Planning your business allows you to identify potential roadblocks, determine what resources you need, and evaluate your idea’s viability.
Every business needs to have a formal business plan to succeed. Researching an idea and the market you are trying to enter is vital to many founders. Writing a business plan helps them understand the scope and strategy of their tactics.
How does a Business Plan work, and why do you need one?
Business plans describe what you intend to create and sell. Additionally, it provides information about its leadership, staffing, financing, and operations model.
A business plan increases an entrepreneur’s chances of building a successful business by 16%.
You need a business plan to guide your business growth, legitimize your venture, and secure funding (among other benefits).
How to write a business plan, step by step?
Having perfect grammar or looking appealing to investors is not necessary for your starter plan – those elements will come later. Getting started is what matters!
Summary of the report
Including the executive summary at the end of your business plan is essential. A high-level overview will encourage busy reviewers (e.g., investors and lenders) to read more.
Highlight the key points you discovered while writing your plan in this summary. In this section, you can completely omit it.
As a practice exercise, you should try writing for planning purposes.
One page is the maximum length for an executive summary. While squeezing all salient information into that limited space can be challenging, it’s not impossible.
Your company’s description
Who are you, and what are your goals? These are the two fundamental questions your business plan should answer.
By answering these questions, you demonstrate why you’re in business, why you’re unique, and why you’re a good investment.
It is still important to clarify these details, even if only you see them. Describe your values, ideals, and cultural philosophies in this section and the more intangible aspects of your business.
You should include the following components:
- What is your business structure? What business do you operate: a sole proprietorship, a general partnership, a limited partnership, or a corporation?
- Include your industry and value proposition in your business model
- Information about the history or background of your company
- Business objectives, both short and long term
- Roles and Salaries of your team
Some points are valid, while others require some thought, especially regarding your business’ vision, mission, and values. Identify the purpose of your business, your goals, and your values.
Assess the market
Any business can be made or broken by you. You will succeed if you choose a market where many people understand and need what you’re selling.
If you select the wrong market and time, you may find it challenging to make each sale.
Due to this, market research and analysis are essential components of your business plan, no matter who reads it.
Describe your business’s place in the market, your market estimate, and your competitors. When it comes to convincing investors and validating your assumptions, thorough research is essential.
Provide an overview of the organization and management
In your business plan, you should describe how your business is organized and managed. It is possible to form a company as a sole proprietorship, a partnership, a corporation, or an S corporation.
For each member of your team, prepare a condensed resume. If you’re a solopreneur, your past educational and work experiences will assist you in running your business.
If you have partners or employees, consider their education and understanding. Business leaders can benefit from this type of instruction to assess their strengths.
When you evaluate yourself, you’ll learn which areas of your business are simpler to manage. This section explains which tasks you can assign to third parties, freelancers, and contractors.
Additionally, this approach makes it easier to figure out how to leverage their advantages for business growth.
Provide a list of your services and products
Your business’ core service or product is described here in detail. Make sure you present your idea as if you were telling it to someone who had never heard it before.
The easiest way to forget this is to write primarily for someone already “in the know.”
Analyze customer characteristics (segmentation)
When identifying your ideal customer, it would be best to consider several general and specific demographic characteristics.
The interests and shopping habits of Fortune 500 company corporate workers differ significantly from those of college students, for example.
You would make different decisions and business plans based on your ideal customer.
Plan your marketing strategy
What are your plans for reaching the target audience? How will you utilize social media and create a website? Attending trade shows is on your schedule?
Would paying for advertising be a good idea? Be flexible – note that if you plan to postpone paying for advertisements until later.
Plan your finances
If you plan to seek investors, this part is just as crucial as your planning.
It would be best if you created a financial projection to describe these valid points:
- Monthly earnings and expenses.
- Using analysis, you can determine how many sales are needed to earn a profit and cover your initial costs.
- A profit-and-loss statement using estimated values.
- A balance sheet shows the business’s assets, liabilities, and equity.
When tax season comes around, you’ll have real numbers instead of projections, so you’ll need to collect this information.