Every business needs to have a written business plan. Whether it’s to provide direction or attract investors, a business plan is vital for the success for your organisation. But, how do you write a business plan?
SBA.gov recommends that a business plan includes;
- Executive summary – a snapshot of your business.
- Company description – describes what you do.
- Market analysis – research on your industry, market, and competitors.
- Organisation and management – your business and management structure.
- Service or product – the products or services you’re offering.
- Marketing and sales – how you’ll market your business and your sales strategy.
- Funding request – how much money you’ll need for next 3 to 5 years.
- Financial projections – supply information like balance sheets.
- Appendix- an optional section that includes résumés and permits.
However, getting started can be difficult to do. So, here’s a seven steps in writing a perfect business plan.
1. Research, research, research
“Research and analyse your product, your market and your objective expertise,” writes Bill Pirraglia, a former senior financial and management executive. “Consider spending twice as much time researching, evaluating and thinking as you spend actually writing the business plan.”
“To write the perfect plan, you must know your company, your product, your competition and the market intimately.”
In other words, it’s your responsibility to know everything you can about your business and the industry that you’re entering. Read everything you can about your industry and talk to your audience.
2. Determine the purpose of your plan
A business plan, as defined by Entrepreneur, is a “written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement.” However, your business plan can serve several different purposes.
As Entrepreneur notes, it’s “also a road map that provides directions so a business can plan its future and helps it avoid bumps in the road.” That’s important to keep in mind if you’re self-funding or bootstrapping your business. But, if you want to attract investors, then your plan will have a different purpose and you’ll have to write your plan that targets them so it will have to be as clear and concise as possible. When you define your plan, make sure you have defined these goals personally as well.
3. Create a company profile
Your company profile includes the history of your organisation, what products or services you offer, your target market and audience, your resources, how you’re going to solve a problem, and what makes your business unique. When I crafted my company profile, I put this on our about page.
Company profiles are often found on the company’s official website and are used to attract possible customers and talent. However, your profile can be used to describe your company in your business plan. It’s not only an essential component of your business plan, it’s also one of the first written parts of the plan.
Having your profile in place makes this step a whole lot easier to compose.
Related: Top 10 Business Plan Resources
4. Document all aspects of your business
Investors want to make sure that your business is going to make them money. Because of this expectation, investors want to know everything about your business. To help with this process, document everything from your expenses, cash flow, and industry projections. Also don’t forget seemingly minor details like your location strategy and licensing agreements.
5. Have a strategic marketing plan in place
A great business plan will always include a strategic and aggressive marketing plan. This typically includes achieving marketing objectives like;
- Introduce new products
- Extend or regain market for existing product
- Enter new territories for the company
- Boost sales in a particular product, market or price range. Where will this business come from? Be specific.
- Cross-sell (or bundle) one product with another
- Enter into long-term contracts with desirable clients
- Raise prices without cutting into sales figures
- Refine a product
- Have a content marketing strategy
- Enhance manufacturing/product delivery
“Each marketing objective should have several goals (subsets of objectives) and tactics for achieving those goals,” states Entrepreneur.
“In the objectives section of your marketing plan, you focus on the ‘what’ and the ‘why’ of the marketing tasks for the year ahead. In the implementation section, you focus on the practical, sweat-and-calluses areas of who, where, when and how. This is life in the marketing trenches.”
Of course, achieving marketing objectives will have costs. “Your marketing plan needs to have a section in which you allocate budgets for each activity planned.” It would be beneficial for you to create separate budgets for for internal hours (staff time) and external costs (out-of-pocket expenses).
6. Make it adaptable based on your audience
“The potential readers of a business plan are a varied bunch, ranging from bankers and venture capitalists to employees,” states Entrepreneur.
“Although this is a diverse group, it is a finite one. And each type of reader does have certain typical interests. If you know these interests up front, you can be sure to take them into account when preparing a plan for that particular audience.”
For example, bankers will be more interested in balance sheets and cash-flow statements, while venture capitalists are looking at the basic business concept and your management team. The manager on your team, however, will be using the plan to “remind themselves of objectives.”
Because of this, make sure that your plan can be modified depending on the audience reading your plan. However, keep these alterations limited from one plan to another. This means when sharing financial projections, keep that data the same across the board.
7. Explain why you care
Whether you’re sharing your plan with an investor, customer, or team member, your plan needs to show that you’re passionate, dedicated, and actually care about your business and the plan.
You could discuss the mistakes that you’ve learned, the problems that you’re hoping to solve, listing your values, and what makes you stand out from the competition.
When I started my payments company, I set out to conquer the world. I wanted to change the way payments were made and make it easier for anyone, anywhere in the world to pay anyone with little to no fees. I explained why I wanted to build this. My passion shows through everything I do.
By explaining why you care about your business creates an emotional connection with others so that they’ll support your organisation going forward.
Business Plan Format Guide
A comprehensive business plan format guide. A full guide to the business plan contents including the standard business plan format for these 10 basic elements: The overview, executive summary; general company description; the opportunity; industry and market; your strategy; the team; a marketing plan; operational plan; financial plan and the appendix.
When it comes to a business plan format, there are ten basic elements that must be covered when writing a business plan.
