A Business Plan is a document that describes your company’s financial goals and how you intend to attain them. A robust, thorough strategy will create a road map for the next three to five years of the firm, which you may present with potential investors, lenders, or other crucial partners.
The easiest approach to put most outstanding company ideas into action is to have a strategy. A business plan is a written framework that you show to others, such as investors, who you want to get on board with you. It’s your pitch to investors, in which you explain your startup’s aims and how you plan to make money.
It also functions as your company’s roadmap, keeping your operations on track and ensuring they develop and change to fulfil the objectives set in your plan. A business plan may act as a dynamic document as circumstances change, but it should always incorporate your company’s basic goals.
What is a Business Plan?
A business plan is a document describing a business, its products or services, how it earns (or will earn) money, its leadership and staffing, its financing, its operations model, and many other details essential to its success.
Why write a Business Plan?
Investors rely on business plans to evaluate the feasibility of a business before funding it, which is why business plans are commonly associated with getting a loan. But there are several compelling reasons to consider writing a business plan, even if you don’t need funding.
- Strategic planning
- Evaluating ideas
- Research
- Recruiting
- Partnerships
- Competitions
10 Steps to Write a Perfect Business Plan
The following are the 10 Steps to Write a Perfect Business Plan:
1. Brief Overview
While it may seem first, it is advisable to compose your executive summary last. It’s a quick section that summarises the key arguments you’ve made elsewhere in your business plan. Summarize the problem you are solving for clients, your solution, the target market, the founding team, and financial forecast highlight. Keep it as succinct as possible and attract your readers to discover more about your organisation.
Keep in mind that this is the initial impression your strategy and business will create. After reviewing your executive summary, your target reader will either discard your business plan or continue reading. So take your time and get it properly.
2. Description of the Company
Give details about the business you’re launching, such as the type of problem your products/services answer and your most likely customers. You may further broaden this description by providing an overview of the industry in which your company will operate, including trends, key competitors, and projected sales. This part should provide you a good outlook on your position in the industry. Set your company apart from the competition by explaining your expertise and competitive edge.
3. Products and Services
This is the opportunity portion of your business plan, with the products and services illustrating how you intend to capitalise on the potential. You must define the problem you address for your consumers as well as the solution you sell.
Finally, if there are any significant competitors’ products or services already on the market, it may be worthwhile to list them here. Describe how you differ, what your strengths and limitations are in contrast, and how you will stand out from the competition. List any intellectual property or patents that help reinforce your stance.
4. Market Research
Define your target demographic, where you will locate clients, how you will contact them, and, most crucially, how you will offer your product or service to them in this area. Provide a detailed study of your ideal consumer and how your company might help them.
In this area, you should also mention your rivals and demonstrate how your company is distinct from the established firms in the sector or market. What are their strengths and limitations, and how will you stand out from the crowd?
You will also need to create a marketing plan depending on the specifics of your company. For example, if you own a small local firm, you would wish to research your competition in the area. Franchises must perform a large-scale analysis, maybe on a nationwide basis. Competitor data informs you about current trends in your target sector as well as possible development opportunities. These facts help demonstrate to investors that you are well-versed in the sector.
The mentioned target market for this part offers a picture of your ideal consumer. Data to include may include target consumers’ age range, gender, income levels, location, marital status, and geographical locations.
A SWOT analysis is a standard technique used by entrepreneurs to compile all of the data gathered during a market investigation. The acronym “SWOT” stands for “strengths, weaknesses, opportunities, and threats.” Strengths and weaknesses examine your company’s distinctive advantages and limitations, while opportunities and threats examine current market risks and rewards.
5. Financial Plan
The financial plan should include a detailed overview of your finances. At the very least, you should include cash flow statements, and profit and loss projections, over the next three to five years. You can also include historical financial data from the past few years, your sales forecast and balance sheet. Consider these items to include:
- Income Statement: Investors want detailed information to confirm the viability of your business idea. Expect to provide an income statement for the business plan that includes a complete snapshot of your business. The income statement will list revenue, expenses and profits. Income statements are generated monthly for startups and quarterly for established businesses.
- Cash Flow Projection: Another element of your financial plan is your projection for cash flow. In this section, you estimate the expected amount of money coming in and going out of your business. There are two benefits to including a cash flow projection. The first is that this forecast demonstrates whether your business is a high or low-risk venture. The second benefit of doing a cash flow projection is that it shows you whether you would benefit most from short-term or long-term financing.
- Analysis of Break-Even Point: Your financial plan should include a break-even analysis. The break-even point is the point at which your company’s sales totals cover all of its expenses. Investors want to see your revenue requirements to assess whether your business is capable of reaching the financial milestones you’ve laid out in your business plan.
6. Plan for Sales and Marketing
The sales and marketing section describes your sales strategy, price plan, intended advertising and promotion efforts, and all of the benefits of your products/services in detail. This is where you detail your company’s unique selling proposition, describe how you want to get your products/services to market, and explain how you intend to convince people to buy them.
7. Management and Organisation
The firm and management area provides a summary of who you are. It should outline your company’s structure as well as the important members of the management team. It should also include any historical information about your company. For example, when your company was created, who the owner(s) are, what state your company is registered in and where you do business, and when/if your firm was incorporated.
Include summaries of your managers’ histories and experience (these should work as concise resumes) as well as descriptions of their roles within the organisation. You should also identify any professional deficiencies you want to fill, as well as expected business milestones.
8. Plan of Operations
The operations plan details how your company will be operated. It includes your company’s physical address, descriptions of its facilities and equipment, the types of employees required, inventory requirements, suppliers, and any other relevant operating details that pertain to your specific type of business, such as a description of the manufacturing process or specialty items required in day-to-day operations.
9. Financial Forecasts and Metrics
This part should at the very least include your expected sales prediction, profit and loss estimates, cash flow projections, and balance sheet, as well as a brief summary of the assumptions you’re making with your projections.
Finally, if you are seeking funds or taking out loans, you should emphasise the amount of money required to establish the firm. This section should also include a report on the use of money, which is essentially a summary of how the financing will be utilised in corporate operations.
While it is not obligatory, it is a good idea to outline your departure strategy briefly. This doesn’t have to be extremely thorough; just a basic notion of how you might wish to depart your firm in the future.
10. Exhibits and Appendices
In addition to the components listed above, include any additional material at the conclusion of your business plan that can assist demonstrate the authenticity of your company concept or boost your prospective success. Marketing studies, product photos, permits, patents and other intellectual property rights, credit histories, résumés, marketing brochures, and any contracts or other legal agreements relevant to your business may be included.