How to write a business plan
“If the plan doesn’t work, then change the plan, not the goal.”
So, you’ve got an amazing idea for a business, you’ve been thinking about it for a while and have most of it mapped out in your head, but where do you go from here? A Business Plan. You’ve heard this term thrown around before, but don’t really understand what one is and how to make one, well you are in the right place.
Create the business that gives you the life you’ve always dreamed of…
What is a business plan?
A business plan is a document that outlines the key aims and goals of the business and how you’re going to achieve these. Outlining the marketing strategies, financial projections, and operational plans. This should entail key measurements of success and how you’re going to achieve these.
But it shouldn’t be a document you write and throw away in the draw letting it get dusty. A business plan is a living breathing document that can help keep you on track; it’s the foundation for you to create a sustainable, profitable business.
Business plans usually come in two forms, Traditional and Lean. A traditional business plan is detailed and comprehensive. Writing in-depth for each section to fully understand you and your business. A bank or investor may want to see this to evaluate your business. A lean business plan is simply a watered-down version of the full plan. It still contains all the vital information for your business, but it is much quicker to write and can get you started.
Here are the 7 steps to get you started on your business plan and turn your great idea into a reality:
Executive summary
The first and potentially most important section is the executive summary. This is the first section that anyone will read and must be compelling. Provide a summary of your business that convinces them to read further. This section shouldn’t be too long and act as introduction to the rest of the plan.
- What does your business do?
- What is your business vision and goals?
- What do you sell?
Company description
Now you’ve explained the business, now it’s time to bring you into the equation. Often with start-ups and small businesses the owner possesses the key skill that in turn you sell as your product. This is the place to tell your reader who you are and what you plan to do? This gives the reader a great insight into why you are in business.
This is a great time to explain about your competitive advantage. What do you have that others don’t? Do you have years of experience in the market? Do you have a unique skill that not many people can do?
Market analysis
Conducting market analysis will help you understand the market you intend to do business in. This shows an understanding of your market and the business’ industry.
In this section it’s important to define your target market. Who is your ideal customer? It’s good to have a good understanding of who your customers are. This section can be a mixture of research and experience. If you have worked in the industry for many years before going solo, you have great insight into the industry. This is the section to let your knowledge and experience come through.
- A description of your market: Size, growth potential, trends
- Details of your target market: Who? Where? Demographics?
- The Market share you aim to obtain
Management and organisation
This is where you can break down how your company is going to be run and the people involved. Outline management roles and responsibilities, the organizational structure and who is accountable for which task and department.
It’s likely if you’re a start-up or small business, you might be a one-person band. In which case this might not be vital you do to begin with, but it will be helpful when you come to recruit.
Competitor analysis
A key area when starting your business is understanding your competitors. Understanding and defining your competition will help you focus where your business fits in the market landscape. Being able to differentiate yourself from your competitors in the marketplace will be key to your success. Think about the following:
- Your main competitors’ strengths and weaknesses
- Strategies that will allow you to stand out. Expertise, accessibility, or quality for example.
Define a marketing plan
Now you know what your product or service is, the market you’re going to be entering and the who you want to sell to. You can now strategize on how you’re going to market your product or service to your potential customers. Think about these questions:
- How are you going to get your product/service in front of your ideal customer?
- How do you differentiate your product/service from your competitors?
- How does a customer buy your products or service?
Financial statements
The final and potentially most crucial section of your business plan is the financial section. This section outlines the financial position of your business in its current state or with future projections if you haven’t started yet.
The level of detail needed will vary depending on the audience this is for, but you’ll want to include three primary areas: Income Statement, balance sheet and cash-flow forecast.
Income statement
This is exactly what it sounds like, outline the revenue sources and expenses over a given period. Including income generated by your business, cost of goods, gross profit margin, operating costs, net profit before and after taxes, and total expenses.
Cashflow forecast
A cashflow forecast or statement outlines when you will receive money and when you will pay any debtors. Allowing you to have an overview of when you will be paid and when you need to pay, ensuring you always have money to cover any shortfall. It should include information as sales, receivables, total income, marketing, and all overheads.
Balance sheet
A balance sheet describes the amount of assets, liabilities, and equity in the business
Assets – short term assets such as cash, inventory, or long-term assets such as property
Liabilities – Current debts such as accounts payable and taxes and long-term such as a mortgage
Equity – This is the difference between your total assets and total liabilities, this can be important for investors to evaluate your company.
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