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5 Tips for an Effective Small Business Plan

Yahoo! Business PlanBefore you apply for a business loan for your small business, you will need to craft an effective small business plan (sometimes also called a small business proposal).  Follow these 5 tips to help ensure that your plan will portray your company in the best possible way.

1. Look ahead to the future

A small business plan should include projections for the next 3-5 years, outlining how your company plans to achieve, maintain, and grow revenues. In your marketing strategy section, explain how you will penetrate the market, grow your business, establish channels of distribution, and communicate with customers.

2. Be thorough

Make sure to include an executive summary, financial projections, market analysis, description of your organizational structure, sales strategies, and an explanation of how your product or service was developed. You might also include an appendix of  credit histories, resumes, permits, leases, product pictures or diagrams, legal documents, media clippings, etc.

3. Research the competition

How is your small business different from its competitors? Your business plan must explain what your niche is, as well as how your product or service differs from those currently on the market. Also, avoid casting too wide of a net, or positioning yourself as a jack of all trades.

4. Think about your customers

In your small business plan, you should list the specific consumers, organizations, or businesses that your company intends to serve. If you have not yet conducted research and development (R&D), outline plans for how you will. Why will your product or service be beneficial? Can you find a target market that is being ignored by existing companies?

5. Explain your financial situation

If you are trying to obtain funding for your small business, you must outline how much funding you need, what funding requirements will come up in the next 3-5 years, and how you intend to use the money you have requested (capital purchases, acquisitions, etc.).

Photo Credit: Yahoo, Flickr. 

Dave Donovan


Dave Donovan has written extensively for the web with a primary focus on articles targeting finance and business.