HOW TO WRITE A BUSINESS PLAN
A business plan is a written document that summarizes the operational goal of a company and financial ability of a business. It is a guide to business success with full information and budgets that show how the goals of the business can be realized.
Why you need a business plan?
Benjamin Franklin once said “if you fail to plan, you are planning to fail” jumping to start a business without a proper plan you will miss some crucial elements that business plan can benefit your entity. Having a business plan will benefit your business one of the following ways.
Grow your business
Documenting a business plan is about establishing a basis for your business. You are not forecasting what your business future will be, you are working through the key master plan of your business that will help you grow your business. This is writing document is not meant to be perfect but it is structure to be review and adjusted to help you recognize and reach your organizational goals.
Having a business plan ensures that you have a guideline that doesn’t just outline where you plan to go, but where you’ve already been.
Your investors and creditors need to know that you have an idea and the flow of your business. You have to prove that your goal can be achievable and sustainable, that you have a business strategy in place and financially stable. This means having the comprehensive financial statements, forecasts, and a digestible explanation of your business methods available for potential investors.
Having your business plan helps you put everything together and create connections to tell a cohesive story about your business goal.
Confident strategic decisions
The biggest decision you will make for your business are mingle with tense periods of growth, reduction, or even external crises. This will allow you to make a highly important decision far more quickly than you may think. Not having up-to-date planning and forecast information, these decisions may be less certain or strategic than they need to be.
Having a documented business plan that you are constantly reviewing, will allow you to make compose decisions. Having necessary information to know when you can hire new employees, launch a new product line or make a purchase. With your business plan you can also plan ahead in case if you have an important decision to make or your decision doesn’t work out as expected, you can quickly review and minimize your potential risk.
Major elements of business plan
Whether you are a writing a business plan to attract investors and to grow your business or you need to test if your idea will work. There are 6 major element to follow when writing your business plan. Below are quick overview of each section.
- Executive summary
- Company and management summary
- Financial plan
The executive summary is a brief explanatory of your business goal and purposes. Executive summary is an important component of your business plan that you want to make sure that it’s as clear and brief as possible. It covers the major component of your business. Your executive summary should be one page or two pages at most, it design on how your business can solve a problem and a make a profit or such an idea that does not exist or your plan to turn your idea to a realistic is not genuine.
A business overview it’s an important part of your business plan that summaries your company information, It describe what your company actually does. Writing an overview about your company can be sensitive, mostly when you are still in the planning phase. If you have an existing business, summarizing your current performance should more easily, it may be harder to explain what your future goal are.
You can summarize the problem you are solving in the market or you are intending to solve in the market. Every business is a problem solver that its customers may need in the market.
This your product or service. How you are addressing the problem you identified in the market.
Who are your target market, or your idea customer? What is your market strategy? What is your pricing strategy? What are the competitive advantage you have over your competitor?
How is your target market solving their problem today? Are there alternatives or substitutes in the market?
Every business has some form of competition and it’s important to provide a brief in your executive summary.
Company overview and team
Provide a quick overview of your team and a short explanation of why you and your team are the right people to solve problem identify in the market.
Investors put an enormous amount of hope on the team—even more than on the idea—because even a great idea needs great execution in order to become a reality.
Focus on the major aspects of your financial plan, ideally with a chart that portrait your planned sales, expenses, and profitability.
If your business model (i.e., how you generate revenue) needs additional clarification, this is where you would do it.
If you are documenting a business plan to get a bank loan or because you’re asking an investors or venture capitalists for funding, you must include the details of what you need in the executive summary.
It is not necessary to include terms of a potential investment, as that will always be negotiated later. You can include a short statement indicating how much money you need to raise.
Milestones and traction
The last major component of an executive summary that investors will want to see is the development that you’ve made so far and future milestones that you intend to hit. If you can prove that your potential customers are already interested in—or perhaps already buying—your product or service, this is great to highlight.
You can overlook the executive summary (or greatly reduce it in scope) if you are writing an internal business plan that’s purely a strategic guide for your company.
Major questions to answer with your executive summary
The major reason of your executive summary is to provide an easily digestible information of your business. To develop this section, try to answer the following questions.
- What are your business objectives?
- What are your target market and how will you position yourself?
- Who are the key players on your team?
- What are your expectations for growth and how will you achieve it?
- What are your funding requirements?
This chapter of your business plan is where the major aspect of your plan lives—it includes details about the problem that you’re solving, your solution, who do you plan to sell to, and how your product or service position into the existing competitive landscape.
Problem and solution
Start the opportunity chapter by describing the problem you identify that you are solving for your customers. What is the primary main point for them? How are they solving their problems today? Maybe the existing solutions to your customer’s problem are very cumbersome. For a business with a physical location, perhaps there aren’t any existing solutions within the logical distance.
To ensure that you are solving a real identify problem for your potential customers, a great step in the business planning process is to talk to your potential customers. Verify that they have the problem you assume they have, and then take the next step and pitch your potential solution to their problem identify. Is it relevant for them?
