Writing a business plan: the definitive guide
Do you want to create a roadmap for your business that will meet the business goal? Then you need a business plan. The plan will then project where and how your business will be in the next 3 to five years.
A business plan is an important part of creating new business, whether it’s a startup or an existing business. It’s similar to a business model.
I know that will be exciting.
Not every entrepreneur think writing a business plan is a waste of time. But how many of you remember all the idea that once popup?
Very few I know (I included).
As unpopular as a business plan is to other entrepreneurs, the advantages of writing a business plan is far beneficial and gives the specific direction more easily than if there is none for the business.
Even though the Business plan tells us about the future of the business, it should be flexible. Meaning you can change and improve the plan where need be.
Well this is a definitive guide to writing a business plan and in the article, we shall be covering:
- Executive summary
- Company description
- Market analysis
- Organizational structure
- Service or product line
- Marketing and sales
- Funding request
- Financial projection
But before we go into all that, let’s look at some things that will better give us a better understanding f a business plan.
What is a business plan?
A business plan is simply a description of your business in the future and what you need to ensure you get there. It explains the entire business nature, the product or service, marketing method, sales, target market.
In essence, the business plan gives the business direction for present and future so that you can avoid the bumps that may arise.
Although the specifics may vary based on the business, the business plan should conform to the general acceptable guidelines in both forms and content.
Each section should be specific and address relevant questions that the people who read your plan will most likely ask.
In another form, the business plan tells what your company does and what you don’t. for instance, if the business you’re writing is in fashion, you can specify whether you’re the fashion business is about men and which class of men and age?
Who will read the business plan
It’s important to note that your business plan is not for everyone. But at the same time, it’s important to note that there are certain people that are important that should see it. These people either help you in financing or the process of building the business.
Here are some people that will demand your business plan.
You and employee
You’re the entrepreneur and you have a business model which is the business plan. You and your employees will need it as a working document in building the business. So that it can keep the business building process in the right direction.
No investor will want to invest in your business without looking at the business plan. Except if you’ve created a business and have sold it $300 million, which investors will want to work with you without asking for a business plan.
For many especially new entrepreneurs, you’ll need one. The reason is, they want to really be convinced that the business in question will work and has a future.
Write the business plan in a way that will answer the questions the investors will want to rise. Just give them the reason why they should invest in the business.
This will depend on the type of business you intend to do. These businesses normally entail the ones that can are in the health, construction, and transport sectors.
Certain regulatory bodies will require you to provide your business plan so as to know the way you intend to do the business. This is real to ensure that you’ll keep adhering to the rules.
What type of business
The business plan is for every business and here are the following business types below:
- A sole proprietorship
- Limited liability company
- Corporation (more than 150 investors)
- Joint venture business
The four Cs of writing a business plan
This is just like the rules of writing a business plan. It makes it possible to have the best truthful plan that investors will appreciate in the future.
When you use the four Cs of writing a business plan, at the end, you’ll be presenting a finished business model ready for action. The four Cs is a must if you want a business plan that has all the standard writing practice.
Make sure that your business plan gives information clearly that makes it easy for investors will understand what you’re saying. Being concise will definitely make it possible to give the required details of the business.
Don’t work by assumptions. Ensure that your data, financial analysis is correct and any other information is free from error or follows acceptable standards. Use data’s that are accurate and relevant to your business plan because that will further show you really know the industry.
Ensure that the business plan is complete. Ensure that the business plan has all the necessary parts to the greatest degree. Any incomplete business plan will tag you as an entrepreneur that is not serious.
The business plan must attract much attention and admiration to investors that will make them eager to invest.
Questions your business plan should answer
- Who will read the business plan?
- What do you want readers to do when they read the business plan?
- How will you get them to take action?
- Who is the reader you’re concerned about?
- What can you do to appeal to them?
When should you write a business plan?
A business plan works best when you want to embark on building a business or trying to expand an existing business operation that requires huge sum.
Another time of writing a business plan is when you intend to find investors or look for a loan from a financial institution. This is because the business plan will help the investor or the credit institution to make their decisions.
How long should your plan be?
In the past, a business plan is long and somewhat complex. But that’s not the case in today’s business plan. Most people have adopted the easy to read the business plan.
The simple method is always the best, so long that the business plan is complete and compelling.
Who needs a business plan?
