- Fantastic Team
- 5min read
- Published: January 21, 2021
- Views: 55
What Is a Business Plan?
A business plan describes what you are planning for your business and how you are going to do it.
When you’re working out how to create a business plan, it’s important to be thorough. But it’s also vital to be realistic.
Something you always need to bear in mind when you’re writing a business plan is your audience. Who are you writing this plan for?
Is it for you, to help you manage your business? For your team, to show them how they should be striving and what for? Or to attract investment?
With your audience squarely in the forefront of your thoughts, here’s how to write a business plan step by step:
What Are the 3 Main Purposes of a Business Plan?
Before you get into the nitty-gritty of how to write a business plan, you should first consider why you’re doing this in the first place. The three most common purposes of a business plan are to:
1) Define Your Goals
A business plan should identify your objectives for the next one to three years of operation and how you’re going to reach them.
This can then be broken down into a series of smaller goals so you can check your progress along the way. It always helps to use specific numbers rather than generalisations.
2) Explain Your Vision
Many businesses produce annual business plans so that their management-level team can understand the company’s vision and how they should go about implementing it.
This can also be important for partners, vendors and junior employees. Finally, it can serve as a draw to attract new talent.
3) Attract Investment
One of the major reasons most business owners decide to write a business plan is to attract investment from outside of their organisation.
This might come in the form of Venture Capital (VC) or be directed at a bank or other lender. Some banks and lenders demand that client businesses file a new annual plan every year.
How to Write a Business Plan
Writing a business plan isn’t like writing a novel. There are a few things you definitely should not do when you create a business plan:
- Don’t use flowery or ambiguous language
- Don’t run to more than 25 sheets of A4 paper if at all possible
- Don’t be disorganised – business plans have a generally agreed-on structure
- Don’t forget to include tables, graphs and other easy-to-read visual information
What to Include in a Business Plan
There are several key elements which no business plan would be complete without:
1) The Executive Summary
Think of this as the section someone can read to get an overall view of your business, your goals and your plan for accomplishing them.
As it’s the first thing that an investor or lender will read, make sure you make a lasting first impression. Be sure to include a summary of the most important points from the rest of your plan.
2) The Business Description
Your business description section should include all of the relevant details about what your company is and what it does:
- Your business name and location
- What goods and(or) services you provide
- How your business is structured
- Details about who your audience is
- Who your competitors are
- Your mission statement
3) The Product and Service Description
This is where you describe what your goods and services are or will be. You should list how you manufacture your goods or what your procurement or service development process looks like along with any copyrights you might own.
4) The Market Analysis
This section expands your comments in the executive summary and business description sections which refer to your audience, your market and the niche you are planning to fill.
To do this, you will need to do some market research. This might involve creating buyer personas – an “ideal customer”, listing the age, gender, job, interests and other facts you know about the people you are trying to sell to.
You might need to create several buyer or marketing personas if you have a diverse clientele. You then need to move on to show how what you offer is what they need.
5) The Competition Analysis
More market analysis is required in this section. You will need to answer a number of questions about your competitors to show how well you’ve thought about actually entering that market. For instance:
- Who are your competitors?
- Why are their products or services good?
- What attracts people to your competitors? Is it their brand? Their price points?
- What range of products or services does each of your competitors offer? How much do they cost?
- What advantage do you have over each of your competitors? Why would someone buy from you instead of them?
The more accurate, numerical data you can supply here, the more effective your business plan will be.
6) The Financial Calculations
Your priority in this section is – as always with a good business plan – to be as accurate and numerical as possible. You should detail:
- How much your business will or did take to start up
- How much it costs to run
- How much capital you currently have
- A break-even analysis
- A sales forecast
- Balance sheets and cash flow statements
What Is a Business Plan?
A business plan can include many other elements. A section on how your day-to-day operations function is common. As is a funding request if you are planning to make a pitch to an investor.
Overall, your business plan needs to be a comprehensive and realistic document. Make sure to include as much detail as possible if you want to accurately define your goals, explain your vision and successfully attract investors and funding for your business.
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