Too many people who start small or home based businesses think that business plans are something that only people seeking finance, or big businesses need. The truth is, however, that the small business plan is one of the most important planning tools you have, and we are about to tell you why.
When you are a small business owner, chances are you spend most of your time reacting to events and circumstances. You probably spend more time working IN your business than you do working ON your business. Writing your small business plan, or updating it, even if you do not plan to apply for business funding, is a great way to force yourself to think about where your business is, and where it is going.
Another reason why a small business plan is critical is that it is the business equivalent of the old saying: those to fail to plan, plan to fail. Having something written down, even if you eventually deviate from it, forces you to plan ahead for your business, and it is always better to have a ‘road map’ to remind you of the direction you want to be going in.
Your Small Business Plan and Funding
Many people these days start home businesses or micro enterprises with no capital at all. Some of the world’s most successful companies have been bootstrapped into existence, and it is entirely possible that yours could be too.
However, if you do need funding to get your company from idea to reality, then there is no question that you are going to need a small business plan.
Every type of investor out there, from traditional banks and lenders to business angels, will want to see your business plan before they consider funding your idea. There are several reasons for this.
Firstly, the mere fact that you were committed enough to sit down and write a small business plan, research everything you needed to complete it, and make it as professional as possible tells investors you are serious. Reading your small business plan will give seasoned investors a good idea of your chances of success, and they will also be able to gauge your understanding of business from your plan.
In a nutshell, your business plan will open doors with funders, and if they like what they see, it could be the very thing that gets you the capital you need.
Should You Pay For a Small Business Plan?
If you need a business plan in a hurry, to approach a bank or lender, it can be tempting to pay a professional or company to create the entire plan for you. However, while that is certainly the easiest way to get a small business plan, it might not always be the best idea.
The truth is, writing a small business plan is a crucial part of your business development process. It is a process that forces you to think about where you are today, and where you would like to go with your company. If you leave it up to someone else to do, you lose the learning experience that writing a small business plan offers you.
A better idea would either be to use a business plan template, business-planning software, or to collaborate with a professional on the small business plan you have in mind. That way, you get all the benefit of doing the research and groundwork for your plan, but with a little help to make sure that your small business plan is exactly what you need.
Not only is this a cheaper option than hiring someone to complete your entire plan, but you’ll learn a lot about your business, and how to get from where you are now, to where you want to be.
How Often Should You Change Your Small Business Plan?
So you thought you only ever had to write one business plan. That you would write your plan before your business launched, and that that would be the end of that. The bad news is that you could not be more wrong.
Writing a business plan before you start your business, especially if you want to apply for financing or investment is one of the most important times, you will have to write a small business plan, but there are plenty of other times you will need to revisit your plan. Those times include:
- If you are adding a new product or service to your business.
- If your core team changes, or if you take on a new partner.
- If you open a new, branch or store.
- If you receive financing later on in your company life cycle.
- If you want to apply for later stage financing for your business.
There are plenty of other instances when you will need to rewrite or revise your business plan too – in fact, every time there is a major change in your company, you should probably consider it. So if you have not already learned to write a killer small business plan, or invested in tools to let you do just that, then it is probably a good idea to start thinking about it!
What Do Venture Capitalists Look For in Small Business Plans?
At Caban Investments, we play a important role in supporting aspiring entrepreneurs. As we assess small business plans, our focus is on uncovering specific elements that elevate a business from potential to investment-worthy. In this narrative, we unveil the key criteria we diligently seek when evaluating small business plans, shedding light on the factors that align with our vision for collaborative success.
- Articulating a Distinct Vision and Mission:
Small business plans that capture our attention articulate a distinct vision and mission. We seek clarity in purpose, ensuring that the business aligns seamlessly with Caban Investments’ strategic objectives.
- Market Insight and Opportunity Analysis:
Understanding the market is paramount to our investment approach. We scrutinize business plans for a meticulous analysis of market opportunities, target demographics, and a comprehensive understanding of the competitive landscape.
- Innovation and Scalability:
At Caban Investments, we are drawn to innovation. A compelling small business plan should showcase not only a unique business model but also scalability. We seek ventures that exhibit the potential for rapid growth and sustained profitability.
- Tangible Traction and Milestones:
Tangible evidence of traction is a key consideration for Caban Investments. Small business plans that highlight significant milestones, whether in customer acquisition or revenue growth, instill confidence in the venture’s ability to execute its strategic plans.
- Financial Prudence:
Caban Investments places considerable emphasis on financial projections. We carefully analyze forecasts that reflect a deep understanding of market dynamics, resource allocation strategies, and a realistic approach to potential returns on investment.
- Competent and Passionate Leadership:
The team behind the business is a pivotal factor for Caban Investments. We seek small business plans that spotlight a management team not only skilled and experienced but also passionately committed to the venture’s success.
- Proactive Risk Mitigation:
Acknowledging and mitigating risks is indicative of a well-prepared entrepreneur. At Caban Investments, we value small business plans that candidly address potential risks and outline proactive strategies for mitigation.
- Articulating a Strategic Exit Plan:
Looking to the future, Caban Investments emphasizes the importance of a clear exit strategy in small business plans. We seek plans that define how investors will realize returns, be it through acquisitions or strategic initial public offerings.
In conclusion, Caban Investments approaches small business plans as blueprints for collaborative success. Entrepreneurs aspiring to partner with us should craft plans that align with our criteria, emphasizing clarity in vision, market understanding, innovation, scalability, tangible traction, financial prudence, competent leadership, proactive risk mitigation, and a strategic exit plan. This alignment not only captures our attention but sets the stage for a collaborative journey toward mutual success in the dynamic landscape of entrepreneurial ventures.