A business plan is not for everyone, but for entrepreneurs who want to start their business or expanding an existing business venture that will need more resource of money, time and personnel will definitely need one.
Why you need a business plan
- You know where to start and finish
This is really important, as it will ensure that you begin building a business foundation in the right way.
- Maintain business focus
The business plan makes it easy in maintaining a steady approach to ensure your business building is following the actual path.
- Ensure every detail is not skip
Your business plan is your business on paper. It reminds you of every detail so that you follow it vigorously.
- You’re working with a goal
The business plan will always help to know what to expect when everything goes according to plan.
- You know what you’re going into
At least you’re not working on the assumption, but you know what you’re going into beforehand and how the entrepreneur should prepare for the task ahead.
The complete step by step to writing a business plan
A business plan is all about the details of your business. Therefore I offer you the complete steps by step to writing a business plan.
The steps are arranged according to the order of priority and skipping one step makes your plan incomplete.
If you’re ready, let’s go get started.
Writing a business plan:
- Table of content
- Executive summary
- Company description
- Market analysis
- Organizational structure
- Service or product line
- Marketing and sales
- Funding request
- Financial projection
Table of Contents
Organized in an Outline Format, the Table of Contents illustrates the selection and arrangement of
The information contained in your plan. It should include topic Headings, subheadings, and Page Number References.
The main purpose here is to make it easy for who is reading to navigate to the page they want.
The executive summary tells the summary of the business plan. It’s the first place that will tell whoever is reading will expect in the plan. The executive summary should contain things like:
- The purpose of the business plan
- Showcasing the financials
- Where the business will be located
- The product or service the business will offer.
Under the executive summary, you can get subheadings that should include:
The services or product the business will offer
What will your business produce or clients your business will target in a year? This is a place where you can say about it. Specify the raw materials you’ll need to creating your product or service.
It’s important to specify the amount of money you need to raise for the business and what the money will be used for the business. The following should then be clear.
- What the finances will be used?
- The time frame for the completion of the business when the money is made available
- What equity the entrepreneur will be adding to the business.
Provide a mission statement which will ultimately define the company’s goals, ethics, and norms for decision making. The mission statement address:
- What the company will do for the customer
- What it will do for the employees
- What it will do for the owner
- What the company will do for the community
The fourth option is rare but still important for a business.
Below are some of the mission statements from businesses which you can use to see how it works.
Public broadcasting system (PBS): To create content that educates, informs and inspires
Patagonia: Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.
Nike: To bring inspiration and innovation to every athlete in the world.
Building a management team ensure the business management in all areas possible and is a major thing that will take the business to the next level.
Having a management team will give confidence to investors who are reading the business plan. Whoever makes your management team, it should come with:
- The years of experience of the team members
- What their expertise can add to the business operation
This will require you to give the time you’ll need for business expansion by stating the method you’ll implement for the expansion. For instance, a business expansion plan could be to implement marketing campaigns that’ll effectively target the right market and produce buyers within.
Company and financial summary
Now at this stage, you’ll need to begin to go into details of your business plan. Remember, you have to be correct, concise, compelling and complete. Under the company structure and financial summary, you’ll have a subheading under it.
Registered name and corporate structure
You should be able to provide the name and location of the business. If you’ve not registered the business name yet, you still specify. But as a general rule, when you have a registered name, many investors will take you as a serious entrepreneur.
Start the required funds you’ll need to either start the business or expand it. Then break it down to show how the funds will be used. You can have the following item within your projected projects:
- Working capital
- Business equipment
- Marketing budget
State whether there is already investor equity and whether you need one or not. Well, not every entrepreneur writes a business plan with the aim of looking for investors to invest in it, instead to go after loans from funding institutions.
Management of equity
For existing business, this is really important. If you own the equity 100% state it.
Do you have an exit strategy in the future, make it known. Some entrepreneurs will want to sell their business when the business is successful.
A business will have a way to operate to ensure that the required output and desired result is achieved. Explaining clearly how the business will source for raw material, produce and distribute their product is important.
Strategic and marketing analysis
The strategic and marketing analysis will seek to tell the economic climate, industry analysis, customer profile and competition. These better make you prove that you have a clear understanding of your industry.
Under economic outlook, try and provide details on:
- Economic market condition
- How long you think the market condition will take
- Then tell the impact it will have on the business
- Analyze the industry and see how much the industry generate
- The job the industry generates
- The trend of the business.
