The Essential Components of a Small Business Plan

When thinking about starting a new business, many potential entrepreneurs wonder what types of business would qualify as an “entry” into this fast-growing industry. Well, if you are looking to open your own business, there are several types that you can consider. Small businesses are basically privately owned corporations, partnerships, or singular ownerships which have less than five employees and/or lower yearly revenue than a typical large corporation or business. The most popular business types for entry are independent, limited liability companies (LLCs), partnerships, and sole proprietorships. Any one of these business types would qualify as an entry into the growing world of business.

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The Essential Components of a Small Business Plan

When thinking about starting a new business, many potential entrepreneurs wonder what types of business would qualify as an “entry” into this fast-growing industry. Well, if you are looking to open your own business, there are several types that you can consider. Small businesses are basically privately owned corporations, partnerships, or singular ownerships which have less than five employees and/or lower yearly revenue than a typical large corporation or business. The most popular business types for entry are independent, limited liability companies (LLCs), partnerships, and sole proprietorships. Any one of these business types would qualify as an entry into the growing world of business.

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One important requirement to meet in order to start a small business is that you must have the self-motivation to succeed. Many aspiring small business owners fail for one reason or another-they lack the self-motivation needed to make their businesses a success. But, here are a few selected characteristics that are essential to any small business owner:

Owns their own building or facility. A small business that is operated from an individual’s or employees’ personal residence or garage is not considered a valid company. In order to determine whether your business qualifies as a small business, you must either own and operate a building or facility yourself or hire your employees to work there. A sole proprietorship does not have to lease or own any facilities.

Owns a significant amount of property or assets. Assets include such things as trucks, cars, motorcycles, airplanes, artwork, antiques, jewelry, and furniture. Although the majority of small businesses today do not physically own property, they do have a number of “intangible assets,” such as inventory and accounts receivable. A substantial amount of tangible assets will increase your net worth and qualify your small business for the appropriate tax classification.

Delivers service that people desire. To be classified as a small business, your business must offer a product or service in which people wish they had more of. This means your products or services must meet a specific need in the market that you serve. In this respect, it differs from manufacturing or retailing, which are service-based businesses.

Offers flexible working arrangements. Flexible working arrangements give employees the opportunity to adapt to the needs of their customers. It also makes them more productive. Small businesses that are able to provide flexible working arrangements reap the benefits of having fewer sick days, more vacations, and fewer customer complaints. Most small business organizations also seek to recruit the most qualified employees by offering many benefits and a strong benefits program.

Demonstrates financial ability to grow. Many small business organizations require only a small percentage of the initial investment up front as capital. The remaining balance is invested in the company, with the earnings made primarily by the entrepreneur. As such, the definition of a small business can mean different things to different individuals. In this light, it is imperative that you work closely with a certified public accountant to help you determine both your tangible assets and tangible liabilities.

Proactively seeks out expansion opportunities. Small businesses are oftentimes considered “start-up” companies; however, they do not always have the resources to stay on the market long term. Expansion becomes an option when there is an unexpected need for additional space, equipment, or sales personnel. When seeking expansion, many small businesses use the internet to solicit assistance from various business ventures.

This is based on the definition of a small business. Companies that are in the start-up phase usually count themselves under this definition since they have yet to make significant revenue. Companies in this stage must rely on venture funding in order to meet their short-term goals, as well as plan for long-term growth. As a result, growth is very important to small businesses.

Defines the purpose of the business. A small business is completely different than a large corporation. They are more prone to change due to their smaller size. As such, a small business plan will incorporate some methods for marketing, employee involvement, expansion, succession planning, and business finance.

This requires revenue verification. Most small businesses rely on revenue speculation because they lack resources to run a more efficient operation. In order to qualify for revenue reduction under the alternative investment plan (ATA), you will need to provide quarterly figures of income as well as projected revenue. This is to ensure that you are in compliance with the regulations set forth by the US Small Business Administration.

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