How to Write a Business Plan: 9 Tips


How to Write a Business Plan: 9 Tips

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

How to Write a Business Plan: 9 Tips

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?

 Read: Top 20 Investment Banks in Nigeria

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

How to Write a Business Plan: 9 Tips

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.

 Related: How to Write an Investment Proposal/ Plan - A Step-by-step Guide

Common Mistakes when Writing a Business Plan

How to Write a Business Plan: 9 Tips

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.

Post a Comment