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How to Write a Business Plan

There are ten basic elements that must be covered when writing a business plan. They include an overview, executive summary; general company description; the opportunity; industry and market; your strategy; the team; a marketing plan; operational plan; financial plan and an appendix.

Entrepreneur

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Introduction

All sections of the business plan 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.

Although there is a fairly well accepted structure for a business plan, there are many ways of putting it down on paper. While most business plans will have the basic contents listed below, no two plans have identical headings, flows and appendices.

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:

  1. Table of Contents
  2. Executive Summary
  3. General Company Description
  4. The Opportunity, Industry & Market
  5. Strategy
  6. Business Model
  7. Team – Management & Organisation
  8. Marketing Plan
  9. Operational Plan
  10. Financial Plan
  11. Appendix

Executive Summary (2 pages)

The executive summary is probably the most critical part of the business plan. Many business plan readers will read the executive summary and then decide whether to proceed further or discard the plan.

The executive summary should be written last, once all the other sections are complete. It should not exceed two pages and should eloquently summarise the most important aspects of the plan.

This is a summary of the entire plan and should cover who, what, where, when, why, how and how much as follows:

  • The company (who, what, where, when)
  • The management and their strengths
  • The business objectives and why it will be successful
  • If the business needs financing, why you need it, how much you need and how you intend to repay the loan or benefit the investor

General Company Description (1 – 2 pages)

The general company description section is used to give a high level overview of the company and the business that it engages in. This introductory section of the plan section should include:

  • Name of the company, type of  legal entity, ownership, significant assets
  • Mission statement of the business
  • Company goals and objectives
  • The main features of the industry in which you will operate
  • The most important company strengths and core competencies

Avoid getting into too much detail about the business in the general company description. It is often tempting to try and cram everything about the business into this section but there are opportunities to get into the details of strategy, marketing, operations, people and finances further on in the plan.


The Opportunity, Industry & Market (2 – 3 pages)

This section of the business plan requires that you communicate some of the insight that you got into the industry, the market and the opportunity from the systematic research you conducted before writing the business plan.

a) The Opportunity

Describe the gap that exists in the market and explain what has given rise to this gap, how it was identified and how it can be filled. Answer the following questions:

  • Where is the gap in the market?
  • What has given rise to this gap?
  • How was this gap identified?
  • How will the gap be filled?

b) The Industry

Describe the forces affecting the industry in which you will operate. These forces are covered by discussing barriers to entry, suppliers,customers, substitute products and competition. Answering the following questions will enable you to cover the critical issues in discussing the industry:

What are the barriers to entry in this industry?

  • Consider whether any of the following exist for your company and others wanting to enter the industry: high capital costs, high production costs, high marketing costs, consumer acceptance and brand recognition, extensive training and skills, unique technology and patents, tariff barriers and quotas, legislation or regulation.
  • How will you overcome the barriers to entry?

How much power do the customers have?

  • Who are the customers?
  • Do they have significant power or influence over the prices they pay?
  • Do they have significant choice when buying the product or service?

How much power do the suppliers have?

  • Who are the suppliers?
  • Do they have significant power or influence over the prices they charge?
  • Is there a limited number of suppliers?

Are there substitute offerings for the product or service?

  • What is the likelihood that customers will switch to a substitute product or service? Will you have important indirect competitors? (For example,video rental stores compete with theatres, although they are different types of businesses)

Who are the competitors and how strong is the competitive rivalry?

  • What products and companies will compete with you?
  • How will your products or services compare with the competition?

What are the major changes affecting the industry?

  • Consider changes in technology, in government regulations, in the economy

c) The Market

Present your insights into the market in which you will operate. Focus on the customers for your product or service by addressing the following questions:

  • What is the total size of the market?
  • How fast is the market growing?
  • What percentage share of the market will you have? (This is important only if you think you will be a major factor in the market.)
  • What are the major trends in target market – trends in consumer preferences, demographic shifts and product development?

Strategy (1-2 pages)

You need to describe to readers how the business will compete in the chosen markets. This requires a description and explanation of the strategic choices that you have made as a business, including:

  • The focus of the business: broad mass market or a specific niche?
  • How the business will succeed in the market? How will you create a unique and valuable position, involving a different set of activities?
  • What is unique about the business? How is the offering different from that of competitors?
  • What is the value for the customers? Describe the value proposition for the customer?

