A Go-To Guide to Small Business Planning

A business owner is happy for their business' financial future.

Key Takeaways

  • Create SMART goals to establish tangible, achievable objectives for your business. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound.
  • Conduct a SWOT analysis to understand your business's strengths, weaknesses, opportunities, and threats. This helps you gain perspective on your competitive position.
  • Develop a growth strategy that outlines how you plan to scale your business over time. Regularly re-evaluate and adjust this strategy.
  • Create a marketing strategy that identifies your target audience, crafts a unique value proposition, and diversifies your tactics to reach customers. Monitor and optimize this over time.
  • Put together a formal business plan using templates as a guide. Customize the plan for your business needs. Keep the plan updated and use it to secure funding as your business grows.

For entrepreneurs and business owners, planning is key to longevity and success. This is true whether you're starting a brand-new business or looking for ways to grow an existing one.

So, what is small business planning? It's about more than tracking your cash flow and outstanding invoices. Savvy small business owners take a holistic approach to financial planning that includes creating a detailed business strategy to help achieve their objectives and attain long-term, sustainable growth.

Below, we'll cover basics of small business planning, from managing marketing and operations to creating a growth strategy that helps ensure your business remains viable for years to come.

Developing a Business Strategy

Before you get into the nitty-gritty of day-to-day management, developing an overarching strategy for your business is a must. By creating a business strategy, you lay the groundwork for your business's success.

Not sure where to start? Follow these steps to begin outlining your own business strategy.

Identify Business Goals

Your business strategy and your goals are closely related. Take a practical approach to setting business goals by creating SMART goals.

SMART stands for specific, measurable, achievable, relevant and time-bound. These guidelines help you set tangible, feasible goals for your business. Just as important, they help you avoid the temptation to set lofty objectives that are hard to define or accomplish.

When thinking about goals, it helps to break them down by category. Set specific goals around areas such as your business finances, hiring strategies and expense controls. Think about how each goal will help your business fulfill its promise to customers or stakeholders. Consider how your goals can help your business achieve long-term success.

Create a Mission Statement

While you want to be SMART with your business goals, get ready to zoom out to the big picture as you brainstorm your business's mission statement.

A strong mission statement communicates what your business offers to the world. Your mission statement also serves as a north star to guide business decisions big and small. As your business grows, this statement can help you consider how a particular business decision ties back to your mission.

For inspiration, look to other businesses and study their mission statements. Whole Foods, for example, has this mission: "Our purpose is to nourish people and the planet."1 The mission at Salesforce is, "We build bridges between companies and customers."2 Take time to carefully craft a mission that conveys your company's purpose in the world.

Conduct a SWOT Analysis

Strengths, weaknesses, opportunities, threats. That's what SWOT stands for, and it's a good idea to perform a SWOT analysis to better understand your business's competitive position. This exercise will also help you understand your competition and identify opportunities to stand out in the marketplace.

A SWOT analysis involves listing the internal factors affecting your business (your strengths and weaknesses) alongside the external factors (opportunities and threats). Many online resources offer practical tips and templates for performing your own SWOT analysis.3 You may also choose to designate a member of your team to spearhead a SWOT analysis during a company retreat.

Establish a Growth Strategy

Your growth strategy outlines how you plan to scale your business. It's a good idea to outline this strategy after performing a SWOT analysis. That way, you already have a clear view of your business's strengths and weaknesses as you plan for growth.

Your growth strategy will be unique to your business. You might identify goals like enhancing your products and services, or acquiring assets, as part of your approach to growth.4

Your growth strategy is dynamic: Regularly check in on your progress toward your goals. Then adjust your objectives as market conditions evolve and fluctuate.

Financial Planning

You can't run a successful business if your finances aren't in order. Here are some of the most important factors to consider as you organize your business's books.

Budgeting & Cash Flow Management

Create a business budget that encompasses all of your fixed and variable business expenses. Expenses may include office rent or property mortgage, utilities, fees for vendors or services, equipment, marketing, payroll and more.

Beyond helping you manage day-to-day expenses, your budget will come in handy when you need to determine your business's cash flow. It provides a snapshot of the cash moving in and out of your business at a given time, according to Harvard Business School.6 A positive cash flow means more cash is moving into your business than is moving out of it. If your cash flow is negative, it's the opposite.

Whether you're working independently as a sole proprietor or running a large business with a sizeable team, consider working with trusted financial professional. Doing so can help you stay on top of your business budgeting and cash flow management while providing a useful outside perspective.

Developing a Financial Forecast

With a strong understanding of your business's financial position, you can start to develop a financial forecast and estimate your business's worth. This knowledge may be useful if you ever decide to sell an equity stake in your small business, bring on a business partner or pursue a business loan.

There are many ways to evaluate what your business is worth. They include an evaluation of your assets and liabilities, looking at your cash flow, looking at revenue or earnings and comparing your business to competitors.

