When starting a business, you should always have a guide to explain your vision for your company and how it will succeed down the road. These guides are called business plans, and even small businesses use them. You may be asking yourself, what is a business plan anyway, and what purpose does it serve?

A business plan is simply an outline of your company’s vision, structure, goals, workforce, and financial viability. It exists to help you both gain potential investors and serve as your own reference document.

There is no limit to how short or how long a business plan can be. It may be a succinct, single-page document, or it may be a longer, multi-page document. It can also change as your business grows or adapts to new market trends. If you hope to present your plan to an investor, however, make sure you include as much information as possible.

With these simple steps, you can create a general business plan of your own.

1. State your company’s vision

This section sets the entire stage for how you see your business and what you want it to become. It’s basically a mission statement for your business. This paragraph is the reason you started your business in the first place.

What to include:

  • Business name
  • Business address
  • Owner’s name
  • Description of your business and its services

2. State how your business will succeed

In this section of your plan, you should explain how your business will succeed and what skills you have to succeed in the market. You should include your background, training, trends in your business area, and how your business fits into the competitive landscape.

Questions to help you fill out this section:

  • Do you have a special skill that others don’t in your area?
  • Is your quality of work superior to others in your area?
  • Are your rates going to be lower than your competitors?
  • Is your particular trade or area of expertise in high demand?
  • Is the market for your business growing in your area?
  • What competitive advantages do you have over your competitors?

3. Lay out your organizational plan

In this section, you should state the basic organizational structure of your business. It should include the management hierarchy, as well as who or how you will handle bookkeeping, records, payroll, taxes, spending accounts, and more.

Questions to help you fill out this section:

  • Who manages your business?
  • Are you the sole owner?
  • Do you have an LLC?
  • Will you handle your own bookkeeping, banking, and payroll, or will you hire someone for that? If so, what is their background and experience?
  • What is your business tax structure? Are you eligible for write-offs or exemptions?
  • How will your workers be paid, and what account will their wages come from?

4. State your marketing plan and goals

In this section, you should lay out a general description of your marketing plan. You should include the avenues in which you plan to advertise and your target customer demographic. You should also list your long-term business goals and how you think your marketing strategy can get you there.

Example: If you’re a general contractor who works on small home improvement projects, you should explain how you will target customers in this sector.

Questions to help you fill out this section:

  • Who will handle your marketing?
  • How large or small will your projects be?
  • What is your primary customer demographic? Are you going after the high-end market or are you looking for everyday homeowner projects?
  • How will you target your customer base?
  • What are the benefits of hiring you?
  • What sets your business apart from others?
  • Will your offer promotional deals or specials?
  • Will you primarily use social media to market your business? Will you use traditional marketing methods such as radio, television, print, and billboards? Will you rely on word-of-mouth and personal networking? Will you use contractor services like HomeAdvisor or Angie’s List?
  • Where will your business be in 5 years?

5. Tell about your workforce

In this section, you should describe your workforce and what their skills will be.

If, for instance, you’re a plumber that typically works as a subcontractor or independently, note that you’ll be working alone or with an apprentice. If you’re going to need a crew for your business, state how large you think it will be and what they will be required to do on the job.

Questions to help you fill out this section:

  • How many workers will you need?
  • What will your workers do?
  • Will your workers be full-time or part-time?
  • Will your workers be insured?
  • Will you be working alone?
  • What skills do your workers need?
  • Is there a pool of workers in your area that can meet this demand?

6. Outline the financial viability of your business

In this section, state how you plan to make a profit in the short term, and how you see your company growing in the future. Most small businesses fail within the first five years, so you should break finances and goals down into phases. How much do you expect to make in year one, year two, and moving forward?

You should also lay out your expenses and financial viability. After all, if you run the general numbers and estimate you won’t make enough profits to remain financially solvable, then you may need to reconsider your business plan altogether.

Don’t be afraid to add charts or graphs, as well as balance sheets in this section to show estimated business projections.

Questions that should be answered in this section:

  • How will your business be different where others have failed?
  • How much will you charge for your services?
  • What much will your overhead be, including marketing costs?
  • How much will you pay your workers?
  • What do you expect your gross and net income to be in the first year or two?
  • What are your estimated profit margins in the first few years?
  • How much do you see your business expanding, and what could the net gains be?
  • Do you expect to take on any debt? If so, for how long and how long can your business survive by doing so?
  • Do you have any investors and do you expect to take on any, if needed?

7. Include an appendix section

In an appendix section, you should feature any documents, licenses, or even opinions about your business and its outlook that you have not included previously. There is no limit as to what you can include, but just make sure it’s pertinent information to your business and your plan to succeed.

Sample Business plans can be downloaded at the Small Business Association’s website.