Many small business owners are at times confused on whether to develop a business plan or not. Due to lack of capacity and management skills, many small business owners consider business planning to be a process that is useless and time consuming. Without proper planning, they just start the business and realize it later the need to develop a plan to run their business successfully.
Business planning is the building blocks of any business. It is an essential guide for the success of the business irrespective of its size and industry. A business plan is a formally written document that helps business owners achieve what they want, plan how to achieve it and keeps the business on track. The document generally projects for the next 3-5 years and outlines the route, the company intends to take to grow revenues. However, not all business plans work out for businesses. So, choosing the right type of business plan that suits your business needs is a crucial thing.
In this article, we will explain you the types of business plans for small businesses.
Types of business plans for small businesses
The Start-Up Business Plan – the most standard: This is the most standard plan which introduces the business to lenders, investors, and provides them a clear picture of company’s goals, ethics, products/services, market forecasts, strategies, implementation of objectives, management team and financial analysis. It provides financial analysis with spreadsheets describing financial areas including projected sales, profit and loss, balance sheets, cash flow and other tables.
Internal Business Plans: Internal business plans are meant only for the target audience within the business and not meant for lenders or investors. Such plans describe the detailed information about company’s current state, including operational costs, profitability and the upcoming product or project. It may also include financial projections if needed for the project that may become forecasts and budgets.
An Operational Business Plan: It is also a kind of internal plan that consists of information related to business operations like annual deadlines, responsibilities of managerial team, milestones, and important dates and events for the upcoming year.
A Strategic Business Plan: It is also an internal plan that focuses mainly on high level options and provides a detailed guide of a company’s goals and how to attain them by laying out a foundational plan for the entire company. This plan includes elements– business mission, vision statement, information on critical success factors and strategies for achieving goals by implementing the schedule of objectives. This type of plan helps in bringing people to work together towards company’s goals.
The Feasibility Business Plan: It is a pre-startup plan that helps the business owner whether the proposed business is worth pursuing. It includes information such as market analysis, estimation of start-up costs, pricing and expenses and a mission statement or target demographics. If this plan indicates business will succeed then the next step to do is lining for a detailed start up business plan.
A Growth or Expansion Plan: This plan is written either for internal or external purpose and is meant for expansion of business in a particular domain of the business or the product/service. If the business owner wants to expand the business, s/he requires investment for the company growth. This plan includes complete description of the company, management and officers. The plan must furnish all the information on the company and satisfy all the potential investors, otherwise they will not fund your business.
Having understood the types of business plans for small businesses, it is very important to have a business plan for your business that will be based on the needs of your business.