You may know that your small business needs a written business plan—but how do you get started? What elements should your plan address, and do you need different plans for different audiences? Below we discuss a few of the key factors to consider when drafting your business plan.
Who's Your Target Audience?
Business plans often come into play when you're seeking funding for your business. Private investors and banks typically want to know how your business is structured, what your financial projections are, and what goals you have for growth. Though you want any business plans you have to be internally consistent, you may also consider whether it makes sense to break out your plan into several forms that vary by their audience—one for lenders or investors, one for marketing consultants, one for your tax accountant, and one for internal management and HR.
What Are Your Financial Goals?
Without concrete financial goals and projections, you may not know whether your business is on track. Consider where you want your business to be over the next few years and decades. Are you content with modest growth that allows you to support yourself comfortably? Are you OK with some lean years if it sets you up for rapid growth later? Do you want to grow your business into something that may be passed down to your children and grandchildren? By identifying your financial goals and putting them into writing, you may be able to work toward these goals with clear eyes.
What's Your Succession Plan?
Up to three in every four small businesses lack a written succession plan, which may lead to lengthy and expensive legal battles or even the closure of the business entirely.1 Without clear direction on what should happen if you're no longer able to run the business yourself, your employees and investors may scramble to stay afloat.
Your succession plan should be a detailed contingency plan addressing how your business is to be transferred or managed upon your death or disability. Something as simple as passing it down to your children may lead to strife if they disagree on how the business should be run or on who has decision-making power. Your succession plan may also address your Plan B in the event of a natural disaster (including a fire, flood, or another emergency that may cause you to temporarily shut down). Having these plans in writing may help you navigate whatever the future may bring.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
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