Before you launch your business, a strong business plan can help you
clarify your objectives, spot potential stumbling blocks, identify the
resources you'll need, and assess the viability of your concept and expansion strategy.
Even though not every successful business starts with a formal business
plan, many founders find it beneficial to take some time to step back, research
their concept and the market they want to enter, and comprehend the scope and
the strategy behind their tactics. Writing a business plan can help with that.
In the sections that follow, you'll find a step-by-step tutorial on how
to write a business plan, advice on how to make the most of it, and motivating
real-world examples.
What exactly is a Business Plan?
A business plan is a written document that describes a company, its goods
or services, how it makes money now or in the future, who will be in charge of
it, how much money it will need to raise, how it will be financed, how it will
operate, and many other crucial factors. Additionally, a marketing strategy,
mission statement, and brand values are frequently included.
Before funding any project, financial institutions and investors
frequently demand to see the business plan. But even if you don't intend to
look for outside funding, a well-crafted plan serves as your company's roadmap
as it expands.
9 Tips to Write a Business Plan
1. Come up with an executive summary
2. Create a business profile
3. Identify the market
4. Explain the organization and management
5. List your offerings
6. Segment your customer base
7. Establish a marketing strategy
8. Describe your logistics and operational strategy
9. Put together a budget
The prospect of a blank page is one of the scariest things ever. The best
first step you can take is to begin your business plan with a structured
outline and key components for what you'll include in each section.
We've created a high-level overview that you can copy into your blank
document to get you started (and prevent the anxiety of staring at a blank
page) because creating an outline is such an essential step in the process of
writing a business plan. In order to structure your plan, you can also start
with a free business plan template.
It's time to fill in the blanks in your business plan outline. To assist
you in creating your plan piece by piece, we've broken it down into sections.
1. Come up with an Executive Summary
One of your plan's most important sections, the executive summary should
come last when you're writing it. The executive summary's goal is to condense
the entire document for time-pressed reviewers (e. g. give them (potential
customers, lenders, and investors) a brief summary of your company that
encourages them to read more.
Again, since this is a summary, emphasize the important ideas you
discovered while drafting your plan. If you're writing for your own planning
needs, you can completely omit the summary, though you might still want to give
it a shot for practice.
An illustration of an executive summary from the lifestyle company FIGS.
There shouldn't be more than one page in an executive summary. It's true
that the limited amount of space can make fitting in all of the important
details a little stressful, but it's not impossible.
The executive summary of your business plan should contain the following
information.
• Business notion. What do you do for a living?
• A vision and goals for the company. What does your company hope to
accomplish?
• Detailed and distinct product descriptions. What do you sell, and what
makes it unique?
• The target markets. You sell to whom?
• Marketing plan. How do you intend to contact your customers?
• The state of the economy right now. How much money do you make right
now?
• The anticipated financial situation. What kind of earnings are you
anticipating?
• The question. How much money are you requesting?
• The team. Who is a part of the company?
2. Create a Business Profile
The two fundamental questions of who you are and what you intend to do
should be addressed in this section of your business plan.
Providing an introduction to your business, what makes you unique, your
strengths, and why you're a good investment by responding to these questions
with a company description.
As an illustration, the clean makeup company Saie posts a letter from its
founder outlining the goals and rationale behind the business.
Even though you will be the only one to see these details, clarifying
them is still a useful exercise. It's a chance to formalize some of your company's
more abstract elements, such as your values, ideals, and cultural tenets.
Some of the elements your company description should have are listed below:
• The nature of your company (are you a sole proprietorship, general
partnership, limited partnership, or corporation?).
• Your business strategies.
• Your field.
• The value proposition, vision, and mission of your company.
• Background data on your company or its past.
• Short- and long-term business objectives.
• The composition of your team, including the salaries of your key
players.
Goals and Values of the Brand
When defining your brand values, consider all the stakeholders your
business is responsible to, such as owners, employees, suppliers, customers,
and investors. Now think about how you want to interact with each of them on
business. Your guiding principles ought to become clear as you compile your
list.
