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 organization. But, how do you write a business plan? Well, writing a business plan shouldn’t be complicated. In this step-by-step guide, I’ll show you how to quickly and easily write a business plan that will get the results you want.
What is a business plan?
A business plan in any company is a document with every crucial detail that covers the following information: what you are going to sell or produce, the structure of your business, your vision on how to sell the product, how much funding you need, information on financial projections, among other details.
What is the objective of a business plan?
The critical perception of a business plan of any company is to show you that your business is worth starting and the idea is worth pursuing. It provides you with the possibilities to get a detailed look at your goals. In case there is something to change and improve, it’s high time to do it before the business plan of your company becomes implemented.
A business plan is integral in selling your company to potential investors and bankers. But as important, the process of writing involves you and your partners taking a real look at what you want the future of your company to look like and how you’re going to make it happen.
Whether you are building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential topics. Here’s a quick overview of each topic. There are a lot more details and instructions for each step later in this guide.
Step 1 : Executive summary
The summary is where you (succinctly) introduce your vision. Try to make sure your exec summary answers these questions:
- What sector are you in?
- What products/services do you provide?
- Who is your target audience?
- What does the future of your industry look like?
- How is your company scaleable?
- What are the next steps?
- Who are the owners of your company? Backgrounds? Experience in sector/business?
- What motivated you to start your company? Why now?
Step 2 : Mission statement
Yes, this part is important to you and your team. However, this isn’t quite as important to your audience as you think it is. For the second step, you should follow the KISS rule (Keep It Simple, Stupid!)
Your mission statement should include your goal and the objectives that will lead you toward it; your industry, how you see it evolving in the short and long term, and who your customers are. Your mission statement also says who you are, and talks about the strengths of you and your team. This is where you, in part (and in brief), sell the features and benefits of your company.
Step 3 : Products and Services
This part includes information on what you do and what you plan to sell it for. This is also where you sell the benefits of your business. This being a business plan and all, it’s important to list the cost of the products/services you are providing:
- How much does it cost to produce? Versus How much will you sell each piece for?
- Is there packaging?
- How will the client purchase the product?
- What system will you use to bill them?
- Are there extra costs in getting it to the customer? How will it be transported?
The products/services section should also differentiate your new business:
- What makes your business different?
- What gives your company’s product or service an edge in the marketplace?
- What distinguishes it from competitors?
If you are selling a product, sell the general idea and its benefits in this section, but don’t get too technical. Leave any diagrams or intricate designs for the addendum, while inserting the phrase: “For more detail, visit the addendum Page #.”
Step 4 : Marketing plan
Now that you’ve proven what you want to do and how you will make it happen, next you will need to detail how you’re going to spread the word. This is where you prove you know what you’re talking about and that your company is ready to provide a service to a proven audience.
Your marketing plan should be the result of a blend of first and (reputable) second-hand research into your marketplace. Break it down into sections, grouping by market topic. We suggest these seven:
- Your customers: Are you B2B or B2C? Who are your customers? How do you plan to reach them? Where will you sell your product/service? How will you garner feedback from them? How will they know you care?
- Your competition: Who are your direct/indirect competitors? What’s your advantage? Tell them you are better and why you are better!
- Your niche: Or market or sector. Again, what separates your business from your competitors and how will you make yourself known in the niche?
- Your distribution: Of course, this is a marketing plan, so they’ll want to know your tricks for promoting within the said niche. How are you selling it? Are you selling it directly to clients, to a vendor, online, at a store, an office, freelance, etc. ?
- Your advertising: Are you advertising already? Where? When you have more funding, where do you advertise? How will you use advertising to retain customers? Get new ones? Make sure you outline your marketing budget either here or within the financial plan. How much will be spent on print, TV/radio, Internet, direct mail, external ads, etc?
- Your sales strategy: Depending on the industry, this could be one of the most important parts, how are you going to sell your product/service? Online? A sales team? Telesales? How will you incentivize sales? Will you offer a free sample or trial? Host a free workshop?
- Your face: You’ve described how you will market, what, to whom, on where. Now it’s time to explain the image you’re going to project. This can include your slogan, images, logos, website, social media channels, etc.
Step 5 : Operational plan
This part takes a reader through the day-to-day of your company, explaining the:
- Location/Logistics of your business
- Transportation (if you’re selling a product)
- Legal – Do you need a permit? License? Do you need to join a union or other professional organization?
- Inventory – if you’re selling a product, where will you need to store it?
- Providers/Suppliers/Freelancers – Detailed contact info/pricing for anyone you’re outsourcing to.
This is a lot of solid, concrete info, but don’t be afraid to add a short lyrical introduction, painting a more visual picture of how your company will work, briefly walking them through your day-to-day operations. You can even include a photo or video showing it.
Writing a business plan isn’t just about including all important information. It’s also about capturing the attention of a reader and convincing him or her that you are a solid team. Show them why you make a good team, and then add some candid shots of your company team happily working together.
Step 6. Management organization
This part includes a hierarchical chart of your company and how the operations we talked about above flow through it. List the positions and briefly describe the functions of each integral member of your business, including but not limited to: board of directors, advisors, technical specialists, accomplished salespeople, accountants, and lawyers.
Then describe any steps for your staff to expand. Also, reflecting it in your financial plan, discuss any new hires you want to make and why. Your business plan isn’t just about where your company is, but where it’s future is headed.
Step 7 : Fiscal planning
The fiscal piece of your business plan puzzle is the piece investors and loan managers are going to spend the most time looking at. Without proper capitalization and financial planning, even the most excellent business idea that fulfills an urgent need is at high risk for failing.
This reflects what you are going to sell versus your business expenses. This analysis projects your profit margin.
Profits & Losses analysis
Done in conjunction with the cash-flow, this looks ahead at least a year and includes revenue predictions, including graphical representations of those numbers.
This breaks down how much you have to, well, break even.
Seriously, this is the part they are going to spend the most time looking at, make sure it’s thorough and realistic.
Step 8 : Addendum
As you can probably guess, this is where you talk about the rest, the boring, the things that you probably won’t need to include. But the addendum shows you did your research. Also, this is where you add any technical diagrams of your business plan. The addendum is also a great place to put references and press about your company, as well as resumes, adding proof of your awesomeness.
The business plan project manager’s job is to organize things most pervasively. Anything that’s not essential and is interrupting the flow of information should be added to the addendum.