Starting a business without a business plan is one of the mistakes most startups are guilty of. Except you don’t want your business to grow then you can overlook having a business plan. But if you are set to grow your brand, you need a business plan even before starting.
Your business plan is like your map, it doesn’t only guide you, but it also shows investors or potential partners that you are goal oriented. In other words, you know where your business is headed.
Hence, you need to properly think it through before drafting out your business plan. That’s why we have created this guide to help you know exactly what to do if this is your first time. And if it’s not your first time, you can still get some points to add to what you already know.
How to write a Business plan
This article have been grouped into eight steps that will help you write a realistic business plan. Remember to take your time through each step as each one is as important as the other.
- Write your executive summary
- Add your company overview
- Undergo market analysis
- Define your business organization
- Talk about your products and services
- Explain your marketing and sales plan
- Detail your financial plan
- Add an appendix
CREATE YOUR EXECUTIVE SUMMARY
This should be the first step to take when writing your business plan. The content of this summary will be an explanation of what your business is about. This can include its current position, potential position, and the motive of your success.
The executive summary shouldn’t be more than a page or two. Despite the length, it might be the most important part of your business plan. This is because most investors only pick interest in your executive summary.
So, ensure it’s not lengthy. Make it simple and precise. Here is an example of what your executive summary should contain:
- Mission statement: Within a paragraph, you should explain your mission statement and the pressing goals you have.
- General company information: State when your business was formed, the name of any founders and their roles. Also, state the number of employees, and any locations.
- Highlights: Next, include examples (with graphs and charts) of your growth since starting the business. This could be financial market highlights or key milestones of the business. You should also think of this part of your executive summary as evidence supporting the success of your business. If you’re a startup, you might not have any numbers to show here. If that’s the case, give information on your experiences and highlights from your past endeavors.
- Products and services: Briefly describe your products/services, and who your customers are. If you don’t have a product just yet, describe your plans for your product offering.
- Financial information: If you want business financing, you should include your funding goals at the end of your executive summary. Be sure to include any information about banks or lenders you’ve worked with so far.
- Future plans: Summarize your potential plans for your business.
However, this may seem long, but try to keep it simple and easy to understand.
Also, if you find it hard to compile your executive summary together, try working on it when you are done with your business plan. That way, you will have enough details for the summary.
ADD YOUR COMPANY OVERVIEW
This is the second step to completing your business plan. Although this step is similar to the previous one, it is a top-level view into the structure of your business and what you basically do. You can break it down into few subtopics:
- What your business does: Begin your company overview section with a few sentences describing the nature of your business. You can think of this part as your elevator pitch in writing. Also, the first page of your company overview is supposed to give readers and investors a general idea of your business.
- Industry and marketplace of your business: Right after that, you should explain the nature of the industry and marketplace of your business. Where do you fit in? What is the need that your business is specifically serving, and how do you meet that need? Again, remember to keep your explanation brief and concise.
- The legal structure of your business: This is the part potential partners and investors are interested in amongst other things. You have to describe the legal structure of your business. Are you an S-Corp or C-Corp, or LLC? Be sure to explain what kind of business entity your company is. Also, endeavor to provide an overview of your ownership structure as well.
UNDERGO MARKET ANALYSIS
Another step to take note of while writing your business plan is your market analysis. Carryout a qualitative and quantitative analysis of your industry, market and competitors. This is the section that requires precision, details and confidence.
Do not do guess work here, be sure of the figures and facts you will use. That way, investors will have a glimpse of how confident you are about your business. Investors will also know that you have a solid understanding of the mechanics of your market, industry and competitors.
Your market analysis should contain the following:
- Industry description: Give the reader a look into your industry. Describe how big it is, growth rate, how industry leaders predict it will grow in the future, and other important trends and characteristics. Then, list out the important players in your industry.
- Target market overview: This is where you get to discuss your target market or potential customers.
- Target market features: Who are the customers in your target market, and what are their needs? Who is currently trying to serve those needs? Where is your target market located? These are the questions you should be answering as you give in-depth information on your target market.
- Target market size and growth: You should also give readers a look into how big your target market is. Try to give as much data as possible into how your target market makes purchases in the overall industry. These includes; how many, how often, and at what time of the year. Once you have an idea of your target market, give a hint of the projected growth of your market.
- Your market share potential: Now that you know what your target market looks like without you, what will it look like with you? How much market share do you expect to gain in your target area?
- Market pricing: By conducting this market research, you can give the best estimate of how you should be pricing your products. How you should distribute your product, and how you can get ahead with promotional strategies.
- Obstacles: Be sure to include any obstacles to market entry you might come across. This can either be regulation, changing technology, high investment outlays, or lack of personnel in the area.
