Is your 2022 business plan targeting growth? It should be. While the small business environment has been volatile (to say the least!) since March 2020, economists predict this situation will change as COVID-19 infections recede and supply chain shocks even out. According to a recent Kiplinger report, 2022 could be promising for small business: GDP is expected to grow 5.5% and consumer spending is forecasted to increase 4.7%. Things are looking up. So what’s the best way for your business to harness a rebounding economy in 2022? By developing a data-informed business plan now so you can hit the ground running. A well-thought-out business plan outlines your goals, helps you prepare for an unpredictable future, and can help you secure funding for accelerated growth. Did you know that a single 15-minute application with Lendio lets you explore financing options from up to 75+ different lenders? Get started today. Why Does a Business Plan Matter? A business plan accomplishes 2 critical tasks – it helps you strategize ways to optimize your business and it helps you plan the necessary logistics. Crucially, a business plan will also help you with the financial components of both tasks. For example, when “expansion into market B” is on the strategy list, a small business may require upfront capital to work out the logistics. Should you apply for a business loan or trade capital for equity? Does your business have enough cash on hand to afford expansion? Would an increased credit limit do the trick? What to Include in a Business Plan Think of your business plan as a road map: where you’ve been, where you are, where you’ll be going. You should include any data and forecasts that you believe are pertinent to your business plan, too. Spend some time articulating and compiling data that shows how your business is doing right now. Outline your business goals, both overall and for the upcoming year. Next, research your industry, customers, and competition. Based on all this information, determine how you can best accomplish your goals from your current operation. If one of the goals of your business plan requires capital via external financing, Natalie Campion, Funding Manager with Lendio, offers the following advice: “The main thing the lender will want to analyze in a business plan, aside from understanding what product/service you offer, is the market analysis and financial analysis. The lender wants to understand how you stack up against competition in your market as well as a high-level overview of what your industry looks like. Who is your target market? How many of them use your competitor’s products or services? What is the competitive advantage of your product to your competitors? These are all things that will need to be highlighted in order to get a lender comfortable with lending you business capital. Finally, you will have to include financials with your business plan. Lenders will lean on this section the most as it should include how your business projects to perform in the coming 3-5 years as well as historical performance.” How Your Business Plan Should Look Feeling creative? That’s good because there isn’t a standard format for a business plan. Create it as a Google Doc or Microsoft Word document or structure your business plan as a presentation. While lenders, investors, and anyone else who reviews your business plan will likely expect to see certain sections when making loan decisions, how you present each is really up to you. Sections that you’ll want to include are: \tExecutive Summary: TLDR section—your super-short summary of what’s in the business plan. \tGoals for 2022: where you want to go and why; include as many details as practical here. \tBusiness Overview: what your business does as well as where you’ve been, where you are, and where you’d like to go; for 2022, it may be a good idea to include the impact that COVID had on your business, too. \tMarket Analysis/Industry Analysis: where your industry has been, how it’s changed, where it’s heading. \tCompetitive Analysis: who/what competition exists for your business, including their customers, and your own competitive advantage—what sets you apart from the rest of the market. \tSales and Marketing Plan: who or what you’ll target and an overview of how this will help your reach your goals; it’s often helpful to include why these are your targets plus any historical information about the actions you’ve taken in the past and the outcomes. \tOperations and Management Plan: how your operations will need to evolve or change during the year. \tFinancial Plan: information about your cash flow as well as any financing you may need to meet the goals for 2022; include sales forecasts (best-case, worst-case, and status quo), your cash flow statement, profit and loss statement, and budget for expenses (note that a bookkeeping app like Sunrise can simplify some of this section’s work for you and help with future updates). Why Small Business Lenders and Other Financiers Want to See Your Business Plan While it’s a good idea to keep your updated business plan within reach (or at least use it as your North Star to keep you on track), it’s also a valuable tool to assess cash flow: your money in and money out. Lenders and other financiers may ask to see all or part(s) of your business plan to structure the right financial product for your business’s goals and needs. “Your business plan allows lenders to understand the growth strategy of your product or service offering. You can articulate specific objectives you have in place and the corresponding results you expect to achieve. This allows lenders to assess the sustainability of your business and ultimately how much credit they are willing to extend you,” notes Campion. Additionally, a business plan can also influence important decisions. Before taking on major expenses, for example, reference your business plan to see how the purchases will impact your goals—both short-term and long-term. Your business plan keeps your goals front and center so you can base your next moves around them. Why a Business Plan Is More Essential Than Ever in 2022 It’s a good idea to update your business plan annually, although some businesses update theirs more frequently. And considering small businesses are finally exiting the rollercoaster years of 2020 and 2021—when they were more likely to be responding to circumstances than focusing on innovation, inspiration, or expansion—developing a business plan for 2022 may be the best way to refocus on a business's goals and mission. Small businesses that are prepared to take advantage of future increases in consumer- and market-confidence will likely emerge as the most competitive. Ready to find out more about financing to help your business grow? Start your application now. Disclaimer: The information provided in this post does not, and is not intended to, constitute business, legal, tax, or accounting advice and is provided for general informational purposes only. Readers should contact their attorney, business advisor, or tax advisor to obtain advice on any particular matter.