Including both short- and long-term objectives in your company
description is also a good idea. Generally speaking, short-term goals should be
accomplished within the next year, while long-term goals should be accomplished
within the next one to five years. Make sure the goals you set are SMART:
specific, measurable, attainable, realistic, and time-bound.
Statements of Purpose and Vision
A mission statement can be created once your values are clear. Your
statement should be no longer than one sentence and should convincingly explain
why your business exists.
Next, create your vision statement. When writing your vision statement,
start with the words "We will" and think about the impact you want
your company to have on the world once you've realized your goal. Unlike your
mission statement, your vision statement can be more than one sentence in
length, but try to limit it to three at most. Concise vision statements are the
most effective.
3. Identify the Market
It is true that your market has the power to make or break your business,
regardless of the type you launch. You'll have a head start on success if you
choose the right market for your goods—one where there are lots of customers
who understand and need your product. You might find yourself fighting for
every sale if you select the incorrect market or the appropriate market at the
incorrect time.
Whether or not you ever intend for anyone else to read it, the market
analysis section of your business plan is crucial.
Whether or not you ever intend for anyone else to read it, market research
and analysis should be included in a significant portion of your business plan.
A summary of the size of the market for your products, an analysis of your
company's position in the market, and a summary of the competitive environment
should all be included. In order to convince investors and confirm your own
assumptions as you carry out your plan, it is crucial to conduct in-depth
research that supports your conclusions.
How Large is Your Potential Market?
How many people need your product is an estimate of the potential market.
Although it's thrilling to envision sky-high sales figures, you'll want to use as
much relevant, independent data as you can to validate your estimated potential
market.
Since starting your research can be challenging, the following general
advice will assist you:
• Recognize the traits of your ideal client. Look for government statistics
on the size of your target market to find out where they reside, which social
media platforms they use, and what they like to buy.
• Look into the trajectory and trends of relevant industries. Look at
Google Trends, trade magazines, and industry influencers to discover consumer
and product trends in your industry.
• Pose educated guesses. About your entire addressable market, you'll
never have perfect, comprehensive knowledge. Your objective is to use as many
verifiable data points as possible to support your estimates.
Government statistics offices, business associations, academic studies,
and reputable news organizations that cover your industry are a few places to
look for market information.
SWOT Analysis
Your weaknesses, opportunities, threats, and strengths are examined in a
SWOT analysis. What strengths and weaknesses do you have as a business? What
market or industry shifts can you seize as opportunities? Are there outside
forces posing a threat to your ability to succeed?
SWOT is frequently presented visually or as a grid. Your reader will be
able to quickly understand the elements that could affect your company and
identify your competitive advantage in the market thanks to this visual
presentation.
Competitive Analysis
You can use the following three key elements to set your company apart
from the competition:
• Cost management. By charging less than the majority of your
rivals, you can increase profits. Businesses like Mejuri and Endy are examples.
• Discrimination. Your product or service relies on standing out
due to its uniqueness in order to provide something different from the current
cost leaders in your industry. QALO and Knix come to mind as examples.
• Segmentation. You concentrate on a very particular, or niche,
target market with the intention of gaining traction with a smaller audience
before expanding to a larger one. Great examples of this strategy are
businesses like TomboyX and Heyday Footwear.
You must comprehend your company as well as the marketplace's competitors
to determine which is the best fit.
Even with a cutting-edge product, the market will always be crowded, so
it's critical to include a competitive analysis in your business plan. Include
a list of a few businesses you believe to be direct competitors if you're
entering an established market, and describe how you intend to set your
products and company apart from theirs.
If you sell jewelry, for instance, your competitive advantage might be
the fact that, in contrast to many high-end competitors, you give a portion of
your profits to a reputable charity or pass savings on to your customers.
