Small business owners have to orchestrate all of the different activities that are needed to make a business work. These activities include providing goods or services to customers. They also include managing any employees you have, as well as performing the back office or administrative duties required to keep the business running. Having a business plan helps to organize and prioritize these activities.

Your marketing plan sets forth the details of promoting, pricing, advertising, and physically reaching your customers. These core business activities focus on getting to the customer and providing the product or service that will generate income. But you also need to plan for the activities that support the primary business activities. An operations plan summarizes how you will create and deliver your product or service to your customers.

Your marketing and sales plan explains how you plan to reach your targeted customers and how you will effectively market your product or service to those customers. For example, the marketing plan specifies the types of advertising that you will use and the timing of those advertisements. In essence, the marketing plan takes the marketing strategy that you developed to a tactical level. It sets forth the specific steps you will take to sell your product or service and provides a timetable for those actions to occur.

The marketing strategy portion of your business plan presents the approach you plan to take in providing products or services to your customers. It explains, at a high level, what you've determined to do to get your customers to buy in the desired quantities. Someone who reads your market strategy should come away with a "big picture" view of how your business will present itself to the market segment in which you will compete. You should assess both the merits and the risks of your enterprise in the marketing strategy.

The action plan is our name for the portion of the business plan in which you account for business operations that weren't covered in the marketing and sales plans. The marketing and sales plans spell out the steps your business will take in an effort to achieve its financial and sales goals. The action plan explains how you will operate and manage your business. It also addresses the back office activities that don't relate directly to providing goods or services to customers. These include activities such as:

How do you determine if there are enough people in your market who are willing to purchase what you have to offer at the price you need to charge to make a profit? The best way is to conduct a methodical analysis of the market you plan to reach. The market analysis presents your conclusions regarding external market factors that will affect your business. It examines the totality of the business environment in which you will compete.

A business plan can help to organize the roles and responsibilities of all the people involved in your business. Even if it's just for your own benefit, a checklist of all the different tasks performed by individuals (or classes of individuals, if you have many employees) may be useful.

A business plan is the blueprint for taking an idea for a product or service and turning it into a commercially viable reality. The marketing portion of the business plan addresses four main topics:

If you have reached the point where you are trying to write a description of what it is that your business actually does or sells, you've probably been thinking about your product or service for quite some time. Now is the time to take a step back and reflect. Because of your familiarity with the idea (after all, it is your idea), you will have to consciously avoid giving it short shrift in your plan. Don't provide needless detail, but remember that the product or service idea you have hasn't been kicking around in the heads of the people who might read your plan. You may have to set the stage a little bit to make sure that a reader understands exactly what your product or service is.

The business entity portion of the plan provides information that is specific to your business. This document sets forth the current status of operations, the management structure and organization, and the identification of key personnel. If the plan is being created for an existing business, historical information is also included. The business background provides the reader with information regarding:

There are a number of issues you should address in your business plan regarding the choice of a facility. Not surprisingly, the most important consideration is usually one of location. The first question to address is why you need a business facility. At one extreme, a consultant may perform most services in space provided by clients. That consultant may not need a facility at all and may maintain a small home office to store reference materials and business records. At the other extreme, a manufacturing business may require, for example, access to rail transport, room for manufacturing operations and storage, parking facilities for a lot of employees, etc.

If you have spent any time and effort at all on a company logo, slogan, or other identifying graphic or text, the cover page is the place to highlight it. If you haven't considered these basic marketing tools, we strongly suggest that you do so. Building an identity is vital if you want people to recognize and remember your business. In addition, the cover sheet contains all the usual and appropriate identification information about the business. This includes business address, telephone numbers, facsimile numbers, etc. The cover sheet should state the date that the plan was prepared, and the period it covers. It should identify the person to contact regarding any questions about the plan (generally, you). If you have prepared multiple copies of your business plan, you might also put a copy number on the cover page to help you ensure that none go astray.