- Competitor research: Look at their market share, strengths and weaknesses, any barriers they present, partnerships, and so on.
Due to the amount of data, research and information involved in this section, this step may be the longest. However, to make it interesting to read, you must not tell stories, go straight to the point. State your facts, figures and other details without beating around the bush.
DEFINE YOUR BUSINESS ORGANIZATION
Defining your business structure and organizational management is key to any successful business. Hence, you need it in your business plan.
You can breakdown the following to help you:
- Organizational structure: Explain the position of every stakeholder before you give personal details. The beginning of this section should include an organizational chart showing the structure of your business.. This will illustrate that you know who is managing what aspect of your business.
- Ownership structure: In this part, you should explain the ownership hierarchy. Explain who owns what, and how much they own.
- Background of owners and board of directors: Next, explain the background of your team, managers, partners, and board of directors. These backgrounds will prove to potential investors that you are surrounded with individuals who can and will make your business a success.
- Hiring need: If your team isn’t that big right now, you’ll probably need to expand in the future. List out any key hires you will need to make in order to achieve your goals.
TALK ABOUT YOUR PRODUCTS AND SERVICES
After describing your business’s organizational structure, you can now dive into the product or service your business provides. With this step, your goal is to lay out your plans for positioning your product.
When writing a business plan, you can begin this part with a description of your service or product and its potential customers.
To further explain this, this section should contain:
- A description of your product or service: Include the details of your product, and emphasize on what makes your product or service stand out. Talk about how your product serves the needs of your customers and its uniqueness. In other words, discuss the problem as well as the solution your business is offering.
- Current status of products: Explain where your offering currently stands. Is it just in the idea stage or do you have a final product ready to go to market? Give a realistic and honest picture of how developed your core product or service is.
- Product development research and goals: If your product is still in the ideation or creation phase, describe the final result. Also, if you have any plans for future products you would like to research and develop, note them here.
- Sourcing and fulfillment: Do you rely on other vendors to provide your product or service? If so, be sure to make that clear when you’re writing a business plan. Include information about where any inventory or materials are coming from, how you receive them, and how often you need fulfillment.
This section of your business plan is to hype your product or service. Give it the attention it needs.
EXPLAIN YOUR MARKETING AND SALES PLAN
This next step involves explaining how you will market and sell your product or service. Your readers, whether investors or partners, must see how you intend to make money via your business.
Your marketing part can include:
- Positioning: The position your brand has determines how customers find and interact with you. Are you a free service? Or the service that can guarantee quality? This is what makes you stand out against your competitors in a branding sense.
- Promotion: This involves any plans you have for packaging your product, advertising the product (online or in traditional media sources) or dealing with public relations.
After explaining your marketing framework, you can dive into your sales plan:
- Sales force: Describe who will be selling your product. Do you need a sales force? If yes, how big will your sales team be? Who will train them? Now’s the time to take on the responsibilities of a chief sales officer.
- Selling strategy: Give an overview of how you will sell your product or service. Will your team do house-to-house selling? Be sure to describe what the sales funnel looks like for your business.
You may not know how your marketing strategy will look like. But you must give an overview of your plans.
DETAIL YOUR FINANCIAL PLAN
This section can be the most important part of your business plan. Issues involving money should be taken seriously. In your business plan, give a summary of your current financial status, it may be your personal or business financial status. Anyone you want to use.
Also, state how you want you potential finance to look like.
However, if you have been in business before now, you can use input your previous financial data. You should also include:
- Income statements
- Cash flow statements
- Balance sheets
- Accounts receivable statements
- Accounts payable statements (if any)
- Documentation of debt obligations (if any)
Also, while detailing your business finances, you should include financial projections for the first 12 months of business. You can consult a business accountant or financial advisor to help you with this section. If you may need funding now or in the near future, state it there too. State the amount and the purpose of the funds.
ADD AN APPENDIX
In all the steps involved in writing a business plan, this step may seem irrelevant but, that’s not the case. The appendix is situated at the end of your business plan. It should contain all information you didn’t add in the main document.
It could be additional charts, footnotes, or further explanations that are necessary. You can also add legal documents, previous contracts, and product pictures. As much as this is the last part, do not fill it with unnecessary information. Remember to remain simple and straightforward.
Furthermore, you can insert your resume in this section. Your appendix should also begin with a table of contents highlighting each section of your business plan. Then followed by the additional information regarding each section.
By following every step here, consider your business plan worthy of presentation. In cases where you can’t draft your business plan, you can hire an expert to do that for you. But the truth remains: no one can talk about your business like you. You can also use business plan templates for easy understanding.