When it comes to running a small business, having a solid business plan in place is absolutely crucial for success. We talk in more detail about the importance of having a strong business plan in our other blog post here. But in short, a well-thought-out plan helps you set clear goals, identify potential obstacles, and devise strategies for overcoming challenges along the way.
According to Experian, half of all new businesses fail within 3 years of opening. And even if you were to make it past 3 years, there’s roughly a 3 in 4 chance of making it past 5 years. The data isn’t promising, right? Well, whether you’re just starting out or looking to grow your existing business, the bottom line is that every business should have a solid plan of action as this massively decreases the potential of things going wrong. Today, we’re sharing our top 10 essential elements that you need to include in your business plan.
Must-have sections to include in your small business plan
1. Executive Summary
This section should provide a brief overview of your business, including your mission statement, goals, and key highlights. It’s essentially a snapshot of what your business is all about. Think of it as the elevator pitch for your business plan – it needs to be concise yet compelling enough to capture attention and entice the reader to want to continue reading. Aim to keep this section under one page while clearly communicating the essence of your business and why it stands out.
Key points to include:
- Business name and location
- Mission statement
- A brief overview of your product or service
- Your business goals and objectives
- Highlights of your financial projections and potential funding needs
2. Company Description
This section dives deeper into the details of your business. It should clearly explain who you are, what you do, and why you do it. Your company description helps potential investors, partners, or stakeholders understand the value your business brings to the market.
Key points to include:
- Your business’s history and background
- The problem your business solves
- Your unique selling proposition (USP) and competitive advantage
- Your target market and how your business meets their needs
- Long-term vision and goals
3. Market Analysis
A thorough market analysis demonstrates that you understand your industry, competitors, and target audience. This section is your chance to show that your business has a viable market to succeed in.
Key points to include:
- Industry trends and growth projections
- Detailed customer demographics and behaviours
- Competitor analysis – who are they, what are they doing well, and where are their weaknesses?
- Opportunities and gaps in the market that your business can capitalise on
4. Organisational Structure & Processes
Your organisational structure outlines how your business operates and who is responsible for what. This section is particularly important if you’re seeking investment or planning to grow, as it shows you’ve built a scalable, sustainable structure.
Key points to include:
- An organisational chart with key roles and team members
- The roles and responsibilities of each team member
- Business processes and workflows that ensure efficiency: include any automation or AI workflows!
- Plans for hiring, training, and scaling your team
5. Products and Services
In this section, detail exactly what your business offers, whether it’s a physical product, a service, or a combination of both. Highlight what sets your offerings apart from competitors and how they add value to your customers.
Key points to include:
- Comprehensive descriptions of your products or services
- Pricing structure and rationale
- Key features and benefits
- The lifecycle of your products or services – how they evolve or are updated
- Future plans for new products or service expansions
6. Marketing and Sales Strategy
Your marketing and sales strategy lays out how you plan to attract and retain customers. This section should provide an overview of your promotional tactics and the channels you’ll use to generate revenue.
Key points to include:
- Your target audience and how you plan to reach them
- Pricing strategies and any promotional offers
- Sales funnels and customer journeys
- Advertising and digital marketing plans, including SEO, social media, and email campaigns
- Partnerships and collaborations that can expand your reach
7. Financial Projections
Your financial projections should paint a clear picture of the financial health and potential of your business. This section is vital for convincing investors or lenders that your business is a sound investment.
Key points to include:
- Profit and loss statements
- Cash flow forecasts
- Balance sheets
- Break-even analysis – when will your business become profitable if you require investment?
- Assumptions and justifications for your projections
8. Funding Requirements & Dependencies
If you’re seeking external funding, this section is essential. Detail the amount you need, how you plan to use it, and the return investors can expect.
Key points to include:
- Total funding required
- Breakdown of how funds will be allocated (e.g., marketing, product development, hiring)
- Timeline for achieving milestones with the funding
- Dependencies – key factors that influence your business success (e.g., technology, suppliers, regulations, or external market factors)
9. SWOT Analysis
A SWOT analysis helps you identify your business’s internal strengths and weaknesses, as well as external opportunities and threats. This exercise can guide your strategic decisions and help you plan for challenges.
Key points to include:
- Strengths: What gives your business a competitive edge?
- Weaknesses: Where do you need to improve?
- Opportunities: What trends or gaps can you leverage?
- Threats: What external risks could impact your success?
10. Action Plan
Your action plan is where everything comes together. This section outlines the specific steps you need to take to achieve your business goals. It should include clear timelines, responsibilities, and measurable milestones.