If you're entering a market where it's difficult to pinpoint direct
competitors, think about your indirect competitors—companies that sell goods
that can be used as a replacement for your own. It's too simple to assert that
you have no competition if you're selling a cutting-edge new piece of kitchen
equipment, for instance. Take into account the strategies that your potential
customers are using to address similar issues.
4. Explain the Organization and Management
Readers should learn who runs your company from the management and
organization section of your business plan. specify your company's legal
structure. Decide whether your company will be incorporated as an S corporation,
a limited partnership, or a sole proprietorship.
If your business has a management team, you can use an organizational
chart to show the roles, responsibilities, and relationships between the people
in your chart as well as the internal organization of your business. Explain
how each person will help your startup succeed.
5. List Your Offerings
The majority of your business plan will focus on your products or
services, but it's crucial to include a section that gives readers who might be
interested in them information about the most important aspects of your
offerings.
If you sell a lot of different products, you can give more general
details about each of your product lines. Provide more details for each item if
you only sell a few. In addition to home goods and other accessories, the bag
store BAGGU, for instance, offers a wide variety of bags in various styles.
These categories and the essential information about the products within each
are listed in the business plan.
An illustration of what the products and services section of BAGGU, a bag
shop, would contain. BAGGU.
Describe any upcoming new products and any intellectual property you plan
to release. Describe how they'll increase revenue. Furthermore, it's critical
to understand where products are sourced; for a drop shipping business,
for example, handmade crafts are sourced differently than trendy items.
6. Segment your Customer Base
The cornerstone of your marketing strategy, if not your entire business
strategy, is your ideal customer, also referred to as your target market. This
person will be important to you as you make strategic decisions, so it's
crucial to comprehend who they are and to include them in your plan.
Identify a range of both broad and detailed demographic traits to provide
a comprehensive picture of your ideal client.
Typical customer segmentation includes:
• Their residence
• Their range in age
• How educated they are
• A few common behavioral patterns
• Their leisure activities
• The workplace
• The technology they employ
• Their annual income
• The places they are frequently employed
• Their opinions, values, and beliefs
This information will vary depending on what you're selling, but you
should be detailed enough to make it crystal clear who you're trying to reach.
More importantly, you should explain why you've made the decisions you have
based on who your customers are and what they value.
For instance, a 50-year-old executive at a Fortune 500 company has
different interests, purchasing tendencies, and price sensitivity than a
college student. Depending on who your ideal customer was, your business
strategy and choices would be very different.
7. Establish a Marketing Strategy
Your ideal client is a direct influence on your marketing strategy. Your
marketing strategy should describe your present choices and your anticipated
course of action, with an emphasis on how your business idea fits that ideal
client.
If you're going to spend a lot of money on TikTok ads or Instagram
marketing, for instance, it might be a good idea to consider whether those
platforms are popular with your target audience. If not, you might want to
reconsider your marketing strategy.
8. Describe your Logistics and Operational Strategy
Your business idea will become a reality through the workflows you put in
place for logistics and operations. Even though you might not need to go into
as much detail as you would if you were looking for investment, this is still a
critical section to take into account when writing a business plan for your own
planning purposes.
Include all elements of your planned operations, such as:
• Suppliers: Where do you
obtain the raw materials required for production, or where are your goods made?
• Production: How long does it take to produce your products and
have them shipped to you? How will you handle a busy season or an unexpected
increase in demand? Will you make, manufacture, wholesale, or dropship your
products?
• Infrastructure: If you plan to have a physical storefront, where
will you and any team members be located?
• Resources: What equipment and technology, from computers to
lightbulbs and everything in between, do you need to be operational?
• Fulfillment and shipping: Are you going to outsource any of the
fulfillment-related tasks, or will you manage them all in-house?
• A listing: How much of it are you going to keep on hand, where
are you going to store it, how will you ship it to partners if necessary, and
how are you going to go about managing your inventory?
This section should demonstrate to your reader that you have a firm grasp
of your supply chain and effective backup plans in place to deal with any
potential uncertainties.