Business Model (1 page)

A business model is the profit-making engine of the business. It is central to a business’s success. The important aspects of a business model that should be presented in a consolidated framework include: The sources of revenue

  • The major costs involved in generating the revenue
  • The profitability of the business (revenue less costs)
  • The investment required to get the business up and running (to get to scale)
  • The critical success factors and assumptions for making the profit model work

Team – Management & Organisation (2 pages)

In this section you should provide a description of the people behind the business. It should include:

  • A list the founders including their qualifications and experience
  • A description of who will manage the business on a day-to-day basis. What experience do these individuals bring to the business? What special or distinctive competencies do they offer?
  • An organisational chart if you have more than 10 employees, showing the management hierarchy and responsibility for key functions (including position descriptions for key employees)

Marketing Plan (2 – 3 pages)

The marketing plan defines all of the components of the marketing strategy. The marketing plan should draw on market research. It should disclose the important marketing decisions about:

  • The product (or service) and why it is valuable to customers
  • The focused and detailed description of the target market
  • The positioning of the product or service – how it should be perceived by customers
  • The pricing strategy with specific price points at which the product or service will be sold
  • The sales and distribution channels that will be used to get the product or service to the customer
  • The promotion strategy including public relations activities, specific promotions, advertising and intended viral marketing activities

Operational Plan (2 pages)

Explain the daily operation of the business, its location, equipment, people, processes, and surrounding environment. This section will vary depending on the nature of the business but some the more generic items that can be presented include:

  • A description of the operating cycle that describes what the organisation will do to deliver its service orcreate and sell its product
  • A description of where all the necessary skills and materials will be sourced
  • What will be outsourced, what relationships are in place and how those relationships will be managed
  • The cash receipts and cash payment cycle of the business

Financial Plan (3 – 5 pages)

The financial plan is a reasonable estimate of your company’s financial future. Include a few paragraphs on the main features in the financial plan and back this up with financial projections. Don’t include too much financial detail in the body of the business plan. If you have detailed projections and supporting calculations, place them in the appendix. The following are the most important financial documents to include in the financial plan:

  • Start-up expenses and capitalisation: a description and explanation of what it will cost to launch the business and where you expect to get this money
  • 12-month profit and loss projection (month-by-month) and a three-year profit and loss projection (quarter-by-quarter)
  • A 12-month cash-flow projection and a three-year cash-flow projection (quarter-by-quarter)
  • A projected balance sheet at start-up and at the end of years one to three
  • A break-even calculation

Appendix

The appendix includes additional documents that the reader of the business plan may want to refer to. Documents that could be included in the appendix:

  • Brochures and advertising materials
  • Industry studies
  • Blueprints and plans
  • Maps and photos of location
  • Magazine or other articles
  • Detailed lists of equipment owned or to be purchased
  • Copies of leases and contracts
  • Letters of support from future customers
  • Any other materials needed to support the assumptions in this plan
  • Market research studies
  • List of assets available as collateral for a loan
  • Detailed financial calculations and projections

All of these sections combine to create what is hopefully an exciting and viable story of a business that is to be launched or a growth path that will take an existing business to new levels of impact and success.

How-to-Write-a-Business-Plan Template

Entrepreneur Magazine is South Africa's top read business publication with the highest readership per month according to AMPS. The title has won seven major publishing excellence awards since it's launch in 2006. Entrepreneur Magazine is the "how-to" handbook for growing companies. Find us on Google+ here.

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1 Comment

1 Comment

  1. Carmen Almazien

    Mar 30, 2012 at 10:31

    Will be of great help

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Keep It Simple: How To Write A One Page Business Plan

Lengthy business plans are a thing of the past and there are sound business principles for why.

Casandra Visser

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A Beginner’s Guide to Growing Your Business With Google PPC Ads

Google PPC Ads inform you where customers are engaging with your ads, and where they’re getting no traction.

Jandre de Beer

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You’re the owner of a business, and you want to learn how to grow your business with PPC advertising on Google. You’ve made a smart choice. There’s only one king when it comes to search engines, and that’s Google. Pay per click marketing or PPC is one of the wisest ways to promote using the power of this search engine.

When you understand how Google’s advertising platform works and how it can benefit your company, if you utilize it correctly, you will likely see significant and positive changes in your revenue.

What is Pay Per Click or PPC?

