Before you jump into actually writing your business plan, take a minute to answer the following 10 questions to get your head in the right frame of mind. Once you have some rough notes jotted down, you can start developing your business plan. It should include these five major components:. Concisely describe what your company does in the first paragraph of your Executive Summary. Be succinct, descriptive and engaging, and explain the specifics of your business.
Why did you choose your business name? Why did you choose your business structure? Why is your business uniquely qualified to succeed? In this section, you should also summarize your vision and your goals. In the beginning stages of a startup, entrepreneurs tend to improvise, and their vision may be a bit hazy. Developing a business plan helps sharpen that vision, and down the road helps the startup succeed.
In this section, you need to provide detailed statistics and research on your target market. Colorful visuals are important here to help highlight the key numbers and demographics supporting the validity of your business idea. Use your market research to explain why your business will appeal to your prospective customers.
Show the reader that you know your market and you understand where your best prospects lie. You should also include information about your sales and marketing strategies, such as digital, print, word-of-mouth, etc. This section outlines what your business will accomplish financially over the next three to five years. The Panel Study of Entrepreneurial Dynamics II found that business plans are vital for external fundraising because a plan builds legitimacy and confidence among investors that the entrepreneur is serious.
It also serves to reassure staff, suppliers, customers, and other key stakeholders. Having solid projections and supportable figures in this section of the plan is key. If you are developing a business plan to seek immediate funding, you also need to include a formal funding request. This should specify how much you need, both now and in the future, and what the money will be used for. Go over this section with your accountant to make sure everything is worded correctly and that your numbers make sense.
The organization and management section of the business plan tells your readers about the organizational structure of your business and which key employees or owners are responsible for key areas of the business, such as operations, sales, finances, etc.
Make sure your business plan explains how each key employee adds to the success potential of your business by explaining their expertise, special skills, and prior experience.
In that case, include information on their expertise, as well as that of any business consultants you regularly engage with or have on your board of advisors. Finally, since readers want to see your potential for growth, you should also project how your org chart will develop as the business grows and what positions you plan to add in the future.
In this section, go into more detail about your service or product. Thoroughly describe your product or service and any associated intellectual property information such as patents or trademarks.
Describe what makes your product or service unique and competitive in the marketplace. Most likely your business has more than one product or service, so be sure to provide a brief description of each. Use colorful photos or drawings to illustrate your business and include relevant details such as dimensions, weights and shelf life. For service businesses, outline your menu of services and any add-ons or extras customers can purchase. Do you have plans to add new products or services as your business grows?
If so, outline the areas of opportunity you see. Explain what you plan to add to your offerings and how that will make your business more competitive. Still feel overwhelmed at the thought of writing a business plan?
Once your plan is done, have some impartial reviewers, such as your attorney and accountant, go overthe whole thing and suggest any changes to make it stronger. The more eyes you can get on your business plan before you give it to a potential lender or investor, the better. Entrepreneurs who write formal plans are 16 percent more likely to achieve viability. So, throw away that cocktail napkin and start developing a business plan. Beyond that, formally-developed business plans serve a number of purposes: Investors and banks will expect to see a well-thought-out, comprehensive plan for your startup before deciding to give you any type of funding.
Developing a business plan forces you to think through your goals and resources to realistically assess your capital needs and make better financial decisions. This is a great starting point.
This can be considered the full version of the miniplan, and its main purpose is to outline, without emphasis on appearance, precisely how to build and operate the business. This is the plan that the business owner would refer to regularly as the business moves towards its objectives. The presentation plan is meant for individuals other than those owning and operating the business. This could include potential investors or bankers.
It is essentially the working plan, but with an emphasis on sleek, marketable presentation, and proper business language and terminology. Whereas the working plan is made for reference by the owner, the presentation needs to be written with investors, bankers, and the public in mind.
