Small Business Management Series

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The Beauty of a Business Plan

Danielle Sonnenberg

A small-business plan contains an executive summary, a basic company outline (describing your product or service, customers, competition and overall industry), an overview of marketing strategies and comprehensive financial analysis.

When writing the executive summary, you should keep in mind what you want from the person who will read it, whether it's a bank representative or a potential investor. Most people neglect to place this vital part right at the beginning, which is where it belongs. Keep the executive summary concise, but ensure it details why your business will be successful.

The description of your company should include its history as well as objectives and goals.

When detailing your product or service, say why it is unique -- possibly in the face of similar industry competition. Why is there a need for your specific product or service? Does your company own any patents or trademarks or need to own them? Are there any barriers that will prevent your service or product from coming into the market? If so, how will you deal with those?

You'll also need a thorough analysis of your market or industry. What percentage of the market do you think you can capture with your product? Include a detailed description of your niche, and be able to address how your market share might increase (or decrease) over time.

For marketing, make sure to lay out your plan. How are you going to reach your base of customers? Will you use an internal marketing force, or are you going to use a direct mail campaign? Also, detail which mediums you will use for promotion, whether television, print, Internet or a combination.

The finance section is particularly important. It should include how much money you need to get the business started. It also should include information on sales, profits and returns on investment.

And many entrepreneurs forget about the table of contents, which is important to include. You can draw this up once you've finished the entire plan; it will give the reader an idea of where you're going before he or she starts. Additionally, although it seems like common sense, don't forget to put numbers on the top corner of every page.

Expert Advice

"The main part of a business plan is the executive summary, which is like a pitch for a movie -- you want to get someone to read the rest of the plan," says Robert Moses, a career counselor at Score, a nonprofit organization that advises small-business owners through its 389 chapters nationwide. Volunteers at the organizations are retired or working executives who have decided to give back to the business community.

There is even a section on Score's Web site to guide you step-by-step through writing a business plan.

"You need to really sell yourself," explains Moses, who worked as a certified public accountant before becoming a Score volunteer.

Be specific in terms of your experiences and the capabilities that you have. What makes you stand out from the sea of entrepreneurs? From the financial viewpoint, how are you going to generate enough income to be a success?

Keep in mind, business plans have two particular purposes: They are used to obtain funding as well as serve as a roadmap for operating the business, explains Moses.

"Good business plans are extremely focused," says Moses. Plans that ramble make the reader lose interest; remember, every single word counts. You want your reader to be entranced enough to keep turning page after page. You don't want your reader to put it down.

More than anything, the reader wants to know how your business will be a success. "It's sort of that intangible of why you're going to be successful and why other people have not been," Moses explains.

So make sure you can address all the issues before you start writing. If you can't answer these questions yourself, how are you going to convince an investor?

Finally, Moses cautions entrepreneurs to be realistic. "If you're looking for $3 million and you have no assets or experience, you're probably not going to get it."

And patience will be required: It typically takes at least several weeks to get a business plan right. "One guy was working on one for a year and half," says Moses. (This entrepreneur, however, was working a full-time job simultaneously.)

Remember, the business plan will be your compass. Take the time and the energy to make it as comprehensive and articulate as you can, and your small business will reap the rewards.