will cost
Each expenses should be estimated differently, estimate their actual cost to have a fair view of what you are looking to spend.
Sum up your expenses for a financial picture
You should organize your business expenses once you identify them, they should be structured into one time or business expenses.
4. Create a business credit
Get yourself acquainted with how to apply for a business credit, maintain good personal and business credit history. This will ensure you can access further credits even higher than you had initially.
Maintain a good personal and business credit history
The idea with existing small business is that their credit history is dependent on their transactional and business track records, which is established financial history.
But a new business is rated by its owner’s personal credit history score overall.
Kindly find recommendations from the Federal Trade Commission to improve your credit.
Apply for business credit
Having established and managed your business credit you stand at the pole spot to secure financing for your business.
Start by registering for a DUNS number, this is a unique 9-digit identification number designed for each physical location of your existing business.
Monitor your credit
To monitor your business and personal credit report should be of utmost concern. You can monitor your personal credit at the Annual Credit Report website, the only known and authorized source for free reports as preferred by the law.
Get a copy of your company’s report from any of the following to monitor your business credit,
- Dun & Bradstreet, etc.
5. Fund your business
Your best business idea cannot kick off without adequate financing as a result, a need to get your business funded.
See the following recommendations to fund your business/recommended in your small business plan
Ascertain how much funding you need
Knowing the exact or approximate amount of money you need for your business will help you to design what exactly you want.
Having known how much you want, then you can figure out how and where to get it.
Personal funding applies when you look to fund your business yourself, you only fall back to your own financial resources. In this case you may turn to family and friends for capital.
If you need to get funding from investors like the venture capital, follow the below steps
- Find an investor: Ensure such investor has experience working with businesses
- Share your business plan: The investor will require to review your business plan, why? To make sure it meets investing requirements.
- Pass through due diligence review: Here they are looking at your team generally, management, market, product/services, corporate documents, etc.
- Work out terms: Having agreed to invest, you will have to agree on terms and conditions
- Investment: Having agreed on terms, the next step is the investment of funds into the small business.
Other funding opportunities
- You may use crowd funding
- Get small business loan
- Use lender match to find lenders who offer SBA-guaranteed loans
- Use Small Business Investment Company (SBIC)
- Small Business Innovation Research (SBIR)
- Small Business Technology Transfer (STTR) program
Here’s a perfect small business plan you can work with if you are looking to start a small business in the United States, U.K, etc.. follow the recommendations, reach out to SBA for clarity and necessary guide where in doubt.
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