The standard contents of a business plan includes:
- an overview
- executive summary
- general company description
- the opportunity
- industry and market
- your strategy
- the team
- a marketing plan
- operational plan
- financial plan
- an appendix.
Business Plan Format Introduction
What to Include in Your Business Plan
Before you physically start writing your business plan, you need to spend some time doing in-depth research into your industry and market. This is important regardless of whether you have previous experience in that particular industry.
You can use the Internet, industry experts and associations, suppliers and existing competitors for the information. Your research will help you in putting the business plan together as it will give you an understanding of the dynamics and forces affecting the industry.
Related: Free Sample Business Plans
All sections in the business plan format are interrelated, and cannot be written in isolation. Each should be written by people who are fully aware of the contents and intricacies of the other areas of the plan so that the different sections are all integrated.
The best option is to write the plan yourself as you know your business best. Also, if you are responsible for writing the business plan, you could identify certain challenges and find solutions to them, it will also ensure that you know every single aspect of the business, which is critical when meeting with potential investors.
You may need assistance putting together the financial information if you don’t have a financial background, but make sure you get an accountant to explain what all the figures mean. Although there is a fairly well accepted structure for a business plan format, there are many ways of putting it down on paper.
There are three primary parts of a business plan:
- The Business concept
- The Marketplace section
- The Financial section.
Some of the contents will have different names and be presented in a different order but almost any business plan will cover these broad areas:
Business Plan Format Contents
Table of Contents
Your contents page should be the very last thing you write to ensure that all the page numbers are correct. Make sure that you number your pages correctly so that a person can quickly and easily find the sections they are interested in._
The following 10 sections need to be included in your business plan – click on each section to find out more:
The 4 Types of Business Plans
Business plans can be divided roughly into four distinct types.
There are very short plans, or mini-plans, presentation plans or decks, working plans, and what-if plans. They each require very different amounts of labor and not always with proportionately different results.
That is to say, a more elaborate plan isn’t guaranteed to be superior to an abbreviated one. Success depends on various factors and whether the right plan is used in the right setting. For example, a new hire may not want to read the same, elaborate version of your plan that might be important to a potential investor.
The mini-plan is preferred by many recipients because they can read it or download it quickly to read later on their iPhone or tablet. You include most of the same ingredients that you would in a longer plan, but you cut to the highlights while telling the same story. For a small-business venture, it’s typically all that you need. For a more complex business, you may need the longer version.
The Presentation Plan
The advent of PowerPoint presentations changed the way many, if not most, plans are presented. And while the plan is shorter than its predecessors, it’s not necessarily easier to present.
Many people lose sleep over an upcoming presentation, especially one that can play a vital role in the future of their business. But presenting your plan as a deck can be very powerful.
Readers of a plan can’t always capture your passion for the business nor can they ask questions when you finish. But in 20 minutes, you can cover all the key points and tell your story from concept and mission statement through financial forecasts.
Remember to keep your graphics uncluttered and to make comments to accentuate your ideas rather than simply reading what’s in front of your audience.
While a presentation plan is concise, don’t be fooled: It takes plenty of planning. The pertinent questions who, what, where, why, when and how all need to be answered.
The Working Plan
A working plan is a tool to be used to operate your business. It has to be long on detail but may be short on presentation. As with a mini-plan, you can probably can afford a somewhat higher degree of candour and informality when preparing a working plan.
In a plan you intend to present to a bank loan committee, you might describe a rival as “competing primarily on a price basis.” In a working plan, your comment about the same competitor might be “When is Jones ever going to stop this insane price-cutting?”
A plan intended strictly for internal use may also omit some elements that you need not explain to yourself. Likewise, you probably don’t need to include an appendix with resumes of key executives. Nor would a working plan especially benefit from product photos.
Internal policy considerations may guide the decision about whether to include or exclude certain information in a working plan. Many entrepreneurs are sensitive about employees knowing the precise salary the owner takes home from the business. To the extent such information can be left out of a working plan without compromising its utility, you can feel free to protect your privacy.
This document is like an old pair of khakis you wear to the office on Saturdays or that one ancient delivery truck that never seems to break down. It’s there to be used, not admired.
The What-If Plan
When you face unusual circumstances, you need a variant on the working plan. For example, you might want to prepare a contingency plan when you’re seeking bank financing. A contingency plan is a plan based on the worst-case scenario that you can imagine your business surviving—loss of market share, heavy price competition, defection of a key member of your management team.
A contingency plan can soothe the fears of a banker or investor by demonstrating that you have indeed considered more than a rosy scenario.
Your business may be considering an acquisition, in which case a pro forma business plan (some call this a what-if plan) can help you understand what the acquisition is worth and how it might affect your core business.
What if you raise prices, invest in staff training and reduce duplicative efforts? Such what-if planning doesn’t have to be as formal as a presentation plan. Perhaps you want to mull over the chances of a major expansion. A what-if plan can help you spot the increased needs for space, equipment, personnel and other variables so you can make good decisions.
What sets these kinds of plans apart from the working and presentation plans is that they aren’t necessarily describing how you’ll run the business. They’re essentially more like an addendum to your actual business plan. If you decide to acquire that competitor or grow dramatically, you’ll want to incorporate some of the thinking already invested in these special purpose plans into your primary business plan.
This article was originally posted here.
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