-
Business Plan and Structure
-
Part 4: Business Plan and Structure
A business plan is a detailed document that explains exactly how you plan on making your business idea work. Business plans help establish your goals and outline how to achieve them throughout all stages of the business. In addition, they are useful for envisioning the long-term success of your company.
Going through the process of creating a business plan will allow you to “map out” everything and help you visualize exactly how your business will run. Many businesses fail because of confusion when executing these key steps. Each of the following processes can be in any format that makes sense to you and your business. However, do not be afraid to second guess yourself during this step. Even sections you believe are fully functional can benefit from reconsideration and scrutiny. In fact, the business plan can be viewed as a “living document.” As you continue to grow, consider revisiting the plan and making any necessary adjustments.
Business plans can serve practical purposes too. As mentioned in Part 3, many lenders require business plans to be submitted as part of the prequalification step. Furthermore, if you are considering utilizing the SBDC’s consulting services, they will expect you to create a business plan. They have a Business Development questionnaire that needs to be filled out before you can meet with a consultant, which you can find here. Consider filling it out in conjunction to working through this outline since it will help frame your thinking. In order to further assist you with creating a business plan, there are two example business plans. Click here to access the first one and click here to access the second.
There are so many resources on the internet for creating a business plan. In fact, there are so many that it can be overwhelming. This section will walk you through the structure of creating a plan and link you to external resources so that you can learn more. We also suggest visiting this website to create a fillable, automatically-formatted business plan. The website will even walk you through creating financial statements, which can be very beneficial. For deeper dives, you can consult external resources such as Citibank’s Small Business Guide (Guide #8 covers business plans) or Wells Fargo’s Guide to Writing a Business Plan. Along with guides, both have videos and other helpful articles that will help you learn a lot. SCORE also has a fillable Microsoft Word template for starting a business plan that can be very useful.
Consider including the following sections in your plan:
An executive summary is a high-level overview of the business that will clearly outline the purpose of the entity and highlight the key points of the business plan. If the business plan is being presented for a particular purpose, such as to a potential investor, the executive summary should include additional detail on that. Here is an Inc. article about tailoring your executive summary, and your business plan, to the intended audiences. Also consider reading this executive summary outline article from Forbes to develop a better understanding of what should be included in this summary. You can also read this article by the U.S. Chamber of Commerce.
It will be exponentially easier to write the executive summary after putting together the rest of the plan. However, when presenting the document, this should appear first.
- Tailor the summary to the intended audience. Even if you do not rewrite the entire plan, make sure that you address any concerns that the readers may have here.
- Consider adding a mission statement in this section.
Deciding on overarching facts about your company can have an enormous impact. Your business structure can affect how much you pay in taxes, how much personal liability you have, and what kinds of paperwork you need to file each year. Be sure to pick a structure that makes the most sense for your business.
- Include basic information about the company, such as legal structure and business type. We highly recommend reading through this IRS webpage, plus all the sub links, since it contains a lot of key tax information about different legal structures and their tax implications. Also clarify if this is an independent business, a takeover, a franchise, an expansion of a former business, etc.
- You can learn more about the different legal structures of businesses by exploring this IRS webpage. The SBA also breaks down the different structures in this article.
- Speak to a lawyer that specializes in businesses to guide you better. They will also be able to easily prepare the necessary paperwork required to start a small business, saving you time.
- For other legal/compliance questions, the SBDC provides resources to identify the required licenses for developing a small business in Georgia. Find more information here.
- Have a summary of the management team.
- Include a list of existing location(s) or potential locations.
Factors to Consider when Selecting a Business’s Organizational Form
- Cost of creating the organization
- How long will it take to create an organization?
- How much paperwork is involved? What is the cost to file all the paperwork?
- Continuity/stability of the organization
- Keep in mind that any change in the ownership of an organization can change the legal existence of the organization
- Control of decisions
- Who is managing the business organization?
- How will disputes involving managerial control be handled?
- What level of control will you retain if you expand the business or if you have to share equity ownership?
- Personal liability of owners - generally, people want to limit their personal liability
- To what degree is the owner of a business personally liable for the organization’s debts?
- Taxation of organization’s earnings & distributions of profits
- Double taxation of corporate income can be avoided by selecting a form of organization that is “single taxed”
Especially when creating a plan for an external party, it is crucial that the business offering is discussed in great detail. This can help in making general business feasibility decisions, making investment decisions, or gaining an understanding of the product or service. This is also a good place to include pictures or mockups of your products or services, if applicable.
- Describe your products or services thoroughly.
- How does the product/service give the business a competitive edge?
- Will you offer any regular promotions or discounts to incentivize the sale of the product/service?
- What raw materials are needed to create the product? Or, what supplier will you use?
- What supplies will you need to regularly purchase in order to continue offering the service?
- How many employees will you need to provide a service?
- Are there any trainings and/or certifications needed to provide your service?
- Are there any inventory controls needed to manage the products? Inventory controls help you understand what inventory is on hand, how quickly it moves, when to resupply etc.
Recall that in Part 2, you conducted a substantial amount of market analysis to determine that this business would be successful. In this part of the plan, you will want to present this information so that external parties will be able to reach the same conclusion.
- Consider displaying information in the form of charts, graphs, or other visuals.
