To succeed in business, you need a strong and well-thought-out business plan. In the absence of one, you will find it hard to maintain a vision for your business. It will help you to know the next steps that your business should take. It proves that each step that you make is part of the larger effort that is calculated. That is why this article will help you to learn how to write a business plan.
Business plans can also help you out in external affairs. For instance, if you wish to take a loan, onboard a business partner, and many more, you will require a solid business plan. You need to use the business plan as the main pitch.
However, writing a business plan is not an easy thing. There are certain things that you should clearly outline in your document. Besides, no two business plans can look the same. That is why you need to go through this guide on how to write a business plan.
Things To Note On How To Write A Business Plan
Top on the list is the fact that you need a clear understanding of your audience. For instance, if you have a business that operates in a high niche place, you should not use complex language that people who are reviewing your documents like investors or lenders will not understand. Remember not everyone has knowledge in your space.
The other thing that you need to pay close consideration to is the length of your business plan. It is a good way to show that you have the interest of the reader at heart. It is recommended to keep the business plan as to short as possible. We have readers who want high-level information while others want to see more details.
For instance, potential business partners may want to see a little more details than an underwriter who is evaluating your business. Therefore, to know how to write a business plan, get to understand your audience.
You should not go overboard by writing a business plan that is over 50 pages. You will rarely come across an individual who is willing to read such a big document.
Choose Between The Traditional Or Lean Startup Format
There are basically two ways on how to write a business plan. The most common route is the traditional one. Traditional business plans have more details and are ideal in most scenarios.
The other alternative that you can explore is the lean startup. These are basically one-pagers and they only detail the business at the highest level. It is the most ideal option for brands that have higher chances of changing quickly or on an extremely short timeline.
Step By Step Guide On How To Write A Business Plan
Traditional plans typically have seven sections and each of them is crucial in explaining a different angle of the business. The detail and length of the business plan and the maturity level of the business are in this plan.
The plan will help you to sell your brand to lending institutions, investors, business partners, and many more. It is useful to have a solid plan and will keep the actions of the business owner on track. Here are important steps on how to write a business plan.
1. Executive Summary
The first thing that you need to do is write an executive summary of your business. Like other writing pieces, this forms an introduction to your plan.
It tells the reader why he should believe the business. You need to sell your brand here and explain well why it matters. You should also supplement the selling with a high level of operating model and plan summary.
However, this section should not be more than one or two pages. You can also include the name of your business, address, key employees, business background, and a list of goods and services that you offer in this section.
2. Business Description
The second step on how to write a business plan is describing your brand. The section gives you an opportunity to describe your brand in detail. Explain the opportunity that your business capitalizes on and your target market.
The other thing you need to tell is how your brand stands out from competitors. You should clearly highlight the differentiating factors of your business.
3. Competitive And Market Analysis
A good business should carry out a comprehensive market analysis before entering. This applies to all business sizes and readers normally want evidence of the same.
You can describe the market and industry that your business is operating in this place. You also need to provide a highlight of the opportunities that you will take advantage of as a business. Explain whether your market research revealed any trends that are unique.
The next point is illustrating the competitive landscape of your brand. Which areas are your competitors doing well and where are they underperforming? What are your motivation to join this industry and the weaknesses that you will exploit? How will your competitors react logically and will you take customers from your competitors and how?
4. The Operational Structure
This section focuses on the tangible elements of the business. It explains how your business will operate on a daily basis. A good business plan should detail out this information clearly.
Explain the legal structure of your business. Are you dealing with a proprietorship? It is advisable to create an organizational chart especially if you have multiple stakeholders. It shows how each individual brings something to the table.
5. Product Description
This section allows you to discuss what you will be offering or selling in detail. Which goods or services will you be selling? The section tends to be longer than the others due to its importance.
As you describe your product, explain how it is different from similar ones. How will you price it and how does it play in the market in comparison to the competitors?
You also need a promotional or marketing plan in this place. You can have the best products in the whole world but it does not if no one knows about it. You need to identify your target market and detail out clearly how you will make them aware of your products.
State the message that you would like to promote and how it resonates with your target audience and specific product. Explain how you will retain loyalty and build awareness.
6. Raise Capital
If you expect a prospective lender or investor to read your business plan, include a funding request section here. Clearly state the amount that you are requesting and why. There should be a clear plan as to why you are asking for that sum of money. Explain how you will use the funds and the projected ROI.
7. Financial Analysis and Projections
This is the last step on how to write a business plan. The section requires a financial analysis to paint a picture of the past performance of your business and show future growth. Using images and charts will create an easier experience.
If your business has been operational for a few years, use your finances to demonstrate its stability. However, if it is a new business that is not yet profitable, have realistic and clear projections.
Research the norms of the industry and see how similar businesses have been performing. Include your balance sheets, income statements, and cash flow statements for several years if available.
As you present your financial outlook, project your vision for a minimum of five years. State the login behind your projections clearly and tie the section back to the previous one on how to raise capital if there is a need to do so.
If you have some remaining information pieces like licenses, patents, charts, and any other thing that did not organically fit in somewhere in the business plan, you need to include them here. However, the appendix should not be a place for dumping documents. Make sure everything that you attach here is supporting the business plan in one way or another.
These are the main tips on how to write a business plan. The same procedure can be used by a person who wants to learn how to write a simple business plan. The most important thing is paying close attention to detail throughout the writing process.