By Noah Rue

New business owners are excited to turn their dreams into reality. But for many, one of the least appealing parts of starting a new business is writing the small business plan. Most individuals understand the importance of a well-crafted business plan. You’ll need one to apply for business loans, bring in new investors or key personnel, or to forecast your cash flow over the first year of business. But how does one get started to write one?

There are too many aspects of a small business plan to cover in one article. It’s best to work with a business consultant who can help you create a comprehensive plan. Or if your budget is limited, the Service Corps of Retired Executives (SCORE) provides free online resources and in-person mentoring to develop a business plan. Here are a few topics you should consider when putting a business plan together.

The 3 most essential sections of a small business plan

Regardless of whether your business is an e-commerce store, a local service-based business, or retail operation, a proper business plan consists of 8 to 10 important sections. Some sections need to be more concretized than others. The reason for this is the fact that many parts of your small business plan are forecasts that are estimated on industry averages. Once you start operating your business, you will need to make adjustments to estimated facts and figures. Here’s a closer look at three of the most business plan sections:

The business description section

The business description section provides readers with a good idea of how your small business operates and what your company’s goals are. A well-written business description excites or inspires readers, who may be employees, investors, or a bank’s loan officers.

Investors have limited amounts of time to consider which startup(s) they may be willing to fund. Take your time crafting your pitch — the business description is your company’s chance at a first impression, potentially making or breaking the deal. Make your description brief yet compelling to keep the potential investor interested in reading further. usually follows the executive summary and includes:

-Your company’s legal structure (sole proprietorship, S-corporation, limited liability company (LLC), etc.)

-Your startup’s history and what customer needs your company plans on supplying

-A description of the products and services your small business will offer

-A brief overview of your company’s short and long-term business goals

The management and human resources section

Employees are one of the most critical aspects to the success of your business. It’s important to flesh out your employment structure and how you plan on compensating your team. Will key personnel work full time? Or can your online e-commerce store operate using freelance or contract hires? All the details regarding your company’s management and employee structure should be included in this section.

Think about who will read your business plan. A well-thought-out management and human resources section in your business plan can be shared with prospects and recruits you’d like to convince to come on board with your company.

A study found that 33% of employees leave a company over the type of work, while another 24.6% leave over lack of career advancement. Much of this turnover can be prevented if an employer is clearer with prospects from the start. If you’re able to define this section of your business plan with the current and future roles your hired talent will play in your company, you’re likely to improve your employee retention numbers.

The operations section

For a business to function well, its organizational foundation needs to be solid. Aspects such as accounting and record-keeping should be well thought out of and described in your small business plan.

One of the most costly mistakes a new business owner can make is a failure to have an established record-keeping process. For example, if you’re based in California and a former employee requests their personnel file, you must produce it. If you never kept track of the former employee’s reviews and documentation or disposed of it once the employee left, you may be sued by your former employee for one or several Labor Code breaches.

Improperly saving and failing to track essential documents and records can lead to government fines for non-compliance, exposure to employee-initiated privacy breach lawsuits, and a lack of awareness of your company’s finances. Safeguard your business from the problems that come from improper record-keeping by implementing a process right away that details your company’s process for storing and disposing of important company-related documentation.

Your small business plan’s return on investment

The business plan is your small business road map to future success. But it could also be a powerful selling tool to convince lenders and investors to give your small business a chance, and attract top talent to join your team. Investing the time to examine all your company’s moving parts may be tedious, but will be well worth it.

_______

Noah Rue is a journalist and a digital nomad, fascinated with the intersection between global health, personal wellness, and modern technology. When he isn’t searching out his next great opportunity, Noah likes to shut off his devices, head to the mountains and read novels based in the American Southwest.