Why and How to Write a Business Plan
Many who take on the business world do so with just an idea. But without proper strategic planning, your new venture is bound to fail. The first step in the right business direction is to write a business plan.
What is a Business Plan?
A business plan is a formally drafted document that mainly consists of three things:
- The goals of the business.
- How you plan to achieve these goals.
- The timeline for achieving these goals.
Your business plan should be your roadmap to success, with practical and actionable steps.
Why Does Every Entrepreneur Need One?
There are many reasons why every entrepreneur needs a business plan for their business, regardless of service, product, or industry. These are the most important reasons:
A Business Plan Acts as a Guide
A business plan is like your playbook. And just like any good sportsman knows, youâll need to adjust the plan according to whatâs happening in the actual match. However, itâs a very good starting point when it comes to strategic planning.
Itâs a Look into the Future (But Just 3-5 Years)
To many, the thought of planning out an entire business in a business plan can be quite daunting. Yet, thatâs just because they donât understand that you donât need to plan and project out a businessâs entire existence.
A business plan should only entail between 3-5 years into the future. Furthermore, you should break down your business plan into smaller pieces. What is the plan for sales, marketing, operations etc.? Thus, a business plan in reality isnât just one massive document containing a big, overarching strategy, but rather a document consisting of multiple mini-plans.
It Helps You Reach Your Goals
You canât reach your goals if you donât know what they are. Thatâs why itâs important to be as detailed as possible when you write a business plan. Besides, you should ensure that each business milestone has a specific date attached to it.
A Business Plan Can Get You Funding
The first thing a bank or investor will ask you, when youâre pitching a business idea for funding, is your business plan. A business plan brings peace of mind that youâve thought this business through, youâve done your strategic planning and that the business is a viable one. It will also assure investors that they will see a return on their investment. Therefore, you should keep all this type of essential information in mind when you write a business plan.
How to Write a Business Plan
As mentioned earlier, to write a business plan is not really so hard. Itâs merely working your way from point A to Z while doing your strategic planning. To make life a little easier, weâve compiled this nifty step-by-step guide to help you write a business plan:
1. Write Your Executive Summary
This is the overview of your business that will dictate whether anyone even digs further into your business plan in the first place. To say that this is an important part of your business plan would be an understatement. Please note that your Executive Summary should not be longer than one page and should include the following:
- Your business concept (what the business does)
- Goals & vision (what you would like to achieve)
- Product/Service description & differentiation (your offering & why itâs different from the other offerings out there)
- Your target market
- Your marketing strategy
- The current financial state of the business
- The predicted future financial state of the business (projections)
- The request (this is only for when youâre providing a business plan to the bank, investors or potential partners and need to lay out your expectation/requirements from them)
- The team (who is currently involved in the business & who you are looking to recruit)
2. Write a Company Introduction
This is where you reveal the core of your business and why it exists. This introduction should include the following information:
- What the company is officially registered as (partnership, sole proprietorship etc.)
- In which industry youâre operating in
- The basic business model
- The businessâs vision, mission and value proposition
- A brief overview of the companyâs history (if any)
- The businessâs objectives (long and short term)
- The personnel and their individual salaries
3. Do a Proper Market Analysis
This section should dive into the depths of your target market. Who is your potential customer? How big is your target audience? What does the competition look like? Where do you see your companyâs position in this landscape? This section will need a lot of research, a thorough SWOT and competitive analysis and well-informed guesses.
4. Draw a Basic Outline of the Management and Organization Structure
This is usually better to understand in the form of an organizational chart. It is also a good idea to add a few paragraphs on each team member, detailing the role they play and what they bring to the table. This ensures the growth of the business.
5. Create a Detailed List of All Products and Services
Describe your products and services (adding pictures is also a good idea when it comes to products). Describe what they entail, pricing, what makes them profitable and any other USP they might have.
6. Do Proper Customer Segmentation
This is where you start diving into greater detail regarding the target audience you already established. Everything from their age, income, location etc.
7. Draw Up Your Marketing Plan
This should be simple, so everyone understands, but detailed enough to be measurable. Things to include should be:
- The product or service youâre planning on launching
- The date of the launch
- The revenue goal
- All actions tied to reaching this goal, including their deadlines
8. Draw Up Your Logistics & Operations Plan
In this section, you need to lay out the following details:
- Suppliers
- Production
- Facilities
- Equipment
- Shipping
- Inventory
These will obviously differ depending on whether your business is product or service-based.
9. Declare Your Financials
This is one of the most important sections when you write a business plan, especially when youâre looking for investment or funding. You should include the following information here:
- An income statement
- A balance sheet
- A cash flow statement
There is no one way to write a business plan. However, if you really donât know where to start, you can search for free templates online or purchase business plan software. This helps you to write a business plan in a way thatâs generally understood and accepted by official institutions and professionals. Generally, there are three types of business plans: The traditional, the lean (which is basically a shorter version of the traditional) and the non-profit (these usually have add-on sections).
If you would like to get more helpful business advice and free resources, go to the Consultport Home Page.