Key points to include:
- Short-term and long-term goals
- Actionable steps to achieve each goal
- Timelines and deadlines for each action
- Assigned responsibilities for team members
- Contingency plans to address potential challenges
Why is a small business plan important as a small business?
A strong business plan acts as a roadmap for your business, providing clarity and direction. It helps you anticipate challenges, allocate resources effectively, and track your progress over time. Whether you’re pitching to investors or simply trying to stay on track, your business plan is the foundation of your success. If you’re interested in learning more about the importance of a strong business plan you can read our other blog post here.
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Frequently Asked Questions: Small Business Plan
What should a small business plan include?
A small business plan should include essential elements such as an executive summary, company description, market analysis, organisational structure, product or service details, marketing and sales strategy, financial projections, funding requirements, SWOT analysis, and an action plan. Each section plays a critical role in demonstrating your business’s potential to investors, stakeholders, and your internal team.
Why is a business plan important for small businesses?
A business plan is crucial for setting clear goals, identifying potential challenges, and devising strategies to overcome them. It also serves as a roadmap for growth, helping small businesses allocate resources effectively and stay focused. Importantly, a robust business plan can help secure funding by showcasing your business’s viability and potential to investors or lenders.
How do I write a business plan for a small business?
Writing a business plan starts with outlining the key sections, including an executive summary, market analysis, and financial projections. Conduct thorough research to understand your target market and competition, and ensure your financial projections are realistic. Use clear, concise language to make your plan accessible to all stakeholders. If you’re new to business planning, consider using online templates or consulting a professional.
What is the purpose of a business plan for small businesses?
The primary purpose of a business plan is to provide a structured strategy for achieving business goals, managing resources, and navigating challenges. It’s an essential tool for communicating your vision, securing funding, and tracking progress over time. A well-crafted plan also helps align your team’s efforts and ensures everyone is working toward the same objectives.
How detailed should a small business plan be?
The level of detail in a business plan depends on its purpose and audience. For internal use, focus on actionable insights and operational details. When presenting to investors, include comprehensive market research, financial data, and projections. Striking the right balance ensures your plan remains practical while addressing key decision-makers’ concerns.
What are common mistakes when writing a business plan?
Common mistakes include being overly optimistic, neglecting thorough market research, and failing to update the plan regularly. Avoid vague language and unrealistic projections, as these can undermine your credibility. Instead, base your plan on accurate data and clearly define your strategies for overcoming potential challenges.
How often should I update my small business plan?
We would recommend reviewing (and updating, if necessary!) your business plan at least once a year or whenever significant changes occur in your business or market. Regular updates ensure your plan remains relevant and reflects your business’s evolving goals, challenges, and opportunities. A dynamic business plan with strong contingency planning also positions you to respond quickly to market shifts.
Can I write a business plan myself?
Yes, many small business owners write their own plans. However, seeking professional help can enhance the quality and comprehensiveness of your plan. Tools like templates or software can simplify the process, but a professional touch ensures you don’t overlook critical details. It might be a good idea to book a small consultancy session to discuss your approach.
What tools can help me write a business plan?
Several tools are available to streamline the process of writing a business plan. Platforms like LivePlan, and templates from the King’s Trust offer step-by-step guidance. These tools are especially helpful for small business owners who are new to creating structured plans.
How long should a small business plan be?
The length of a business plan varies depending on your industry and goals. Typically, a small business plan can be between 15-30 pages, though simpler businesses may require fewer pages. Focus on clarity and relevance rather than padding your plan with unnecessary details.
What is the difference between a business plan and a business model?
A business model outlines how your business generates revenue, including your value proposition, customer segments, and revenue streams. A business plan, on the other hand, is a broader document that details your strategy for achieving your goals, including market analysis, financial projections, and operational plans.
Should I include visuals in my business plan?
Yes, including visuals like graphs, charts, and tables can make your plan more engaging and easier to understand. Visuals help illustrate complex data and highlight key points, especially in sections like financial projections and market analysis.
How do I present my business plan to investors?
When presenting your business plan to investors, focus on key highlights and use visuals to support your points. Be prepared to answer detailed questions about your projections, strategies, and assumptions. Practice your presentation to ensure clarity and confidence.
What is a lean business plan?
A lean business plan is a simplified version of a traditional business plan. It focuses on essential elements like strategy, tactics, and financials, making it ideal for startups or businesses in the early stages. Lean plans are concise, actionable, and easy to update.
How can a business plan help me secure funding?
A detailed business plan demonstrates your business’s viability and shows investors or lenders how their funds will be used effectively. It provides financial projections, market analysis, and a clear strategy for achieving your goals, giving stakeholders confidence in your ability to deliver results.