Having a well-thought-out and solid business plan is essential to any business’s success. It provides you with a clear road map for your business. Writing a business plan allows you to work through your business’s validity and get a clear picture of your financial needs and the competition in your sector.
Additionally, you can hash out your growth goals, set the strategy, and create milestones for achieving them. If you’re seeking a loan or looking for investors, writing a detailed business plan can help show your potential investors that you are fully prepared and have thoroughly vetted your business idea.
Thus, it’s important how you go about writing a business plan. Writing one isn’t a complicated process, and you don’t have to be an accountant or have a business degree, as you will see with this guide. But first, let’s take a look at the fundamental elements we will be discussing in our step-by-step guide for writing a comprehensive business plan.
Step 1: Write an Executive Summary
An executive summary is the core aspect of any business plan. It entails the full rundown of the entire document by highlighting crucial elements. Although it is the first part of the business plan that the reader engages with, you should write it last, after you have written the other parts of the business plan. Doing this gives you a better idea of the details it should contain.
Now let’s look at some of the critical things you should capture in your executive summary:
- Business name
- Key employees
- Office address
- Business background (mission statement, ownership structure)
- Brief description of goods/services offered
Remember to keep it clear and straight to the point, and it should not exceed two pages.
Step 2: Create a Business Description
In this section, clearly state the nature of your business. You get the chance to give full details of the product or service your business offers and how it can benefit the consumer. Also, state your target audience and your competition within your sector.
If you wish to apply for a loan or seek investors, your business description needs to differentiate itself from others. It will allow your potential investors to get to see the strengths of your company and why you deserve funding.
Step 3: Provide a Market and Competitive Analysis
The third step in your business plan should focus on in-depth industry research: the size of the market, customer needs, the opportunities you plan on tapping into, and your target market. Here you give further details about your target market, age demographics, gender, income level and other information about your potential buyer persona.
You should also add your product or service pricing, evaluate your market share, and state any difficulties you may likely face. Include details about your competitors, how well they are doing in the market, and the strategies you plan to use to stay ahead. If there are different trends that your market research and analysis revealed, you can include them in this section.
Step 4: Describe Your Operational and Management Structure
Here is where you get to give details of your business’s legal structure, history, and location. It includes yourself, your team, type of ownership (is it a sole proprietorship, partnership, or corporation). What are the percentages of ownership and the extent of involvement of each member? You can make use of an org chart to describe your structure.
Highlight all your strengths as a team and how your business plans to run on a day-to-day basis. Mention key staff members, their role(s), and what they are bringing to the table. If you are considering future hires as your business expands, you can also state that here.
Step 5: Include Your Product and Service Description
In this section, you can give further details about your product and service. Besides stating what problems you wish to solve and how your product and service are different from those already in your sector, you need to explain the production or creation process.
For instance, if your business plans to manufacture toothbrushes, give details and where you get your materials from, and likewise your production and packaging process. Additionally, this step helps to determine your product or service pricing.
Step 6: Outline a Sales and Marketing Plan
This part of your plan should contain marketing, promotions, and strategies for sale. Include all of the details about your planned advertising, promotions, distributors, and sales representatives. You can also highlight the strengths of your product or services and the advantage it has over others. To help you capture the strategies that need to be executed, you might need to answer the following in detail:
- What is your brand message to your customers, and how does it resonate with them?
- How do you plan on attracting and retaining customers?
- What strategies will you use in making them become a part of your loyalty program?
- How do you plan on fulfilling all your orders in a timely and efficient manner?
Remember that you might have the best product or service in the world, but if there is no interaction with your target audience, that becomes a problem.
Step 7: Create Your Financial Analysis and Projections
Your finances are another equally vital part of your business plan. It needs to have accurate details of your balance sheet containing your assets (and debts, if any), income statement, cash flow statements, etc. However, if your business is new, your cash flow statement can take the form of a projection.
Show a chronicle of your business’s performance, starting from the past and progressing into the future (at least five years ahead). You can include infographics to make your financial analysis easy to understand at a simple glance. For a new business, make sure you are clear and realistic when adding your financial projections. Ensure that for each projection, you have solid logic behind it.
If you plan on getting a loan or investors, a financial plan is a great way to show how your business can generate enough profit to repay the loan or how you will earn a decent ROI.
Step 8: Make a Funding Request
This step is for those who plan on getting investors or requesting a loan. Indicate how much you are asking for and how you plan on spending it. Also, state the ROI and benefits the investor stands to gain from their investment. If it’s a loan, you should give details on your loan repayment plan.
You want to make this section as accurate and detailed as possible, so there is no doubt left in your potential investor’s or bank’s mind. They should easily be able to tell how the financing will help your business grow.
Step 9: Write Your Appendix
The appendix section of your business plan can carry the remaining information you might want to add. It could include relevant patents, permits, charts, studies, licenses, product images, legal documents or contracts, staff resumes, etc. Generally, you can list anything else that won’t naturally fit into the steps we have listed above.
However, it should not be used as a section to dump in irrelevant material. Before you add anything here, ensure that it is relevant to your business plan.
When you are done writing your business plan, you can take a break and then look at it later to ensure that all the information you have included is accurate and relevant. Remember to also proofread for spelling errors. Having a concise and straightforward plan will help make it more digestible and easier to understand.