Understand the basic structure of the business plan. Whether you opt for a miniplan, or a comprehensive working plan to start, it is essential to understand the basic elements of a business plan. The business concept is the first broad element of a business plan. The focus here is on the description of your business, its market, its products, and its organizational structure and management.
The market analysis is the second major element of a business plan. Your business will operate within a particular marketplace, and it is important to understand customer demographics, preferences, needs, buying behavior, as well as the competition. The financial analysis is the third component of the business plan. If your business is new, this will include projected cash flows, capital expenditures, and the balance sheet.
It will also include forecasts as to when the business will break-even. If you lack business or financial education, it is never a bad idea to enlist the help of an accountant to assist with the financial analysis portion of the plan.
The above sections are the broad components of the business plan. These sections in turn break down into the following seven sections, which we will, in order, focus on writing next: Company description, market analysis, organization structure and management, products and services, marketing and sales, and request for funding.
Format your document correctly. Format section titles in Roman Numeral order. Write your company description as the first section. To do this, describe your business and identify the marketplace needs for your product or service. Briefly describe your key customers and how you intend to succeed. Write your market analysis. The purpose of this section is explore and demonstrate knowledge of the market your business is operating within.
You should be able to answer questions like, who is your target market? What are their needs and preferences? How old are they, and where are they located? Make sure to include a competitive analysis that provides research and information on immediate competitors. List your main competitors strengths and weaknesses and the potential impact on your business. This section of the business plan focuses on key personnel. Include details about the business owners and its management team.
If the owners and managers and have extensive backgrounds in the industry or a track record of success, highlight it. If you have an organizational chart, include it. Describe your product or service. What are you selling?
How will customers benefit? How is it better than your competitors products or services? Do you currently have or anticipate developing a prototype, or filing for a patent or copyright? Note all planned activities. For example, if you are writing a plan for a coffee shop, you would include a detailed menu that would outline all your products. Before writing the menu, you would include a short summary indicating why your particular menu sets your business apart from others.
Our wide variety will be a key competitive advantage as we can provide a diversity of product offerings that our main competitors are currently not offering".
Write your marketing and sales strategy. In this section, explain how you intend to penetrate the market, manage growth, communicate with customers, and distribute your products or services. Will you use sales representatives, billboard advertising, pamphlet distribution, social media marketing, or all of the above?
Make a funding request. If you will use your business plan to secure funding, include a funding request. Explain how much money you need to start and maintain your small business. Provide an itemized summary of how start-up capital will be used. Give a timeline for your funding request. To accurately complete this step, in some cases it might be necessary to hire an accountant, lawyer, or other professional.
For one full year, provide monthly and quarterly statements. Each year after that, yearly statements. These documents will be placed in the Appendix Section of your business plan. Include projected cash flows for at least 6 years or until stable growth rates are achieved and if possible, a valuation calculation based on discounted cash flows. Write the executive summary.
Your executive summary will serve as an introduction to your business plan. Remember to place this section at the beginning of your document. When was the business first conceptualized? What are some notable growth benchmarks? Start-ups will focus more on industry analysis and their funding goal.
Existing businesses and start-ups should highlight any major achievements, contracts, current or potential clients and summarize future plans. Potential investors might want to see this information before making a decision. The documents you include here should support claims made in other sections of the business plan. There should a section clearly outlining the risk factors affecting your venture and your mitigation plans. This also indicates to the reader how well prepared you are for contingencies.
Review your business plan for spelling and grammatical errors. Do this several times before deciding on the final version. Rework or completely rewrite content to ensure it works from the perspective of the reader. This is especially true if you are creating a "presentation plan". Read your document aloud. This allows you to detect if any sentences do not flow together well, and it also makes any grammatical mistakes more obvious. Make a copy and give it to a trusted friend or colleague to proofread and provide feedback.
To help you write your business plan, we've compiled a list of the resources that will put you on the right track.
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This guide will explain why a business plan is a must-have, provide a shortcut to the business planning process, help you collect important background information, and get you started with a working business plan outline. A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a .
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