So, what is PPC? It’s a form of Internet marketing. You set up an ad online, and each time a visitor clicks on your ad, you’re charged a fee. Placing your ad on the powerful search engine Google, through the use of Google AdWords, is the most well-known kind of PPC advertising.

If you set up your campaign in the most efficient way – targeted keywords, compelling ad copy, an attractive and effective landing page, and more – the amount of money you pay for clicks on Google will be minimal compared to your profits.

For example, if you pay R10.00 for a click that leads to no sale, you’ve lost R10.00. However, if you pay R10.00 for a click that leads to a R2000 sale, based on your effective marketing on Adwords, you’ve gained R1990. Let’s say the cost of your product or service is R400, that means you still made R1590. That’s money in the bank.

How Does Google PPC Advertising Work?

Google pay per click is accomplished through the use of Google Adwords, released in the year 2000. Google decides what ads will show based on what is known as Ad Rank. This determination looks at how much an advertiser’s CPC or cost-per-click bid is.

It also looks at the advertiser’s Quality Score, which is comprised of the click-through rate of the ad, the relevancy and the quality of the landing page.

Related: How to Use Pay Per Click Using Google Adwords

Therefore, one of your primary jobs as an advertiser on Google is to set up your campaigns in a way that will work out favorably with Google’s Ad Rank determination. It’s not at all impossible with enough patience and diligence to succeed with this method.

What are the Benefits of Starting a PPC Campaign?

google-ads_embedded

The advantages to starting a pay-per-click campaign on Google are many and below are just a few of them!

1) Google is King

Because Google is the top search engine or the one that is most used, advertising on the platform can be hugely beneficial. There are over three billion searches on Google every day of the year. Therefore, the number of impressions and clicks you can receive for your ads has the potential of being huge, and that can lead to significant conversions and sales.

2) It’s An Effective Way to Get the Word Out About Your Business

You’ve started a business that you’re proud of, but if people don’t know you exist, how will your business make money? Having a website or a blog on the Internet is often not enough, especially if you’ve done no advertising.

Potential customers need to know what products or services you provide and how they will benefit from what you provide. Advertising on Google is one of the best ways to accomplish that goal.

3) There’s No Wasting Time with Guesswork

Google AdWords is a system that allows you to take the guesswork out of advertising. You have the tools to determine how effective your keywords, ad copy, landing page, etc. are for your advertising goals.

You’re also provided with targeting tools that better allow you to reach the kind of customers you want based on things like distance, cities, regions, or countries.

Related: Common Google AdWords Mistakes and How to Avoid Them

You’re given results of how many people have seen your ads, how many people have clicked your ads and tracking tools that tell you when those clicks have turned into actual conversions or sales. Guesswork never has to be a part of this advertising platform.

4) You Control When a PPC campaign on Google is Running

You’re in control of when your ad is running on Google. You can start it, pause it, re-start it, or stop an ad whenever you’d like.

How Do I Set Up My First Google PPC Campaign?

How does pay per click work with Google Adwords? Follow these steps to set up your first Google PPC campaign.

1. Create a Google Account

You will need a Google account to advertise on Adwords. If you don’t already have a Google account, go to Accounts.google.com/signup and create one. When you have a Google account, head on over to Adwords.google.com and sign in.

2. Name Your Campaign

There are various categories that you can choose for your campaign.  According to Google, “Search Network with Display Select” is the best opportunity to reach the most customers. Then you’ll need to come up with a name for your campaign.

Choose an organized naming system that allows you to identify each of your ads quickly. Select your location as well as the language that you’re targeting.

3. Choose Your Budget

You should always have a budget when working with AdWords, especially beginners. For example, a budget of R50 to R150 a day is a good starting point. That gives you enough money to play with keyword pricing.

If you bid too high, you’ll blow throw you initial monthly budget. For each keyword, choose to start with an average bid of R10.00.I suggest you start small with your budget and gradually scale up.

Related: Implementing 2 Advanced Google AdWords Strategies

Ad extensions can also be included at this stage. You can extend your ad with location information, phone numbers, or site links.

4. Choose Your Keywords

Crucial parts of your AdWords campaign are the keywords. What are keywords?

They are topics that describe what your content is about. They are also the words that people type into Google and other search engines. So, if a person is looking for a wedding photographer in Johannesburg, he or she may type in the Google search bar “wedding photographer Gauteng,” for example.

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After those words are typed in, the wedding photographers in Gauteng who have a presence on the Internet, such as with a website or a blog, will show up. From there, the person searching can do their research.

