A business plan is an official document outlining the finances, direction, goals, and future planning of a business. It can be created to target investors while trying to raise capital or used internally to align teams and give direction. Usually, a business plan includes comprehensive market research, an outline of your business and your marketing strategy. If you write your business plan correctly, it can help propose action and keep the business on track to meet its goals.
Why should a business owner write a business plan? This is a question that is often asked by people with business ideas and lots of enthusiasm. Why not just get started and fill in the details when the need arises? There are several reasons why a business plan is important, more so if you are starting your own business.
If you have a wonderful idea for a business endeavor, you probably want to get it running as soon as you can. Although the enthusiasm is definitely useful, without direction, it is not always productive. A business plan is in actual sense a strategy, which will be in use for the next 1-3 years.
It will enable you set achievable business objectives and goals, identify priorities, and set a standard for your performance. This is useful for your ambitions as the business owner and anyone else involved in that business, such as an investor or a business partner.
Among the major reasons for knowing how to write a business plan is to finance your venture. If you are approaching a bank or investors for money, they will ask for financial statements and evidence that you have a comprehensive understanding of how you will spend the money and what you will get in return.
You will also be required to show proof that there is a ready demand for your product or service and predicted how much you will probably make. Preferably, your business plan needs to show how your business model will generate profits.
In addition to giving useful information to your potential investors, the business plan is a useful document in other sectors of your business. A central document helps in making informed decision about the business and its activities. No matter the type of business you intend to operate, a business or marketing plan can help in aligning everyone with similar priorities. In turn, all processes will run smoothly and be well-considered.
Various studies have established a link between performance and strategic planning in businesses. One study found out that proper planning can help a business grow up to 30% faster. Once again, part of this growth involves having detailed strategies in place and setting clear objectives. A business plan also helps in identifying risk, forecasting sales, and highlighting opportunities to reach new customers.
Before we provide you with a step by step guide on writing a business plan, here are a few useful general guidelines. The guidelines will help you assess the type of plan you need and the approach to take when writing it.
There are different types of business plans formats to choose from depending on length and structure. Although most of them cover the same points, they are different in terms of content and purpose. You can choose from among the following styles:
The business plan style you choose depends on the current phase of your business and your ultimate aims and objectives for the next 1-3 years.
No matter the style you choose, ensure that you do not get diverted from your goal. A business plan should not be like a novel detailing every aspect of your business. It should be a brief summary of your objectives and aims and how you will achieve them. Obviously, you should provide sufficient detail to demonstrate that you have done your due diligence. But, do not create a ridiculously long document. Remember that this is a document that will be read by someone, and you do not want to bore them with too much detail.
The information and details you include in your business plan should be based on reality. Undeniably, you have objectives and ambitions you want to achieve. However, they should be sustained with data and research. Likewise, you should recognize potential threats and risks.
If the document is for internal use, you do not want to underperform and miss your targets. For external use, financiers or investors will see through an overly hopeful plan that does not factor in current market conditions.
You should think about where your business plan will be used and accordingly match the tone. Each time you create effective content, always think about the audience you be presenting the work to. For instance, if the document is meant to secure investment, you should strike a professional style and tone. But, if it is for internal use, try and match it to your organization’s tone of voice.
Even though we have stated that you should be brief with your business plan, you should focus on the right details. When the document is read by your audience, they should easily access the significant information about your aims and how you plan to achieve them. But, the finer details are dependent on where and how you are going to use the business plan.
A business plan should not and does not have to be a static document. The layout and the information you research will only be useful for so long. So, you need to regularly review your business plan and ensure that it is current and a mirror of your business. You should update different factors and it is easier to execute small regular adjustments than rewriting the business plan every few years.
A good business plan contains different elements. It does not matter if your business plan is a one-pager or a longer and more comprehensive plan, there are some elements that should be in all the different business plan formats. As with any other project, attention to detail and proper planning plays a significant role.
Your business plan should be unique to your organization. Even though there are ready business plan templates you can use, you need to go through each section and customize it to your business. Having said that, let us look at the steps to follow when writing a business plan.
Before you begin writing, spend some time researching on the things you want to include in the business plan. Also, ensure that you have as much primary data about your business, competitors, financials, marketplace, and other relevant factors as you possibly can. It is always beneficial to have a data driven approach as it can provide more insight into the business.
