How to create a Business Plan?
A business plan is a written summary of a business’s prospects. It is a document that specifies all the goals in business and how to execute the plan.
Investment-seeking entrepreneurs use a business plan to communicate their concept to potential investors. It is a tool used by firms to attract good employees, invest in new business, deal with suppliers, or detail the company’s management more effectively.
Steps to Write a Business Plan
A business plan is an organisation’s tool to guide the business. A document that shows external parties precisely what the business is. Hence, it is required to approach each section as a step to walk through one at a time.
Step 1: First, write the executive summary📝
The first chapter in the business plan will explain what the business is planning to do, the current state of the business, the business’s mission in the road ahead, and how to reach success. Here are the details:-
- Firstly, the mission statement includes laying down the business goals in no more than a paragraph.
- The overall company information includes providing information about the business, the details of its founders and their functions, the existing number of employees, and where the company is located with its head office and sub-units.
- Details of commodities or services describe what your business sells and who are its buyers.
- Key milestones or financial market highlights include models elaborated by graphs and charts of any growth seen from commencing the business.
- Monetary information, which includes details of your business financing or the funding goals at the close of this summary.
- Long-term plans include where your business is planning to take the routes in the upcoming times.
Step 2: Providing the overall company details✅
This is an overall study into the framework of your business as to what it does.
It may contain the following:
- The business’s statutory structure: What legal structure does the company have. Is it a private limited company, proprietorship, limited liability partnership, or any other? All this is to be described with the details of ownership.
- Details of the business’s commodity or service: It is meant to give your investors a general sense of the business.
- Marketplace fit of the business: What the business is exactly doing to fit into the marketplace, and how does it meet that need?
Step 3: The market study🎯
As the name suggests, it is an in-depth analysis of the industry, market, and rivals. It may include the following:-
- Business information: This gives a survey into the industry, including the expanse, growth over time, the future, and other important trends. Identifying the experts or those who hold a major share in the market is also important.
- Target market details: This contains the details of your target market or the target audience.
- Target market features: It is about identifying the customers in the target market and understanding their requirements. It is a survey of how the current needs are being served and the key demographic that the business serves.
- Target market size and extension: Here, a lot of information about the purchasing trends of the target market is provided. This brings about the know-how of the projected growth of the market.
- The market share potential: In a targeted geographical targeted area, how much share are you expecting.
- Market pricing: It is the best estimation of how your business should be pricing and distributing the products and the promotional strategies that will be followed ahead for the same.
- Barriers: You must include any barriers to market entry that your business might come across.
- Competitor analysis is also an integral part of the business plan.
Step 4: Specification of the business’s organisation📑
It includes explaining who is responsible for the business, what are the past experiences and expertise of everyone in the team and listing them in detail. These are as follows:
- The legal structure of the company: It has specifications of ownership.
- Organisational structure: It includes an organisational chart or the organogram showing how the business is structured. This will demonstrate the authority and responsibility matrix in the business.
- Background of the team: This will prove to potential investors that the business is surrounded by individuals who can carve a success story. It includes the past experience and expertise of the managers, team, partners, and board of directors of your company.
Step 5: Detailing the products and services📋
This section explains what needs your business fulfils with its product and service.
- A detail of the product or service: It includes the product and service details that the business is dealing with and why it is distinct from other players in the market. Details of the ways the product or service is going to lure and satisfy the customers.
- Prevailing status of products: It explains whether the product or service is just in the idea stage or is there a final product ready to market?
- Product development analysis and goals: Whether product or service is in the ideation or creation point, detailing how it is brought to a finalised product. What research and development projects require to be done before getting to market?
- Patents, copyright, and intellectual property: For patents, you need to give a well-detailed explanation of whether they have patents or are in the patent application process. For technology or scientific companies, or if intellectual property is proprietary to the business and crucial for success, it should be explained in the product development section.
- Information of inventory or sourcing details of your product must also be included.
Step 6: Explaining the marketing and sales plan🧮
It delves into the detail as to how will your business attract and convince customers and get them inspired in the industry and the product in particular? It includes the following:-
- Positioning: The way a business positions the brand determines how your customers find and interact with the business and how it stands out against the competitors in a branding taste.
- Selling the product: It describes who will be selling the product. Is a sales force required? If so, how big does the sales team require to be?
- Promotion: This involves asking how to get the word out and how the business will reach the customers.
- Selling tactics: It includes an overview of selling the products, whether cold-calling or any other sales strategy is to be taken up.
Step 7: Financial strategy📊
It includes income statements, cash flow statements, balance sheets, accounts receivable statements (if applicable), accounts payable statements (if applicable), and documentation of debt obligations (if applicable). Again, the funding request needs the following:-
- The funding sum the business needs currently.
- Any funding the business needs in the future.
- The purpose and impact of the funds
Step 8: Attaching an appendix📎
Although the appendix will be at the very end of your business plan, it will also hold all of the supporting information about your business’s above-mentioned steps that were not included in the document.
If the business has any additional data points, charts, or further explanations essential to creating a complete plan, it needs to be included in your appendix in the business plan.
Thus, a business plan is essentially a future forecast of the business and works as a guide for those interested to set up a business. While talking about the importance of a business plan, Kevin J. Donaldson added, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve!”
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Q. What should be the length of a business plan?
Ans: Based on its use, the length of a business plan can vary from a few pages to a detailed plan explaining a complex project, with more than 100 pages. A standard business plan covers 15 to 20 pages.
Q. What are the questions to be answered before you begin to draft a business plan?
Ans: -In the industry, who are the prime competitors?
-What is the market response to this industry?
-How is your solution distinct from that of competitors?
-Who is the ideal customer?
-What are the ways to market the business?
-How can the business be funded?
-When and how to make a profit?
-How to define success after the first year?
Q. What are the online tools that can be used to write a good business plan?
Ans: SBA’s Business Plan Tool, Enloop, RocketLawyer, and StratPad.
Q. Can a business plan template help you to write a business plan?
Ans: The business plan template includes a business plan framework in a Word or a PDF format that contains a simple fill-in-the-blank system to create the plan. It can be useful to jump start a plan. They are available online.