The more relevant your keywords in your AdWords campaign, the more likely your ad will be displayed predominantly (page one or two for your keywords) on Google for your target customers.

 

Without these relevant keywords, the people who you want to see it will never see your ad. The keyword “wedding photographer” is broad and is not enough to reach customers in Gauteng.

You can only create targeted keywords if you fully understand your niche and your audience. What are you offering and who are the people you’re offering it to?

These are two questions that you must be able to answer. You’re located in Gauteng, and your customers live in the area, but what other factors are relevant? For example, do you offer traditional wedding photos taken anywhere in Gauteng or only on Johannesburg?

Related: Cash in on Google with AdWords & AdSense

If you were a Johannesburg wedding photographer, the keyword “Johannesburg wedding photographer” is better targeted for your niche than “wedding photographer” or even “wedding photographer Gauteng. A keyword such as “photographer” is a broad keyword. It’s popular, and it has a lot of competition.

A keyword such as “Johannesburg wedding photographer” is a specific keyword otherwise known as a long-tail keyword. It’s less popular, and there’s a greater chance that your business will be seen using it. Choose both broad and long-tail keywords in your campaign, with a focus on long-tail keywords.

How To Find the Perfect Keywords for your PPC Startegy

1) Think About Your Niche and Write Down the Keywords That Come to Mind

Look at your website or blog for ideas. Also, consider what your customers would type into Google’s search bar if they were looking for your niche.

2) Use the Keyword Planner at Google AdWords under “Tools.”

When you enter in a keyword, the planner will return similar keywords, and it will tell you how many people search the keywords. Make sure you consider the advanced options as well; such as where you’re located and what language you want to target.

The results will tell you what the average monthly search is, what the suggested bid is, and what the competition is. For example, “wedding photographer Johannesburg” may return with a monthly search of 20 000 searches or so, with a suggested bid of R15 and may have low competition.

Related: Beginners Guide To Digital Marketing In South Africa (PART 2)

Your goal is to find keywords that receive enough searches but that your business has a chance to compete with. You’ll need to determine if your maximum cost per click matches up with or exceeds the estimated cost per click displayed by the tool.

5. Create Your Ad

The creation of your ad content is another important step in the process. It’s imperative that you understand your unique selling proposition or USP. It’s what makes your service different from other sellers in your area.

Your ad should convey the product or service that you’re offering, and it should have a call-to-action such as “learn more” or “buy now.” You will have 170 characters to work with, which include the headline, description, and URL.

Your headline is the most significant part of your ad, followed by your description.

It’s also advised to have a strong display URL.  Instead of just inserting your standard URL, you can change the domain name that you would typically include in your ad to something more effective, such as your call-to-action statement, for example.

Related: 9 Mistakes Killing the Success of Your Pay-Per-Click Advertising

Think about your customers and consider creating more than one ad when setting up your campaign, or split ad groups. These ad groups are more targeted and more relevant than one ad designed to reach all your customers.

So, using our Johannesburg wedding photographer example, your first ad can be designed to target brides who wish to get married in Johannesburg.

You could create another add that targets parents who want to treat the bride and groom to a Myrtle Beach wedding photography package.  You could create another ad that targets both the bride and the groom.  Get creative and think outside the box.

6. Set up a Landing Page

Landing pages are content on the web that has a particular purpose. Their goal is to get information to convert a visitor into a customer.  Landing pages have specific content along with one call-to-action button.

The CTA button can be hooked up to getting subscribers to your mailing list or to booking consultations, for example. You can have more than one landing page for each of your ads, to get even more targeted for customer conversion.

There are many ways to make a landing page. Look to sites such as Leadpages or Instapage for user-friendly ways to make affordable landing pages.

7. Track Your Ads

Converting a click into a sale is your number one goal with any PPC ad. One tool that you’ll want to use is conversion tracking. This tool measures sales once your ads are clicked.

It helps you to determine which keywords are working for you and which keywords are not. You can use the conversion-tracking tool provided by AdWords, for example.

You’ll be given a code to attach to your order form, or receipt page, or whatever your final page is that lets you know you’ve got a sale. Therefore, these tools only work if you conduct your sales online.

Also, utilize techniques such as A/B testing. This is where you create two different landing pages for the same amount and kind of traffic.

Determine which landing page works best and ditch the other one.

