Writing a business plan for a small business can be a daunting task - just the sound of it makes it sound BIG! So here are some down-to-earth tips to make the process easy!

It's important to understand that when developing a plan, there are plans for internal use, those for investors, those for bankers, etc. Be sure you know who your plan is going to be for. In this article we are going to focus on the one written to obtain financing. 

If you are applying for a loan for a small franchise business, this process will be a bit easier as much of the information for three of your four sections the franchisor can help you with.  The bank will also know that you are applying for financing for a business that others have been successful in, and that you'll receive guidance and training for your business.  However, they will still want to know about you and why you personally would be a good fit for this business.

But remember, do NOT go for Length! Even though a plan that is pages and pages long may look impressive on the outside, to a banker with limited time it is NOT impressive!  They want to know "just the facts".  So keep your plan to around 10 pages.

They will evaluate you based on several criteria and those are what they want to know about.  As financing has become more and more difficult to obtain, selling yourself and your plan is required.

Section 1: This section is all about discussing the business that you want to start or get financing for. You may find it helpful to do a small SWAT analysis on your business (S-strengths, W-weaknesses, O-opportunities, T-threats of your business idea) - this will help you complete this section. You'll also want to be sure to properly answer the following questions:

• What is the purpose of this business?
• What problem does it solve?
• What industry will it belong to and how much business does that industry capture?
• Why are you different from what is out there?
• What is your competition?
• What research have you done that makes you believe that your business will succeed? (demographics, etc.)

Section 2: This section is all about you or your staff. In it, you'll discuss who the key people are that will be involved in your business. Be sure to sell yourself first (if you are going to be the main employee), then list the others involved and their relevant information.

• Who are you and your people?
• What relevant experience and education do they have that would make them competant and able to help you run this business?
• What is their job responsibility in your business?

Section 3: Here is where you ask for the amount of money that you would like to receive. Make sure and ask for what you will need - including working capital.

• What are your plans for the money?
• Detail out what it will be spent for and how you determined what those amounts are.

Section 4: In this section describe how you intend to pay off the loan you are asking for.

• Estimate your revenues and be sure to let them know how you came up with your figures.  With a Kids Salon Franchise you would estimate the number of haircuts per month, the price of those and the revenue from other services (with reasonable expecations to start slower and grow over time).  
• Estimate your expenses as best as you can.  Here you should also let them know where you got your figures.  Make sure and group expenditures into easily understandible categories.  For example, talk about your Fixed and Variable Expenses. Fixed are those costs that will not change no matter how much business you do (rent, some salaries, equipment payments, phone, etc.). Variable expenses will change as your business changes (inventory costs, labor, possibly utilities).

If you have pictures or other items that would make this presentation more interesting, by all means add them - but do NOT overdo it!  Only add photos if they help educate the banker on what they will be loaning money for.  Do not just add pictures for fluff.

If you are beginning a small business franchise, then the franchisor can help you with items 2, 3 & 4. The information in the franchisors item 7 will assist you with section 3.  The information in the franchisors FDD item 19 can assist greatly with section 4.  If you are starting a business from scratch, a great resource to walk you through the business plan process is SCORE.

Maybe a franchise could help you in jump starting a new small business!  Download our free whitepaper to learn the four considerations when buying a franchise.