A business plan is important, and here is why. If you are just getting started with a new business or want to expand an old one, it’s normal for failure to be the last thing you want to talk about because you wish to remain focused and positive. However, for a majority of businesses, failure is the reality, and the fundamental cause of this is lack of planning.
A business plan is crucial to your company’s success. If a business should fail for whatever reason, be it insufficient market research, poor management, financial planning, inefficient social media presence, or something else, these mistakes all points back to a lack of proper planning from the initial start of the business.
A business plan is a document which contains every crucial detail about running a business. It covers information such as your products or services, business structure, business funding, information on financial projections, target market, among other details. That being said, you may still ask; “is it necessary to outline your plan?”
The answer is yes; the significant idea behind a business plan is to keep you aware and updated about your business by providing you with detailed insight into your goals. It also gives you room to make small changes or improvements whenever you learn something new before implementing the business plan. Furthermore, a business plan is crucial in selling your company to potential clients or investors.
Now, if you want to create a plan for your business but still don’t know how to go about it, here are eight steps and tips to make one in a standard format. But first, you have to understand that a business plan isn’t meant for internal company use only, it is also a promotional document that can be presented to investors, banks, and unique customers, to give them an insight into the business. Therefore, you want to consider these people when writing your plan. You also want to keep it simple and flexible to updates and changes.
Eight Steps in creating a business plan
Step 1. Executive summary
The summary is the part of the document that describes the business in-depth. When writing this section, make sure your plan answers these question;
1.What sector is your business under?
2. What products/services are you providing?
3.Who is your target audience?
4.What does the future of the industry look like?
5.Is your business scalable?
6.What are the next steps to progress?
7.Who are the pioneers (owners) of the company?
8.What are their backgrounds and experience in the sector/business?
9.What motivated you to start your business?
Step 2. Mission statement
It is essential to keep the details in this section as simple as possible, although it may not be as relevant to clients, it is important to you and your team. The mission statement for your company should incorporate the goal and objectives set to lead your business toward success in the industry, as well as the companies vision, short and long-term progress. It should also say who you are and talks about the strengths of your team. This section is where you, partially and briefly sell the features and benefits of your company.
Step 3. Products and services
This section of the plan should contain information about what you do or what you intend to sell. It is also another avenue to state the benefits of your business. Although this being a business plan and all, it’s necessary to list the cost of the products/services you are providing in this section. The product and service part of the plan should also highlight the value to produce in contrast to how much you are selling each piece. Questions this section should answer includes:
1. Is there packaging involved?
2. How will customers purchase the product?
3.What would be the paying system you’ll utilize?
4. Are there extra costs attached to getting products/services directly to customers?
5. How will it be transported?
Furthermore, the products and services section should also distinguish your new business from competitors; it should answer questions such as:
6.What makes your business different?
7. What qualities gives your business’s product or service an edge in the marketplace?
8.What differentiates it from competitors?
If your business is product-oriented, you want to sell the general idea and its benefits behind it in this section. However, try not to get too technical with your explanation, if you’re going to include any diagrams or intricate designs, be sure to reserve it for the addendum section. You can indicate by inserting the phrase: “For more detail, visit the appendix Page #,” in this section.
Step 4. Marketing plan
Now that you have proven what you want to do and indicated how you intend to make it happen, your next step is getting people to know about your business. This section will need to go into detail about how you’re going to spread the word, in a way that proves your company is capable and ready to provide a service to a proven audience.
Your marketing plan should be created based on information from your market research. Make sure the research and plan contain information about your target customers, your competition, your niche, distribution strategy, advertisement strategy, sales strategies, and brand identity.
Step 5. Operational plan
This section takes a reader (investor or client) through the day-to-day running of your company. It explains the logistics of your business, transportation system, and legal criteria such as permits, licenses, the need to join a union or other professional organization. This section also touches on a business concept like inventory, product supplier or service provider info,
Step 6. Management organization
This part provides an overview of how your company carries out the operations above; it could be illustrated in a chart. In this section, also list the staff positions and briefly describe the functions of each integral member of your company, including but not limited to: manager, technical specialists, accomplished salespeople, accountants, and more.
Also, describe any steps for expanding your staff; this information should also reflect in your financial plan if there would be any new hires.
Step 7. Fiscal planning
This is one piece of your business plan that investors and loan managers are going to pay more attention to. Because even the most excellent business idea wouldn’t work without proper capitalization and financial planning, this critical section should highlight:
1. Cash-flow analysis:The cash flow is an overview of generated revenue versus your business expenses, protecting your company’s profit margin.
2. Profits & Losses analysis: This can be done in conjunction with the cash-flow, it is the revenue predictions of the business, for at least a year ahead. This section can include graphical representations of those numbers.
Step 8. Appendix
This is where you add any additional information, such as references to your research, technical diagrams, press, and your company as well as resumes/CVs, as further proof of qualification. Lastly, anything that’s not essential and can interrupt the flow of information in the business plan should be added to the appendix.
Writing a business plan would take a lot of time, research work, and other resources. Be sure to consult professionals in your field of specialization to gather as much information as possible. Also, if the company isn’t a “one-man” business, make sure to have your team works with you on writing out the plan.
Since the business plan is also a tool for attracting investors to your company, you want to make it as comprehensive as possible. Writing the plan shouldn’t be all about including essential details on running the business; it should also captivating and convincing to readers. Make sure the plan highlights things that make your team and business one which is worth investing into.
Also remember to check out our articles on Job search.