Introduction
The thought of starting up a business can be an exciting time for many people. One of the very first decisions you, as a future business owner, must make is how to write a business plan. By taking ownership of this first, most important step in building your business, you will gain far more than a crisp dot document to be read by others. You will develop a deep understanding of what it will take for your business to succeed. For this reason, the business owner must be the primary thought leader or sole author of the business plan.
What is a Business Plan?
A business plan is a researched and refined document that helps you get business loans, raise equity funding, define and fix business objectives, get reviews of your business idea, create agreements between partners, set a value on a business for sale or legal purposes, evaluate a new product line, unique selling proposition, promotion, and expansion. If you are approaching a banker for a loan for a startup business, your loan officer may suggest a small business administration loan, which will require a business plan.
A business plan is simply a plan of what your goals are for the business and how you plan to go about accomplishing them. It is also referred to as a vision for your business, or a blueprint or a roadmap to accomplishing your goals. According to business experts, a business plan will identify the purpose of your business, company description, business goals, structure, product or services, required resources, financial plan with financial statement, and business management and operation.
Steps to Write an Effective Business Plan
Step 1: Write an Executive Summary
A poorly written executive summary is often the reason why you don’t find investors for your business. In your executive summary, include all major information about your planned business in a concise, clear manner. Write it for your readers and consider their educational backgrounds and what information really matters to them. Limit the executive summary to one to three pages. State the returns and exit plan for the total project, as well as the top two or three selling points of your investment proposition. Provide a summary of expected income, expenses, anticipated income, and cash flows, as well as the total capital needed and return projections.
Step 2: Business Description
A good business description will make your work a lot easier as you travel the road to starting your business. Your business description must meet the expectations that your customers have when they walk through your doors. Get inside their heads, understand what they want, and break down what it will take to provide it. Include information about the legal structure of your business, how the business came to be formed, the type of business, location, and what products and services you will provide to your customers and clients.
Step 3: Operations Plan
An operational plan is a necessity for every new business to get good results. It includes cash flow forecasting, profit plan preparation, flexible budget, break-even analysis, variance report, control of expenses, executive review, daily, weekly, and monthly management meetings, weekly position report, company mission statement, strategic team operating plan, organization structure, delegation of authority, position guide development, hiring procedure, performance evaluations, progressive discipline, employee compensation, and profit-based incentive system. The operational plan measures the performance against particular standard costs, operations, and services, and considers how goals can be achieved in a better and more cost-effective way.
Step 4: Organization and Management
The organizational structure details the ownership of the company, the management team, and the board members. Describe why the board members were chosen and include a chart showing the organizational structure, including managers, employees, and other important personnel. Each managerial position should list the person’s name, position, primary responsibilities, education, who they manage, special skills, number of years with the company, and prior employment.
Step 5: Legal Structure of Your Business
There are four legal structures to choose from for your new business:
Each has its advantages and disadvantages, so choose the one that best fits your needs.
Step 6: Products and Services
Using a business plan to outline what products will be produced or sold, or what services will be offered, is a wonderful way to communicate information to others. Highlight your biggest sellers and unique products or services, and give a description of your items. This section shows the heart of your business and what you are offering to the public.
Step 7: Marketing and Sales Strategy
By developing a marketing and sales strategy, you understand the type of clients you are going for and can develop a proper strategy to approach them. Define your target customer profiles, marketing strategies, and success-oriented revenue targets, and develop an action plan to implement your sales and marketing strategy.
Step 8: Competitive Analysis
Perform a competitive analysis to understand your competitors and perform better. Categorize the competitors, analyze their promotional strategy, evaluate their products and services, and identify their weaknesses and strengths. Use a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats) to gain a snapshot of your competitors’ health.
Step 9: Unique Selling Proposition
Determine your unique selling proposition, what differentiates your offering from your competitors, and what combination of features will benefit your customers more. Identify what makes your product or service stand out and why customers should choose you over your competitors.
Step 10: Financial Plan
Financial planning is paramount to the success of any company. Determine and estimate the funds needed to open a business, including one-time fees and ongoing costs. Create clear and concise financial projections that demonstrate your understanding of the financial aspects of your business.
Conclusion
Your business plan is the blueprint for your success. By following these ten steps, you can create an effective business plan that will help you achieve your goals. Remember to be clear and concise, address your readers’ needs, and adapt your plan as needed. With a well-written business plan, you can confidently start your business and attract investors and partners who believe in your vision.
Now you know what a Business plan needs. Initiate your first step now towards your entrepreneurial journey. Good Luck!
Check out: How to Outperform Competitors
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