The executive summary is arguably the most important section of the business plan. It must be concise, specific, and well-written. It summarizes the highlights of the completed business plan and provides a brief snapshot of the plan, with sales, spending, and profit summary figures. The summary emphasizes those factors that will make the business a success. It must contain sound numbers for market size, trends, company goals, spending, return on investment, capital expenditures, and funding required.

The business background section of your business plan generally consists of two to four sections that present information that is specific to your business. You may have gathered substantial information about competitors and the industry in general in the course of considering your business plans. This is not the place for that information. Instead, concentrate solely on those characteristics of your business that are specific to your particular business.

As you draft your business plan, you may feel somewhat overwhelmed by the sheer number of external factors that can dramatically impact your business. Most of these factors are simply beyond your control. For example, if your business is dependent on loans or a line of credit, the interest rate on that debt is crucial. Say that you can get a loan at 2 percent over the prime rate. There is no guarantee that the prime rate won't fluctuate, perhaps wildly, in the first few months of your planning period. That means it is up to you to decide not only what assumption to make regarding the rate, but how likely it is that your assumption is correct. If you assume that rates won't change by more than 1 percent one way or the other, how comfortable can you be with that assumption?

Economic and weather conditions immediately come to mind when you think of factors outside your control. If a particular geographic area experiences an economic decline, there isn't much you can do about it. Or, if your business is dependent on fair weather, and unusual conditions prevent you from working, even short-term business plans will quickly go out the window. A house painter faced with nearly constant rain just won't be able to do the planned work. The profitability of a business that relies heavily on borrowed funds can turn on whether interest rates remain within an acceptable range.

As you work your way through the planning process, you will be called on to take your best guess regarding the key operational issues facing any business. You'll have to make estimates regarding productivity, capacity, cash flow, costs, and a hundred other interrelated factors. For example, if you are considering a manufacturing business, how many units of product can you expect a particular piece of equipment to produce? What assumptions can you make about its reliability and potential down time?

After you've considered the purpose of your plan and done some background preparation, it's time to consider the actual elements that you'll include in the written document.

Before turning to the substance of a business plan, let's take a few moments to consider some basic issues regarding the format and presentation of the plan. You want your plan to look professional and be a useful tool. There are a number of things to do to ensure that is the case:

A SWOT analysis is an analytical tool that can help you work through all the information you have about your business. "SWOT" stands for strengths, weaknesses, opportunities, and threats. This type of analysis represents an effort to examine the interaction between the particular characteristics of your business and the external marketplace in which you compete. Many of the conclusions that you draw as a result of the SWOT analysis will be incorporated into the market analysis and market strategy sections of the business plan.

When you draft a business plan, you have to make many different types of assumptions. Some of these are so basic that they remain, appropriately, unstated. Realistically, there is no point in worrying about cataclysmic or other events that can render all your planning moot. You have to start with the assumption that it's going to be "life as usual." For example, retailers assume that consumers will continue to make most of their purchases during the holiday season.

Whether you are expanding an existing business or starting a new one, there is likely to be substantial information available regarding the market you wish to reach.

If you're preparing a business plan for an existing business, you'll find the financial and operating information developed over the business's life to be absolutely essential. This historical information can provide much of what you need for a written business plan. Your business's track record of operations is probably memorialized in a number of ways. You keep books, keep customer and supplier information, file government documents, pay taxes, and perhaps even have some employees with payroll records and personnel files. If your recordkeeping efforts are even more sophisticated, then you may also have cash flow projections, spreadsheets, and other documents that contain information you can use in drafting a plan.

By the time you decide to draft a business plan, the planning process has probably been going on for quite some time, at least in your head. Many portions of the plan will be derived from the analysis you performed as you thought about your idea. Nevertheless, assembling the written plan is more than an exercise in translating your thoughts to a printed page. You'll also have to gather together and organize a lot of specific information relating to your business and to the market you hope to reach. There are many potential sources for that information.

Whether you're in business now or you're just beginning, the starting point of writing a plan includes a thorough analysis of where you (and your business) stand.