If you are the reader, this information ought to serve as a starting
point for other crucial choices you will need to make, such as how much to
charge for your goods in order to cover your anticipated costs and when you
expect to break even on your initial investment.
9. Put Together a Budget
A business's financial health determines whether it survives or fails,
regardless of how brilliant your idea is or how much time, money, or effort you
invest in it. People want to do business with organizations they believe will
be around for the foreseeable future.
Your audience and your objectives will determine the level of detail
needed in your financial plan, but generally you'll want to include an income
statement, a balance sheet, and a cash-flow statement as the three main views
of your finances.
Financial data and projections might also be appropriate to include.
Here is a spreadsheet template with all the information you need to make
an income statement, balance sheet, and cash-flow statement, along with some
sample data. It can be altered if necessary, to incorporate projections.
Let's go over the various financial statements you will require.
Income Statements
Readers can view your revenue sources and outgoing costs on your income
statement for a specific time period. With those two pieces of information,
they can determine your company's crucial bottom line, or the profit or loss it
made during that period. You can project future milestones using the same data
if your company hasn't yet launched.
Balance Sheets
How much equity you have in your company is visible on your balance sheet.
You list all of the company's assets (what you own) on one side and all of the
company's liabilities (what you owe) on the other.
This gives you a quick view of the shareholder equity of your company,
which is calculated as:.
Assets - Liabilities = Equity
Cash Flow Statements
Your cash flow statement and your income statement are very similar, but
there is one significant distinction: the cash flow statement takes into
account when revenues are received and when expenses are paid.
Your cash flow is positive if the amount of money coming in exceeds the
amount leaving the business. Your cash flow is negative when the opposite
situation holds true. Your cash flow statement should ideally show you when
cash is low, when you might have a surplus, and when you might need to have a
backup funding plan in place to keep your business solvent.
To identify gaps or negative cash flow and make necessary adjustments to
operations, it can be especially helpful to forecast your cash-flow statement.
Why Write a Business Plan?
Business plans are frequently associated with getting a loan because
lenders use them to determine whether to fund a venture after considering its
viability.
Business plans also assist owners in spotting weak points prior to
launch, potentially preventing expensive errors later on. Jordan Barnett, owner
of Kapow Meggings, says that creating a business plan helped him and his team
identify the "unknowns" and made it simpler to see where they might
need assistance or, at the very least, to develop their own skills.
There are several additional compelling justifications to think about
writing a business plan:
• Strategic Planning: You
can clarify your ideas and better understand the scope of your business by
outlining your plan in writing.
It can also help you determine how much time, money, and other resources
you'll need to get started.
• Evaluating Ideas: If you have several ideas in mind, creating a
rough business plan for each can assist you in concentrating your time and
efforts on the projects that have the best chance of succeeding.
• Research: In order to write a business plan, you must conduct
market and competitor research. This will give you the knowledge you need to
make more informed choices.
• Recruiting: Your business plan is one of the simplest ways to
explain your vision to potential new employees and can boost their faith in the
company, particularly if you're in the early stages of growth.
• Partnerships: If you intend to work with other brands, it will
be much simpler for them to decide if your company is a good fit for theirs if
you can give them a clear overview of your vision, your audience, and your
business strategy.
• Competitions: There are numerous business plan competitions that
award prizes like mentorships, grants, or investment money.
A business plan is a great place to start if you're looking for a
structured way to organize your ideas and communicate them to people who can
have a significant impact on your success.
Business plan formats
The length of a business plan can range from one page to multiple pages,
with intricate graphs and reports. A business plan can be written in many
different ways. It is intended to give readers the key details about your
business.
The following are just a few examples of the typical business plans we encounter.
Conventional Business Plans
The most typical business plans are these. Traditional business plans can
be many pages long and take more time to write. This plan is requested by
lending institutions and venture capital firms. If you don't intend to look for
outside funding, traditional business plans might not be required.
The following type enters the picture here.