- Research how to present information creatively by reading articles such as this one from Microsoft on how to create visual presentations.
- Be sure to focus on the key takeaways from this analysis.
The operational plan section, unlike the previous parts, will actually outline details related to operating a business on a day-to-day basis. It should list strategies for managing, staffing, manufacturing, fulfillment, inventory, etc.
Think of this as a road-map to how you will run your business each day. You can make this as detailed as you’d like but the more information you add, the easier it will be to execute. If you want more clarity as to what should be included, consider reading ahead to Part 5 and Part 6.
- Figure out your operating hours.
- Estimate how many employees you will need.
- Determine which key suppliers you want to work with
- Discuss seasonal adjustments your business might need to adapt to.
While the terms marketing and sales are often used interchangeably, the two are very different. In order to gain a better understanding of the differences, we highly recommend reviewing sample marketing and sales plans. See here for a PDF of a sample marketing plan. You can also view an example of how to set goals here.
A marketing plan is an outline that you should follow in order to acquire customers. It will use the findings from the market analysis (Part 2) and present clear, measurable objectives that will help capture your target customers. This is a good place to describe your vision for future growth as well. Growth tends to stem from increased demand, which is caused mainly by marketing efforts. The SBDC offers in-person training to educate small business owners on how to market their businesses. Sign-up for in-person training here.
A sales plan, on the other hand, is an outline of the goals that you have in regards to selling your products or services. This will also outline the exact methods you will use to deliver your product or service. The sales plan can be viewed as a segment of the overarching marketing plan.
When creating a marketing plan:
- Determine your target market.
- Create strategies that allow you to reach your customer base.
- Outline any threats that your business might face and how you will combat these through marketing.
- Create a budget for fulfilling your marketing plan.
- If you want more clarity as to what should be included, consider reading ahead to Part 7.
When creating a sales plan:
- Set specific and measurable goals that will allow you to reach your financial targets.
- Tailor your sales strategy to take advantage of opportunities in your market.
- Determine your timeline in which you plan to implement your sales strategy.
- Develop a sales forecast and include costs.
In Part 3, you already created a structure for a financial plan. However, this is the chance to go into more detail, especially since you have more clarity on how you will be operating. You can start to include more detailed estimates for costs and fine-tune projections. Again, make sure that you conduct careful research in order to estimate revenues carefully, have costs be as accurate as possible, and be conservative.
You can also consider tax implications since you’ve picked a legal business structure. Taxes can be a very confusing part of life in general. Therefore, it is recommended that you seek the advice of a tax consultant when deciding how to budget for taxes. As a small business, you could qualify for certain tax credits or deductions, allowing you to pay less in taxes each year. You most likely thought about taxes when you chose a business structure but we recommend consulting a tax professional to give you more insight. Click here to access a list of firms that can help with tax preparation located in Hartwell.
The SBDC’s accounting and financial services can help small business owners better understand and analyze their financial statements. A variety of articles, videos, and other resources, along with contact info for the local offices and the sign-up for in-person training for accounting and finance inquiries, are located here.
- Research how you can make your original profit & loss statements more accurate.
- We suggest reading this article from the U.S. Chamber of Commerce to learn more about financial accounting statements to start off your research.
- Present your original financial statements in easy-to-follow formats (graphs and models can be easier to follow than spreadsheets).
- Consider reading this article on how to present financial information visually in PowerPoint or this article on illustrating financial statements in in Excel to help guide you.
- You can find financial statement templates from SCORE here.
- Account for various taxes you may have to pay.
- Sales Tax
- Property Tax
- Income Tax (personal and corporate)
- Read the SBA guide on paying taxes to learn more
- The IRS has a 9-part video series about taxes for small businesses.
- Research more about potential tax credits you may qualify for. The IRS breaks down some business tax credits that small businesses and self-employed individuals can qualify for, plus the forms themselves.
Presentation
After you are finished creating the content, take time to present the information in an effective manner. For internal purposes, the plan should be a comprehensive outline of your business and should continue to evolve as you grow and develop.
Depending on the final audience, you may choose to emphasize certain parts while glossing over others. For example, if you are sharing the plan with a lender, they will want to see more detail into the financials and how exactly you arrived at your conclusions. On the other hand, they may choose to glance over the structure of the company. If potential investors are reading the plan, they will most likely expect a holistic view of the entire business. Business plans are not just for raising money; you can use this information as a supplement when hiring key employees as well.
Finally, you should consider displaying the content in various forms, such as a presentation deck, an easy to read summary or a full-length version.
- Consider which external parties you will be sharing the plan with.
- Research how your intended audiences prefer to view information. We suggest reading this article on how to tailor a presentation to your intended audience, which gives helpful tips such as what visuals to include for certain audiences.
After you finish:
Get feedback on your business plan from an expert such as an SBDC consultant, who can provide meaningful insights and fine-tune details. You can also share your plan with family and friends and get their feedback!
Register for training via the SBDC’s StartSmart or GrowSmart, sign-up for an in-person course, or reference other helpful SBDC materials here. To filter through classes, use this link to specify location, topic, and price range. To directly contact the closest SBDC office in Gainesville, GA, call: (770) 531-5681. You can also view all available classes at the Gainesville location here.
-
Connecting Business with Community