Market analysis and market research
Market analysis, start with some research. First, identify your market niche and determine how big each segment is. A market segment is a group of people (or other businesses) that you could potentially sell to.
When you identify your target market section, you should describe your competition. Who else is providing solutions to identify problem to your customers’ pain points? What make your solution unique over the competition?
Most business plans include market research analysis and compare their features against their competition using a SWOT analysis. The major important point to demonstrate in this section of your business plan is how your idea solution is different or better than other offerings that a potential customer might consider. Investors will want you to show them the advantages you have over the competition and how you plan on differentiating yourself.
Future products and services
An entrepreneurs always have an idea and a vision of where they want to take the business in the future if they are successful.
While it’s necessary to spend a more of time exploring future opportunities goal for new products and services, you shouldn’t expand too much on these ideas in your business plan. It is advisable to include a paragraph in your future plan, which will point investors to where you are headed in the long term, you don’t want your future plan to be dominated by long-range plans that may not come to reality. The highlight should be on bringing your first products and service to market.
Execution chapter, includes everything about how you’re actually going to make your business work. In this chapter you will cover your marketing and sales plans, operations, how you’ll measure achievement, and the key milestones that you expect to achieve.
Marketing and sales plan
The marketing and sales plan section of your business plan details how you plan to reach your target market, how are you plan on selling to those target markets, what are your pricing plan is, and what types of activities and partnerships you will need to make your business a success.
Before you decided to document your marketing plan, you must have your target market well-defined and have your potential customers flashed out. You must understanding who you are truly marketing to, before your marketing plan will have value.
Your positioning statement
The introductory part of your marketing and sales plan is your positioning statement. Positioning is how you will try and modern your company to your potential customers. Are you the low-price problem solution, or are you the premium, luxury brand in your market? What you offering that your competitors don’t offer?
Once you know your master plan on positioning, you can move on to pricing.
Your positioning master plan will often be a major driver of how you price your offerings. Your price can be a game changer for your business. If you are offering a premium product, a premium price will speedily communicate that message to consumers.
A promotion plan provide information on how you plan to reach your prospects and customers. Remember, it’s crucial that you’ll want to measure how much your promotions cost and how many sales they deliver. Promotional programs that aren’t profitable are complex to maintain in the long term.
If you are selling a product, the packaging of that product is very important. If you have an images of your packaging, including those in your business plan is always a good idea.
Your packaging section must answer the question stated below:
- Does your packaging correspond with your positioning strategy?
- How does your packaging communicate your major value proposition?
- How does your packaging relate to your competition?
Your writing business plan should highlight the kinds of advertising you plan to spend money on. Will you be advertising online? Or perhaps in traditional, offline media?
The operations section is how your business works. It’s the logistics, technology, and other nuts and bolts. Be condition on the type of business you are starting, you may or may not need the following sections which are;
- Sourcing and fulfilment
- Manufacturing representative
- Original equipment manufacturer
- Milestones and metrics
Company overview and team summary
This chapter comprise your company and who are the major team player are. These information are critical important to investors as they will want to kn who’s behind the company and if they can convert an idea into business reality.
In this section you will show you have a right team in place to execute your idea. It should demonstrate that you have thought about the significant roles and responsibilities your business need to be flourish. Include short bio that show the relevant experiences of each major team member. It’s crucial here to make the case for why the team is the right team to turn business idea into a reality.
It is not necessary to have all your management team before you document your business plan. If you have a management team gaps that’s alright. Investors can see where you are missing certain major people as a sign of maturity and idea about what tour business needs to be successful
You may decide to include a proposed organizational chart in your business plan. This isn’t important and can certainly be in your business plan’s appendix.
The company overview will most likely be the briefest section of your business plan. The following section should include:
- Mission statement
- Intellectual property
- A review of your company’s legal structure and ownership
- The business location
- A brief history of the company if it’s an existing company
Your mission statement should be short amd it should be envelope, at a very high level, what you are trying to do.
This section cover patents you have to defend itself against competitors.
Business structure and ownership
Highlight your company overview and should also include a summary of your company’s current business structure. Your company structure may be one of this
- Sole Proprietor,
- and Partnership
If you are documenting a business plan for an existing company, it’s appropriate to include a brief history of the company and show major historical achievements. This section should be short.
This section of your business plan should highlight your current location and any non-current asset that the company owns.
This is often what business owner find most difficult, but it doesn’t have to be as intimidating as it seems. Most newly business are less complicated than you think.
A real financial plan will have monthly sales and revenue forecasts for the first 12 months, and then annual projections for the remaining three to five years. Your financial plan will highlight your future comprehensive financial statement for three years or five. Your compressive financial statement include statement of cash flow statement of profit or loss, statement of financial position. This section will also highlight to your investors how you are planning to use their money.
This section is not a compulsory chapter but it is a useful area to show any charts, tables, definitions, legal, note or any other critical information.
By Dayo Akadiri,
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