Traditional business plans
The traditional business plan has been condensed into a lean business
plan. The same structure is used, but only the most crucial details are
presented. Lean business plans are used by companies to adapt current
strategies for a particular target market or to onboard new employees.
Nonprofit business plans
A nonprofit business plan is required for any organization that functions
for the benefit of the public or society. It includes all the information found
in a conventional business plan as well as a section outlining the impact the
company hopes to have. For instance, a speaker and headphone company that wants
to assist those who have hearing impairments. Often, donors ask for this
strategy.
6 Tips for Creating a Small Business Plan
When it comes to writing a business plan, there are a few best practices.
Keep these suggestions in mind as you write even though your plan will be
unique to your company and your objectives.
1. Be Aware of Your Audience
You can adjust the language and level of detail in your plan to the
audience once you know who will be reading it, even if you're just writing it
for yourself to organize your thoughts. This can also assist you in determining
the most pertinent details to include and when to omit less important sections.
2. Have a Specific Objective in Mind
Instead of working through a plan for yourself or even your team, you'll
need to put in more effort and present a more comprehensive plan if your goal
is to secure funding for your company.
3. Spend Time Learning More
Parts of your business plan will be primarily based on your thoughts and
vision, but some of the most important information you'll need will require
independent research. Here is where you can spend time learning about your
target market, whether there is a market for your goods, and who else is
offering comparable goods and services.
4. Keep it Brief and Direct
Your business plan should be concise and easy to read, usually no more
than 15 to 20 pages, regardless of who you are writing it for. Consider
including them as appendices if you have any other documents that you believe
could be helpful to your reader and your objectives.
5. Consistency is Key in Voice, Style, and Tone
This is best handled by having a single person write the plan or by
giving the plan enough time to be properly edited before distributing it.
6. Use a Template for a Business Plan
A free business plan template can serve as the framework for your
strategy. These frequently lead you through every section, including financial
projects and.
7. Make a Business Plan Using Software
The hardest task for business owners to complete is writing a business
plan. But it's crucial for anyone starting or growing a business. Fortunately,
there are tools available to assist with everything from planning and drafting
to graphic creation and data synchronization.
Additionally, business plan software includes tutorials and templates
that can help your complete a thorough plan in a matter of hours as opposed to
days.
Several carefully chosen choices are:
• LivePlan: The most affordable choice with templates and samples.
• Bizplan: Tailored for startups seeking investment
• Go Small Biz: A cost-effective choice with templates tailored to
particular industries.
Common Mistakes when Writing a Business Plan
What we're about to tell you is something that other articles on business
plans would never tell you: Your business plan could fail. The last thing you
need is for your time and effort to be wasted.
Steer clears of these common errors:
• Poor Business Plan: In some cases, your idea might be
unmarketable or too expensive to operate to attract potential investors. Choose
small business concepts with low startup costs as your preferred option.
• No Plan of Escape: Finding funding will be difficult if you
don't present an exit strategy, or a plan for investors to walk away from the
company with the biggest profits.
• Teams with an Uneven Composition: The investment required to launch a business
is a great product. However, a fantastic group of people will win it. Sadly, a
well-balanced team is often neglected by business owners. Instead of worrying
about the logistics, they concentrate on potential profits.
• Inaccurate Financial Projections: Don't forget to include your
income statements, P&L statements, cash flow statements, and balance sheet.
To develop a successful business plan, incorporate your break-even analysis and
return-on-investment calculations into your financial projections.
• Grammatical and Spelling Mistakes: The very best businesses have
their documents edited. How can someone believe you'll run a successful
business if they find typos while reading your business plan?
Create a Business Plan Right Away
Even if you never intend to pitch investors, a business plan can help you
identify specific, deliberate next steps for your company and can also show you
any gaps in your plan before they become problems.
You now know how to create a business plan that meets the objectives and
requirements of your company, whether you're working on launching a fresh
online venture, developing a physical retail location, expanding your current
operation, or buying an already-running company.
0 Comments