We are often been asked by newbies in entrepreneurship whether there is a need to have a business plan. My answer most of the time is a counter-question. Imagine yourself playing a football match without goalposts. Would you be interested in playing such a football match? If not, read this article to write a plan document for your upcoming business in the correct way.
What is a Business Plan?
A business plan is essentially a document where you will be providing details about your business activities, mission, and vision, and information regarding how you plan to achieve the desired goals. Before writing a plan document for your business it is extremely important to know about some mandatory sections.
Why Business Plan is Important?
A Business plan is extremely critical to your success in business. It is always exciting to start and run a business venture. However, the road is also full of stress and obstacles. To reduce the confusion and stress in your business journey, the first thing to be done is to write a plan for your venture.
When done correctly and thoroughly, that document can not only put you on track to proper growth and healthy strategies, but it can also be the perfect way to introduce your company to potential investors.
Here’s a list of guidelines that will help you craft the right plan for your organization. Keep in mind: All businesses are unique and have their own specific challenges that must be met. But, if you stick with these characteristics, you will already be way ahead of where you started.
10 Steps to Write a Business Plan
1. Executive Summary
Begin with a concise overview of your business idea, including your mission statement, product or service description, target market, and competitive advantage. This section should provide a snapshot of your entire business plan.
2. Company Description
Provide a detailed description of your company, its history, legal structure, ownership, and key personnel. Explain the purpose and vision of your business, highlighting its unique selling points.
3. Market Analysis
Conduct thorough market research to understand your target market, industry trends, and competitors. Identify your target audience, their needs, and how your business will meet those needs. Include information on market size, growth potential, and any barriers to entry.
4. Products or Services
Describe your products or services in detail, highlighting their features, benefits, and competitive advantages. Explain how your offerings stand out from competitors and meet the needs of your target market.
5. Marketing and Sales Strategy
Outline your marketing and sales approach. Define your target market segments, positioning, pricing, and distribution channels. Describe your promotional strategies, such as advertising, digital marketing, public relations, and sales tactics.
6. Organizational Structure and Management
Provide an overview of your organizational structure and key team members. Include their qualifications, roles, and responsibilities. If applicable, outline any advisory board or external partnerships.
7. Operational Plan
Detail the day-to-day operations of your business, including location, facilities, equipment, technology, and suppliers. Discuss production processes, inventory management, quality control, and any legal or regulatory requirements.
8. Financial Projections
Present your financial forecasts, including income statements, cash flow projections, and balance sheets. Include sales projections, expenses, startup costs, and funding requirements. Demonstrate your understanding of the financial aspects of your business and provide realistic projections.
9. Risk Assessment and Mitigation
Identify potential risks and challenges that your business may face, such as competition, market fluctuations, or regulatory changes. Outline strategies to mitigate these risks and ensure the long-term sustainability of your business.
Include any additional information that supports your business plan, such as market research data, product details, marketing materials, tax return copies, snippets of financial projections, credible references, partnership contracts, and vendor agreements.
Important Tips to Write an Effective Business Plan
a) Keep it Short and Simple
Be straightforward. You don’t need to fill pages with stuff you’ve ever wanted in your business.
“People think that a business plan needs to be a multi-page document that’s poetic in nature, and that’s not the case,” says Barbara Findlay Schenck, author of Business Plans Kit For Dummies.
She continues “What you need to have is a piece of paper that details the main things that will keep your business on course.”
b) Mention the Most Important Aspects of Your Business
In her book, Schenck emphasizes one must include aspects to make the plan a useful document in starting and running your business: Find below the list:
- Write about your business.
- Provide a detailed description of your product or service.
- Write a competitive environment for the product of your business.
- Mention in detail how you are planning to market your business.
- Write how the business will make money through the business model you have designed.
- Elaborate about how you’re going to produce the product.
- Write the management team, whether it’s you or a small team.
- Provide information on the financial projection, including how much money you need and how much money you will profit.
Most of the people who aspire to start a business might already know all these. However often seen these characteristics are often seen missing from their plan document.
“It’s amazing how many businesses start without that knowledge and fail without that knowledge,” Schenck says.
c) Write with Clarity the Unique Selling Points
It’s extremely important for startup newbies to think about the purpose of the business, what exactly they’re selling, who their target audience is, and how it will make money. Schenck says understanding the nature of the business is critical in creating an effective business plan document.
Those are questions that need to be answered right on paper, although Schenck asserts many businesses can’t answer them right away.“These questions can be answered on the back of a napkin for all I care, but when you’ve answered them, you’re in business.”
Schenck continues “Those questions answer what you’re doing, who you’re doing it for, how you’re doing it, and how you’re going to make money doing it.”
d) Take Help from Online Business Plan Writing Software
There are many reputed online platforms that can help you in documenting business plans. You can create your plan document by providing inputs as instructed in the software.
If you are starting from scratch and know little about writing plan documents, this planning software can come in handy. You can check our list of some of the popular software and free templates providing platforms for writing a plan document.
Remember, your business is unique and deserves the utmost care when crafting a plan for success. Making a fair assessment of your requirements and planning and thereby writing a business plan accordingly will ensure that your plan is stable enough to get you off to a flying start.
Frequently Asked Questions
How long should a business plan be?
The length of a business plan can vary depending on the type of your business activity and scale of operation. However, it is advisable to keep it concise. The length of business plans for small businesses is typically between 20 to 40 pages. Try to provide relevant and essential information only. Otherwise, unnecessary details can be overwhelming for the reader.
What should I include in the executive summary?
The executive summary generally includes a brief description of your business, its mission and vision statement, the problem it solves, and your unique selling proposition. In addition, it should also highlight your financial projections, target market, and funding requirements.
How often should I update my business plan?
Your business plan should be a dynamic document. It must be regularly reviewed and updated. And if there are any major changes such as market shifts, new competitors, or changes in your business model, you must quickly make an immediate update. In fact, experts recommend reviewing and updating your business plan at least once a year.
Do I need professional help to write a business plan?
It is without saying, taking professional help to write a business plan has certain advantages, as they have expertise in it. However, it is not mandatory. If you are planning to launch a small business, writing a business plan of your own is advised. In the case of starting a big business and looking for funding from external investors, it is advisable to hire experienced business plan writers.
About the Author: 99businessideas.com led by Rupak Chakrabarty is committed to helping beginners, entrepreneurs, and small business owners in starting, managing, and growing their businesses.