Your small business plan acts as the foundation on which your business is built. It’s the guiding light that can drive the business decisions and actions you take, helps you evaluate which opportunities to pursue and shapes the messages and brand identity you put into the marketplace.

If you pursue small business loans or seek funding from investors, your business plan may be the document that convinces them that your business is worth their financial support.

Despite the many benefits a business plan can offer, creating one that both accurately conveys your vision and uses factual information that drives actionable goals can be a challenge, even for skilled entrepreneurs.

If you’re grappling with how to create a business plan, these seven tips can simplify the creation process and help ensure your effort results in a document that takes your business to the next level.

1. Choose a Format That Fits

Google the phrase “business plan templates” and you’ll find plenty of pre-formatted documents designed to guide you through the process of creating a business plan. Yet, the Small Business Administration (SBA) explains that not all formats are necessarily the right fit for your business. Choosing the wrong template could potentially result in the core of your plan never truly being implemented.

To identify the best plan format, the SBA says to first consider what you hope to accomplish. If your intent is to secure bank funding or financial support from investors, you might choose a traditional business plan format. It will typically include all the details potential financiers will want to know, including current and projected business financials, and factual data about the broader competitive environment and market opportunity your business will pursue.

If you’re creating a business plan to formalize your vision, or simply to put your mission and business goals on paper, however, you have far more flexibility in how you want to format it. So long as your plan communicates the critical ideas your business entails, including key partnerships, points of differentiation and your strategies to gain a competitive advantage, you generally have creative freedom in how you structure the business plan. Ultimately, the end result is an actionable document that represents where your business is today — and where you intend to take it in the future.

2. Tell Your Unique Story

Regardless of the business plan format you choose, Alexander Lowry, professor of finance at Gordon College and a startup advisor to several small businesses, says your plan will be most compelling (and likely easier to write) if you approach it like a story.

Lowry says this structure lends itself to emphasizing how your business will create relevant change — a critical element in hooking your audience. “Name the undeniable shift in the world that creates big stakes and huge urgency,” says Lowry. This sets your plan up to address that there’s a problem in the market and makes it easy to segue into the many critical ways your business will solve it.

3. Research Your Competition

A business plan describes your business financials and opportunities for growth, but the context of those figures depends on how your business stacks up against the competition. The more you understand about the competitive environment, the better equipped you are to establish a unique proposition in your plan that sets your business apart.

According to Business Insider, nearly 20 percent of failed startups went out of business because they were beaten by competitors. The more accurately your plan addresses your market position relative to the broader competitive space, the more valuable the document becomes.

4. Identify the Critical Tipping Point

Your competitive market analysis will use a combination of facts, figures and analysis to demonstrate market need, demand and opportunity. Bring those numbers to life with Lowry’s storytelling structure, and identify the critical tipping point that will emerge when your business gains ground against competitors.

“Demonstrate how the solutions you propose your business will deliver will create big winners and losers,” says Lowry. Substantiate this argument by presenting a “teaser” of the ideal world your business will help to create. “This should be both desirous and difficult for the reader to achieve without your help,” says Lowry.

5. Document Every Claim

A business plan is based on your vision — and should be substantiated with factual data that is credible and convincing. If you cannot find the statistics that prove the demand you say exists for your product or service, keep researching until you have proof.

Free data sources like American Fact FinderBusiness Dynamics Statistics and Claritascan help you unearth actionable data about potential target audiences and competition in a given region.

6. Be Realistic

A business plan should reflect the business you want to build, but the case you present needs to be feasible. Because owning a business is often an exercise in testing, learning and course-correction, Nancy Gaines, business coach and founder of Gain Advantages, Inc., says her business plans became more successful when she changed her perception of how much ground the plan needed to cover.

“I found that running a business is very fluid. There are too many things that change over a year, so a plan quickly becomes outdated. The time and resources spent creating the ‘perfect annual business plan’ is wasted,” says Gaines. Instead, she says to think about your business plan in “90-day sprints. Quarters are long enough to complete meaningful work, yet short enough to hold your focus and course correct as needed.”

7. View the Plan as an Evolving Process

Some business owners can get so overwhelmed by creating a plan that they lose sight of the true objective: address and identify business opportunities and actionable goals.

Gaines suggests that business owners narrow the focus of their business plan only to those aspects of the business that will drive real value. “Choose up to three focus areas that will have the biggest impact in growing your business. For example, seize one opportunity, eliminate one blocker and mitigate one threat,” says Gaines. “Then create and implement the bite-sized action steps within each quarter to accomplish these goals. Repeat the process each quarter to keep your business thriving.”

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