When preparing this section of the business plan, provide necessary background information about who you are and what your business is about. It is more like a mission statement or a business description. Ensure that you cover the following points:
If you have already started trading, provide details of when you started and your progress so far as a business.
If the business is new, provide details about your professional background and what you have done to get the business started.
If you have obtained the business from another entity, outline details of the original owner.
Provide details of the legal structure and current owner and include the identities of the key partners and stakeholders.
At this point, provide an overview of the products or services being offered by your business. This will provide the reader with direct information that is comprehensive without being excessively technical. Try and concentrate on what makes you product or service stand out. With any luck, you are aware of your products or services unique selling point and how it distinguishes itself from the competition. Likewise, talk about the advantages of choosing your business and how you will handle any potential disadvantages.
Do not forget to mention the progress you have made in developing your product or service and how you plan to improve them going forward. Lastly, mention any special features of the industry and what you are doing to handle them.
Among the major considerations to make when writing a business plan is the market conditions situation. Competitive and market analysis is the foundation of a successful plan as it demonstrates that you have acknowledged the opportunities, challenges, and trends in the sector you intend to venture in.
Start by looking at different sectors of the market and the types of customers in each sector and their purchasing habits. Identify the amount of market share you hope to acquire, the trends in the sectors and their outlook. This should be followed by a description of your potential or existing customers. It is important to know your customer personas and if you are new to the business, write about your best prospects and how you will generate leads.
Lastly, write about your main competitors. Focus on their products or services and their prices, their advantages and disadvantages, and if you will manage to make their customers buy from you. Do not be critical of your competitor, instead give an honest evaluation of their strengths and weaknesses.
A marketing strategy is a significant document when starting or boosting your business. This strategic plan’s focus is on how you will position your product/service in the market. Consider the following points when creating a sales and marketing strategy.
While doing this, take into account marketing costs and your anticipated return on investment.
In this section, explore the available human resources to help in the success of your business. Provide details of the organization of the company management and identify the strengths and the skills of the personnel, and include any specific gaps.
Remember to look into the scope and size of your workforce and how it compares to other businesses. Emphasize on how you may grow the team through recruitment and how you manage the business in case you lose some key personnel.
For this part, focus on the operational side of the business, such as the location of your business, equipment under use, and the reliability of your systems.
Start by concentrating of the place that you operate from and consider if it serves your needs now and for the future. Next, consider how efficient and current your equipment is and its comparison to industry standards. Also, write about the setting of your IT systems and how you manage customer data, stock, and accounts. You can also consider the reliability of your IT systems and how you will expand in the area.
This is a tricky part to write in a business plan as it requires an understanding of business accounting and finance. If you have been in business for some time, start by providing some historical data, such as gross margin and sales. Also include a balance sheet, cash flow statement and a profit and loss account.
Irrespective of whether or not you have historical data, a financial plan and a prediction outlining the next three years of business is a must. If you want to be straightforward, this can be cash flow, cost, profit, and sales forecast. Remember to back up your forecast with a detailed methodology. You should adopt a data-driven approach to illustrate how you have worked your predicted model, and that you have considered various market factors. In due course, you want to prove that your business plan is viable.
The next step is a SWOT analysis, that is, the strengths, weaknesses, opportunities and threats of your business. This demonstrates that you are in tune with your business and the factors that impact it externally. This part should not be too long, but should have enough details in each point.
You should clearly outline how you will optimize and deal with each factor, demonstrating an understanding of the market.
Structurally, your executive summary will be the first chapter of the business plan. This is the section that outlines who your company is, your activities, and what you hope to obtain from your readers. But, why should you write this part last? Because you will know your company better at this point and you will better summarize relevant points.
You may include a concise summary of everything mentioned above, plus:
An overview – in one sentence
The issues you hope to resolve and how you will do it
You can write the executive summary as a standalone document to help gather interest and traction for your business.
A business plan is a very detailed document to prepare especially when asked to write one as part of an academic assignment. Buy-Essay.com is an online writing company that provides business plan assignment help to students in need. We have professional business writers who create custom business plans based on the student’s special instructions. For students facing challenges creating the ideal business plan, we are here to help.
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