How To Write A Business Plan – A well-detailed business plan can help you clarify your strategy, realize potential roadblocks, make decisions about what you will need in the way of resources, and evaluate the credibility of your decision or your growth plans before you commence a business.
Not every successful business commences with a formal business plan, but lots of business owners find value in taking time to step back, research their idea and the niche they’re willing to focus on, and understand the scope, and the strategy behind their tactics. That is where writing a business plan comes to play. If you are looking for the best way to write the best business plan, this article will assist you. In this guide, you will be allowed to see how to write a business plan.
How To Write A Business Plan
Presented below is a step-by-step guide to writing your business plan.
- Outline an executive summary
- Describe your company
- Explain your business goals
- State your products and services
- Do your product research
- List your marketing and sales plan
- Carry out a business financial analysis
- Make financial projections
- Add more information to an appendix
1. Outline an executive summary
Take this stage as your elevator pitch. It should consist of a mission statement, a brief description of the products or services provided, and a broad summary of your financial growth plans.
Though the executive summary is the 1st thing your investors will read, it can be easier to write it last. Therefore, you can explain the information you’ve identified while writing other sections that go into more detail.
2. Describe your company
Next on the list is your company description, which should contain information like:
Your business’s registered name.
Address of your business location.
Names of important people in the business. Ensure to highlight unique skills or technical expertise among members of your team.
Your company description should also consist of your business structure — e.g a sole proprietorship, partnership, or corporation — and add the percent ownership that each owner has and the percentage of each owner’s involvement in the company.
Also, it should elaborate on the history of your company and the nature of your business now. This prepares the reader to know about your goals in the next section.
3. Explain your business goals
This section spells out what you’d like to achieve, both in the near term and over the long term.
If you’re searching for a business loan or outside investment, you can make use of this section to state why you have a clear need for the funds, how the financing will assist your business growth, and how you plan to accomplish your growth targets. The key is to give a clear explanation of the opportunity presented and how the loan or investment will make your company grow e.g, if your business is launching a 2nd product line, you might state how the loan will assist your company launch the new product and how much you think sales will improve over the next three years as a result.
4. State your products and services
In this section, go into more detail form about the products or services you provide or plan to provide.
You should put the following in this section:
A detailed explanation of how your product or service works.
The pricing model for your market.
The typical customers you are serving.
Your order fulfillment strategy and supply chain.
Your sales strategy.
Your distribution strategy.
You can as well discuss current or pending trademarks and patents associated with your market.
5. Do your product research
Lenders and investors will want to know what makes your product different from your competition. In your market analysis section, stare who your competitors are. Explain what they do well, and list out what you can do better. If you’re serving many underserved markets, highlight that.
6. List your marketing and sales plan
In this section, you can address how you plan to convince customers to buy your products or services, or how you will grow customer loyalty that will lead to repeat business.
7. Carry out a business financial analysis
If you’re just starting, you may not have more information on your business financials yet. If you are an existing business, you will want to put income or profit-and-loss statements, a balance sheet that highlights your assets and debts, and a cash flow statement that display how cash comes into and goes out of the company.
You may also put metrics such as:
Net profit margin: the % of the revenue you keep as net income.
Current ratio: the measurement of your liquidity and competence to repay debts.
Accounts receivable turnover ratio: a measurement of how many times you collect on receivables per year.
This is an awesome place to put charts and graphs that make it easy for those reading your plan to assimilate the financial health of your business.
8. Make financial projections
This is an important part of your business plan if you’re seeking financing or investors. It highlights how your business will generate more profit to repay the loan or how you will make a decent return for investors.
Here, you’ll give your business’s monthly or quarterly sales, expenses, and profit estimates over at least 3 years — with the future numbers if you’ve obtained a new loan.
Accuracy is key, so carefully state your past financial statements before giving projections. Your goals may be strict, but they should also be realistic.
9. Add more information to an appendix
Highlight any supporting information or additional materials that you could not fit in elsewhere, consisting of resumes of key employees, licenses, permits, receipts, equipment leases, patents, bank statements, contracts, and personal as well as business credit history. If the appendix is long, you may want to add a table of contents at the beginning of this section.
What is a Business Plan?
A business plan is a document stating a business, its products or services, how it generates (or will generate) money, its leadership and staffing, its operations model, financing, and many other details important to its success.
A business plan is a document that shows your business’s financial goals and states how you will achieve them. A strong, detailed plan will give a road map for the business’s next 3 to 5 years, and you can share it with interested investors, lenders, or other essential partners.
Here are Some Tips to Assist your Business Plan Stand Out
1. Avoid over-optimism
If you’re putting in for a business loan at a local bank, the loan officer is likely aware of your market pretty well. Giving unreasonable sales estimates can hurt your chances of loan approval.
Spelling, punctuation, and grammatical errors can appear on the page and give lenders and prospective investors the wrong impression. If writing and editing are not your expertise, you may decide to hire a professional business plan writer, copy editor, or proofreader.
3. Use free resources
SCORE is a nonprofit association that gives a large network of volunteer business mentors and experts who can assist you write or edit your business plan. You can look for a mentor or find a local SCORE chapter for more guidance.
Why Write a Business Plan?
1. Strategic planning
Writing out your plan is an important exercise for clarifying your ideas and can assist you to understand the scope of your business, and the amount of time, and money you will need to get commenced the business.
2. Evaluating ideas
If you have many ideas in mind, a rough business plan for each can assist you to focus your time and energy on the options with the highest chance of success.
To write a business plan, you will need to research your ideal audience and your competitors—information that will assist you to make more strategic decisions.
Your business plan is one of the easiest ways to transfer information about your vision to interested new hires and can assist build their confidence in the venture if you’re in the early stages of growth.
If you plan to approach other companies to work with others, having a clear highlight of your vision, your audience, and your business strategy will make it much easier for them to identify whether your business is a good one for theirs—especially if they are working along than you in their growth trajectory.
There are lots of business plan competitions giving prizes consisting of mentorships, grants, or investment capital. To find related competitions in your industry and area, try google searching for “business plan competition + [your industry] and “business plan competition + [your location]”.
If you’re looking for a better way to lay out your thoughts and ideas, and to share the ideas with people who can have a contribute a positive impact on your success, a business plan is a good starting point.
Frequently Asked Question(s)
What are the 5 steps of a business plan?
- Step 1: Define Your Business.
- Step 2: Determine Your Target Audience.
- Step 3: Understand the 5 Forces that impact Your Business.
- Step 4: Create a Competitive Strategy.
- Step 5: Project Your Financial Performance.
What makes a good business plan?
Good plans are usually highly detailed and include information on all aspects of the business, including the industry, marketing, finance, personnel and various operating procedures. They are specific, communicate to all company employees and require commitment from everyone.
- nerdwallet.com – How To Write A Business Plan, Step by Step
- Shopify.com – How To Write The Perfect Business Plan in 9 Steps