- Evaluate the industry demand for the product or service
Knowing who you’ll sell to is really important. Without knowing this, it’ll be difficult to make sales. Depending on how you will market will determine your customer profile. Again you can look around at your business environment to see who possibility will be a potential customer.
For instance, if it’s a farm business you’re writing a business plan for, a grocery store, farmers market, individuals seeking to buy organic food make people in the area makes them potential customers.
Then try and make the estimation of the people in the area, as this will help predict future revenue for the business.
Sometimes, it’s difficult to gauge for competition especially when there is price fluctuation. But trying to keep a strong competitive advantage in providing what people are looking for always keeps you in business. To get competitive, you have to prove that your business plan how your business will:
- Overcome your competitor’s weakness and shortcomings
- Take advantage of your strength.
The more eyeballs your business get the more your business will attract customers. Having a marketing plan should form an important aspect when writing a business plan. Without a tangible one in place, no one will patronize the business.
In your business plan, include the overview of your marketing strategies and objective.
As part of your marketing plan, you’ll have to come up with marketing objectives. This is a way that ensures that your marketing gets the desired result, in other words, the intended goals of a company’s marketing campaigns.
For instance, when a business needs to increase the sales by 30% for every money spend, marketing objectives are formed to ensure that the outcome is achieved. In writing a business plan the marketing objectives will seek to outline:
- How the business intend to build relationship with buyers within the target market
- How you intend to expand the business in the future.
The marketing strategies will then provide the detailed blueprint on how the marketing objectives will be achieved. In essence, the marketing strategies will position your business image and brand so that it can attract the right audience and buyers always. The marketing strategies:
- List the steps of action
- Specific goal for each action step
- Time frame for accomplishing each step
The pricing of the product is one important step in showcasing your product to the audience. How you intend to price the product will depend on the following:
- The price of the market: If the product pricing will rely on free marketing model and commodity model, specify.
- Specify when the periods when you’ll be reviewing the product price.
When you do that, you’ll be able to come up with a competitive price that investors will love.
Organizational plan and personal summary
Organizational planning and personal summary are often a confusing especially when it comes to allocating the organizational budget. Every business must have a great organization. The organizational plan and personal summary will help you not to spend money unnecessary on frivolities.
The cooperate organization will seek to spread the responsibility of the business that will ensure that there is efficiency.
The corporate organization is just in a different department with a specific responsibility. Each of these organization will have a unique responsibility, but the common goal is towards serving the customer.
Below is an organizational structure for a farm in other to get the way you can structure it when writing the business plan.
Budgeting will definitely see your business on the right footing. When writing a business plan, your budgeting is what will definitely guide you in the process of implementation.
Budgeting should have the following and should be done on a yearly basis:
The owner, Site, and facility manager, business hands, Bookkeeper (P/T), Administrative, Numbers of personnel, Owner, Site and facility manager, Farm hands, Bookkeeper (P/T), Administrative.
The main purpose of the financial plan is to secures needed funding and assistance through worksheets and projections detailing financial plans, methods of repayment, and future growth opportunities. Most often, the financial plan should project the income, cash flow, and balance statements over a period of three years.
The financial plan should have the following:
- Financial Statements
- Bank Loans
- Methods of Repayment
- Tax Returns
- Start-up Costs
- Projected Income (3 years)
- Projected Cash Flow (3 Years)
- Projected Balance Statements(3years)
If you cannot write a financial plan, you can seek the services of an expert to do it on your behalf. Without a proper financials, your business plan will not be complete. The finances tend to tells whoever is reading the plan how you can spend the money and the projected income.
Other supporting documents
When writing a business plan, your number one goal is to ensure that your plan stands out and appealing especially if you’re seeking investors or a bank loan.
Some supporting documents essence is for it to further enhance your business plan.
- Pictures of products, equipment, facilities etc.
- Legal agreement
- Research and studies
- Marketing material
- Operation schedules
- Organizational charts
- Job description
Writing a business plan requires you to be concise, compelling, complete and correct. Having a business plan will, however, provide the roadmap as you try to put the business on the right footing.
However, the business plan will set your business priorities right, stick to the strategy, have a clear objective of the business, you’ll know when a task should start and finish, tracking results becomes easy, better plan and manage your finances.