Maybe there is no need to write a business plan or maybe you don’t need a business plan template to run a successful business. In most close quarters, some entrepreneurs succeed even without writing a business plan. However, you need a good business plan to push your business to the limelight. In this guide, I will show you a step-by-step guide on how to write a good business plan.
A good business plan could be the difference between a successful business and a failing business. As a matter of fact, your business plan is the foundation of your business. They are some things you will not know as an entrepreneur, but with a well-articulated business plan, the stage is set for success.
What is A Business Plan
A business plan is a written document that describes the future of a new business. Your business plan highlights your products or services, how you will earn money, leadership and staffing, financing, operations model and other details that are essential to the smooth operation of your business.
A business plan is also important for start-up or already existing business seeking an investor. It also serves as a business roadmap for startups. A well-written business plan can help an entrepreneur to uncover concept weaknesses, market misconceptions or other specifics that might cause a shift in how the business is being built.
Business Plan Purpose
The sole purpose of a business plan is to provide the business owner with information about what is needed for the business to succeed. It helps the business owner determine the following:
- The amount of money needed to establish the business
- Equipment or facilities need for the business operation.
- Whether there is a need for employees and if so, what will they do
- Existing competition
- Best location for the business
- The company’s competitive advantage
A well-researched and written business plan guides and informs nearly everything the new company does.
How Long Should A Business Plan Be?
Depending on what you are using it for, a good business plan can be very lengthy. In the case of a well-detailed business plan, it can be more than 100 pages. However, a typical business plan is about 15 to 20 pages but there is room for wide variation.
In writing a business plan, much depends on the nature of your business. If you have a simple idea, you may be able to write it in a very few words. However, if you are proposing a new type of business or even a new industry, it may require a lengthy explanation to pass the message across.
The purpose of your business plan also determines its length. If you want an investor or partnership, you may have to do a lot of explaining and convincing. On the other hand, if your plan is for internal use, then a much concise version will be fine.
Who Needs A Business Plan?
The only person who doesn’t need a business plan is the one who is not going into business. So, anyone who intends to start up a business or has an already established business needs a plan.
Startups Need A Business Plan
An entrepreneur seeking funds to help start a new business surely needs a business plan. Many multinationals company today had their plan written out on paper, which was used to source for funds from investor to get them underway.
Established Firms Need A Business Plan
Well established companies also need a business plan. Some of these business plans are written by and for the companies. These companies need a business plan to convince other companies or financial institution to get funds for expansion.
They may also feel the need for a written plan to help manage an already rapidly growing business. Or a plan may be seen as a valuable tool to be used to convey the mission and prospects of the business to customers, suppliers or others.
Key Elements of A Business Plan
The business plan template and format depends whether it will be shared with outsiders or used internally. Whichever way, your business plan should be professionally written using the conventional format. The standard format for writing a well-articulated business plan include:
- Executive summary
- Business Overview
- Product or service description
- Organization and Management Plan
- Sales and Market analysis
- Competitive Analysis
- Operation Plan
- Financial Analysis
- Appendices and Exhibits
In addition to these sections, a business plan should also have a cover, title page, and table of contents.
How to Write A Business Plan (Step-By-Step Guide)
Writing a good business plan involves you following the conventional format as stated above. Below is a step-by-step guide on how to write a business plan.
The executive summary briefly tells your reader what your business is all about and why it will be successful. The summary includes your mission statement, your product or services, and basic information about your company’s leadership team, employees, and location. State clearly your financial information and funding requirements in the summary. Even though it’s the first section of your plan, it’s generally written last.
This section offers a high-level description of your business, its products or services and who your target customers are. Your description also explains how your business differentiates itself from its competitors and how that helps you meet your goals. Writing a convincing business overview gives the reader an idea of how much you plan to gain and how you plan to gain it. It also gives a projection of your gross profit margins.
Products or Service Description
Describe what your products or services are, and how they benefit the consumer. Include also the product’s lifecycle. Intellectual property like copyright or patent fillings can also be listed in this section. If your product or service involves research and development, explain it in detail
Organization and Management Plan
Describe the way your business is organized based on its legal business framework and outline who does what. Include your internal management team, external management resources, and human resources need. An organizational chart along with explanations of specific roles will be just fine. If your plan is to get funding, it’s wise to ensure that your management plan includes an advisory board as a management resource. This section should also include schedules and rates.
Sales and Marketing Strategy
In this section, you have to explain your sales strategy, pricing plan, proposed advertising and promotion activities, and product or service’s benefits. The marketing strategy helps you figure out the most effective and efficient way of reaching your customers. Describe how you are going to persuade people to buy your products or service.
The competitive analysis section is where you investigate your direct and indirect competitors with an assessment of their competitive advantage. You also have to provide an analysis of how you will overcome any entry barriers to your chosen market.
Every business has a competition. Understanding the strengths and weaknesses of your competitor or potential competitor is important to making sure your business survives and grows. You need to distinguish your business from the competition. Convincing the reader(s) of your plan that your business will be able to compete successfully is very vital.
You have to develop an operation plan that will serve your customers, keep your operating costs in line and ensure profitability. Your operation plan should describe your business’s physical location, facilities, and equipment, kinds of employees needed, inventory requirements and suppliers, and any other applicable operating details, such as a description of the manufacturing process.
Financial projections and estimates help entrepreneurs, lenders, and investors to objectively evaluate a company’s potential for success. If you are seeking outside fundings for your business, it’s important to provide a comprehensive financial report.
In this section, you write about your funding needs including start-up and operational over the next five years. Give a detailed plan on how to spend the money, indicating if it is on capital expenditures or working capital. Describe how your business would navigate a buyout or acquisition and include a repayment plan or description of what would happen in the event you sold your business.
Appendix and Exhibits
Use this section to provide supporting documents or other exhibits were specially requested. You can outline additional information that will help establish the credibility of your business idea such as marketing studies, credit histories, product pictures, letter of reference, and/or other legal agreements binding to your documents.
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