To get an approximate idea of your business's worth, use our online business valuation calculator . For a more accurate number, consider working with an outside firm to perform a third-party valuation.

Identifying Funding Sources

You may need funds to get a new business off the ground, or perhaps you need a boost to cover expenses during a slow season for your established business.

Regardless of the reason, small business owners can secure funding a number of ways:

  • Small business loans. Many business owners use loans to help launch or grow their businesses. Loans backed by the U.S. Small Business Administration are a popular option that generally come with lower rates and more favorable terms.6 Business owners can also pursue loans through traditional banks and financial institutions. There are many types of business loans available, so get to know your options before pursuing a particular loan.7
  • Investors. Venture capital firms and angel investors are just two types of investors that support small businesses. If you pursue this route, make sure you thoroughly understand the terms — you'll likely need to cede some ownership and control of your company to your investor(s). 8
  • Grants and special programs. From government grants for women and veterans to corporate grants supporting Black business owners, a plethora of small business grants and programs offer financial assistance to business owners in certain industries or from certain backgrounds.9

Managing Risks

Even when your business is thriving, it's crucial to plan ahead for lean periods and anticipate risks.

Aside from loss of revenue, be aware of other risks your company could face. These include, but are not limited to: loss of staff or worker strikes, inventory damage, changes in the market and reputational damage to your company.

Assemble a team of in-house experts and/or trusted vendors and contractors to can help you mitigate different types of damage. For example, keeping a public relations firm on retainer may come in handy if your business ever faces a PR crisis. And a trusted Certified Professional Accountant (CPA) can help ensure your business remains compliant and financially viable.

Marketing Strategy

For small businesses, marketing isn't just a "nice-to-have." Whether you're on a shoestring budget or have a generous bucket of funds allocated to marketing, you can't afford to ignore this piece of the puzzle.

Your marketing strategy helps you position your business in the market and generate loyalty and goodwill among your customers and clients. As you map out your small business marketing strategy, focus on these key areas.

Identify the Target Market

Get to know your target customer on a deep level. By understanding their pain points and motivations, you'll learn how to better communicate with them. You'll also glean how to better tailor your products or services to meet their needs and stand out from your competition.

In addition to doing your research from resources such as industry trade publications, you can also embark on your own methods of audience research to gain a clearer picture of your target audience. Use methods such as interviews, surveys and focus groups to gain valuable face time with your customers and learn what they really think about your business.10

Creating a Unique Selling Proposition (USP)

With your customer research and target audience data in hand, it's time to craft your unique selling proposition (USP).

Your USP articulates what makes your business unique in a sea of competitors.11 Writing your USP can seem tricky at first, especially if your business competes in a crowded marketplace with businesses offering similar products or services. Ask yourself a few questions to consider what makes your business stand out:

  • What makes your product/service different from your competitors' offerings?
  • How does the customer experience at your company differ from the experience with your competitors?
  • How does your customer service compare to the competition?
  • How do your prices compare to those of your competitors? Do you offer more value to the dollar?
  • What do customers say they love most about your business? What keeps them coming back for more?

Develop a Marketing Mix

No matter your budget, it's important to diversify your marketing tactics. Fortunately, there are many low-budget and even free methods to enhance your small business marketing. A few areas to focus on include:

  • Word of mouth. How are you and your business showing up within your industry or in the community? Attend trade shows, local events and network with your target audience to spread the word about your company and your offerings.
  • Social media. Have you created social media channels for your business? Get to know the channels where your customers spend the most time. Focus on these platforms rather than chasing the latest or trendiest apps. Share information that your target audience will find compelling, such as industry news, tips or sales and promotions.
  • Paid advertising. These days, even a small budget can lead to impactful paid advertising. Look into advertising opportunities in trade publications, email newsletters, and podcasts that reach your target audience. Considering boosting social media posts with ad money to increase your reach and expand your audience.

Monitor & Adjust the Strategy

Marketing is a dynamic process. Monitor your efforts and see which ones are paying off and which aren't performing as well. Then, optimize your tactics over time. If you spend several hours a week creating social media content that nobody sees or engages with, move on to a different approach; if you have an ad in a local newsletter that hasn't generated any leads in months, consider investing that money elsewhere.

As you tweak your marketing strategy, look to identify the sweet spot where your effort generates the most bang for your buck.

Crafting an Operations Plan

A growing small business needs a clear operations plan in order to run smoothly and profitably. Take the time to walk through each of these key areas as you craft an operations plan.

Choose the Right Business Structure

Many small business owners start out with a dream and a one-person team. But eventually, it's important to create a legal entity for your business. Choosing the right business structure can help protect you against liability and keep your assets safe.

Business structure options include:

  • Limited liability corporations (LLCs)
  • C corporations
  • S corporations
  • General partnerships

Choosing the more beneficial structure depends on the nature of your business. A financial professional who specializes in small business needs can help you consider your options and stay on track to comply with all of the tax and reporting rules for that business structure.

