Many SMEs operate without a proper or overall business plan. It happens because a majority of them work on tried-and-tested traditional models and are backed by personal funds or the support of family members or relatives. However, every small business can benefit from a properly drafted business plan, as it helps keep business goals and relevant needs in sight consistently and creates short-term and long-term strategies for success.
Without a foolproof business plan, attracting investment, even from within the family, can be challenging because not everyone is used to blindly trusting an entrepreneur’s claims. When it comes to external investors, a business plan is a must. However, many small business owners find it challenging to create a business plan because they may be used to keeping things ‘in the head’ and not in black and white. So, to make it easy for SME owners, here’s what they need to do to create a successful business plan.
When you draft a business plan, your first task is to draw up an executive summary. Write down an overview and description of your business containing essential details like the date of registration and launch, the structure of the business enterprise, its key services or main products, the target market, and how you intend to invest, earn revenue, break even and turn a profit in a sustainable manner.
Next, note down your observations of the market in respect of your product or service, which particular customer needs it fulfills, and delineate your ideal customer persona or target market segment. At this stage, also include any intelligence on competitors with similar products or services in the market. Then, describe your services or products in detail, highlighting features, intellectual property information, product development plans, and essential technology.
The next step is clearly defining your marketing and sales strategies, highlighting your SME’s distribution plans and pricing criteria. Also, describe your primary sales funnel structure, conversion logic, as well as customer service and retention strategies. Once the description of the operational aspects is over, comes the most important part of planning: financial projections and analysis.
Prepare the financial projections by extrapolating the figures in the past three years’ profit-and-loss and cash flow statements, if they are available. Then prove the feasibility of your business model by explaining key financial ratios and breakeven analysis. Funding needs are mentioned in a business plan after financial projections. If you want others to invest, clearly specify and break down your capital needs for easy understanding. You also need to offer exit strategies and delineate repayment plans.
Ultimately, add an Appendix section to include supplementary materials, including data, brochures, contacts, and details of licenses, which are relevant to your business operations but have not been included in the main sections of the business plan. You can create a business plan that is short or long, brief or detailed according to your needs. But having one as a reference would always help you get funding and serve as a roadmap to achieving business success in the future.