Now that you know how to set up your first ads on Google Adwords, don’t delay. Get started on researching the keywords so that you can create your first ad.  With practice and monitoring, your business can benefit greatly from this powerful tool.

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5 Ways To Hack A Business Plan

Bullet points are your best friends, and other tips for not getting caught in the weeds of business-plan details.

Christopher Hawker

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Whether you’re building gadgets, selling software or starting a nonprofit, your starting point is a vision, which gets turned into a plan of action.

In business, your plan is the road map that will help you pinpoint the answers to some of the most important questions pertaining to your venture:

  • What are you selling?
  • How will you make money?
  • Who will buy it?
  • How will you reach those customers?

Writing a business plan may sound daunting, but it doesn’t have to be. It can be fun! Throughout my career I have launched dozens of successful products – and each one began with some level of business plan. Because I have a lot going on, I never want to invest too much time in the actual writing of these plans, preferring to spend my time instead on the actual strategy.

Related: Business Plan Examples to Get You Going

So, how do I pen my own business plans? I hack them, and so should you. Here are my five business plan hacks:

1Start with a business model canvas

I strongly recommend that you begin with a business model canvas (Steve Blank’s blog is a great resource), especially if this is your first time writing a plan. It’s a tool for designing, inventing and thinking strategically about your company – all on one page.

The exercises will help you identify the resources you’re going to need and define the customers you need to approach. It’s a cool and effective way to brainstorm all of the key considerations when starting a business.

2Keep things simple, with bullet points

Once you’ve completed your business model canvas, you’ll have a much clearer vision of what you’re going to do, how you’re going to do it, and the people you’re going to serve. You then get to turn your canvas into the plan.

Business plans are more thorough and detailed. You will need one to share with investors if you want to raise money.

There is a section for each major area of consideration: Product description, target market, sales, marketing, operations, team, etc. You’ll want to address the who and how of each component of your business.

For example:

  • Who’s handling our marketing activities?
  • What channels will we use for getting the word out?
  • What activities will be performed in each channel?

Related: Keep it Simple: How to Write a One Page Business Plan

Thorough doesn’t need to be lengthy. Too often, entrepreneurs lose the forest for the trees, and get hung up trying to draft carefully worded prose.

Start by just getting your ideas down on paper in raw form as bullet points in each area. You can worry about making them sound good and organise them into paragraphs later.

After you write your ideas down, solicit feedback from your advisors, using a bullet-point form. This is will save you time integrating suggestions before you lock in careful wording.

3Focus on differentiation where it counts

business-plan-adviceAs you write your plan, think about what will make both your company and product or service distinct from your competitors’. You’ll want to capture your unique offering, and your business plan should emphasise this.

The good news is that while your offering should be different from your competitors’, many key elements of your business plan don’t have to be. You don’t have to reinvent the wheel or try to be different in every area.

For example: When it comes to your customer acquisition strategy or your logistics platform, you can do what everyone else is doing as long as there is no competitive advantage readily available.

Related: Free Business Plan Template Download

4Don’t overdo it on cash-flow projections

It’s easy to get caught in the weeds when you’re trying to create accurate cash flow projections.

The purpose of your cash flow and profitability projections isn’t necessarily to show exactly what’s going to happen; it’s to show how, within reasonable circumstances and success, your business is positioned to make money and can afford to keep the lights on.

Your projections’ purpose is to help you test your assumptions about profitability, not predict the future. So, you need to invest time in them, but you don’t need to go crazy trying to be perfect. Make your assumptions, declare them and proceed.

5Hire a writer

There are parts of your business plan that cannot be outsourced. Only you can decide what you’re going to do and the people you wish to serve. Thankfully, writing your business plan text isn’t something you need to do yourself.

Once you’ve completed your canvas and the high-level bullet points for the major sections of your plan, consider hiring a business writer if you’re short on time or hate writing.

Such people are relatively affordable and easy to find. I recommend checking out Upwork or Freelancer. You can then go back and forth with the one you hire, to get it just right. This can save a tremendous amount of effort.

The hacks I’ve detailed above are designed to help you save time and focus on what really matters, such as identifying your customer segments and understanding how your business will make money.

Related: Free SWOT Analysis Template

Once your business does start operations, things will likely shift anyway, so be efficient in spending your time on this task. If you treat the writing as a fun brainstorm on a living document rather than a daunting exercise, your effort will be inspiring!

This article was originally posted here on Entrepreneur.com.

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