Determine Key Processes & Resources

In a small business, it's not unusual for one person to wear many hats. But at some point, you may need to expand your team in order to fulfill the key processes of your business.

During the small business planning process, consider the resources you need to fulfill certain areas and processes, including:

  • Human resources
  • Accounting and finance
  • Information technology and data security
  • Marketing and public relations
  • Other areas specific to your business, such as design, production, supply chain management, project management, etc.

You may need to hire full-time or part-time employees to take charge of these areas. Or you may choose to work with a third-party contractor, vendor or agency to help fulfill certain responsibilities, such as hiring an IT firm to manage cybersecurity.

Create an Organizational Chart

An organizational chart — or org chart for short — is a tool for visualizing your company's structure and chain of command. It can also help you identify any potential gaps in your organization where you may need to hire an employee or enlist help from an outside firm.

Plan for Contingencies

Just as you would create a will and estate plan for your personal finances, you should plan for contingencies within your small business. Areas to consider include:

  • Mandatory business insurance. Depending on your industry, you may be required to purchase certain types of insurance for your small business. Plus, if you have any employees, you are required by law to hold unemployment, disability and workers' compensation insurance, according to the U.S. Small Business Association.12 You can also provide them retirement accounts, such as a Simplified Employee Pension (SEP).
  • Optional business insurance. In addition to required insurance, you may elect to purchase additional policies to protect your company and plan for disasters. One option to consider is key person insurance, which provides a death benefit to a business if an owner or key leader dies or becomes disabled.
  • Succession planning and ownership transfers. At some point, you may choose to step away from your small business, whether you're ready to retire or looking to sell the company and move on to other projects. Creating a succession plan will help protect you and your company and smooth the transition to new ownership.

Putting It All Together: Creating a Business Plan

With your business strategy, financial planning, marketing strategy and operations plans in place, you're ready to put the pieces together and create a formal business plan. This plan can help you keep your business on track and can also prove valuable in securing loans and funding.

Select a Business Plan Template

You don't need to reinvent the wheel when you start putting together your business plan. Search online to find business plan examples and templates. Ask other business owners in your network if they would be willing to share their own business plans with you for inspiration.13

Tailor the Plan to Your Specific Needs

When you work from a template, you may find that another company's business plan doesn't perfectly fit your business. Tailor your plan to represent the unique facets of your business. Don't worry about fitting your business into a box — use templates as guidelines, not mandates. Then add and or remove sections as needed to best represent your business.

Keep the Plan Up to Date

A business plan is only useful if it's accurate. After creating your business plan, schedule regular check-ins to review it and update it as needed. You might add a quarterly reminder to your calendar to review your business plan at the same time that you review other aspects of your business.

Use Your Plan to Secure Funding

Many investors and small business lenders will expect to see a thoughtful, thorough business plan before they are willing to fund your business. Keeping a detailed and up-to-date plan will not only help you keep your business moving in the right direction but can help you secure valuable funding as you grow and scale up.

Bottom Line

If you've ever struggled with the question of "what is small business planning?" know that you're not alone. The process of mapping out your business's vision, financial plans, marketing and operations, and overall strategy can feel intimidating, especially if you're a new business owner.

By breaking the task into smaller parts, any business owner can tackle small business planning with confidence. Take the time for thoughtful planning and reflection to take your small business to the next level and attain continuous improvement over time.

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  1. Our Values. https://www.wholefoodsmarket.com/mission-values.
  2. We're Salesforce, the Customer Company. https://www.salesforce.com/company/our-story/.
  3. SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats. https://ctb.ku.edu/en/table-of-contents/assessment/assessing-community-needs-and-resources/swot-analysis/main.
  4. Growth Strategy. https://www.gartner.com/en/finance/glossary/growth-strategy.
  5. CASH FLOW VS. PROFIT: WHAT'S THE DIFFERENCE? https://online.hbs.edu/blog/post/cash-flow-vs-profit
  6. Loans. https://www.sba.gov/funding-programs/loans
  7. 13 Types of Business Loans: Find The Best Loan. https://www.forbes.com/advisor/business-loans/types-of-business-loans/.
  8. Fund your business. https://www.sba.gov/business-guide/plan-your-business/fund-your-business#id-get-venture-capital-from-investors.
  9. 51 Grants, Loans and Programs to Benefit Your Small Business. https://www.uschamber.com/co/run/business-financing/small-business-grants-and-programs
  10. How to do Market Research. https://www.score.org/resource/article/how-do-market-research.
  11. Unique Selling Proposition (USP). https://www.entrepreneur.com/encyclopedia/unique-selling-proposition-usp.
  12. Get business insurance. https://www.sba.gov/business-guide/launch-your-business/get-business-insurance.
  13. Write your business plan. https://www.sba.gov/business-guide/plan-your-business/write-your-business-plan.

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