A business plan helps you outline your goals and figure out how to achieve them, but it is more than just a document! A business plan acts as a guide, a management tool, and a showcase all at once! It allows you to plan out your business’s operations, analyze your progress and make strategic decisions, not to forget, demonstrating your business’s potential to investors.
A well-written business plan will help you visualize your business idea’s growth while also increasing your chances of successfully pitching your idea to investors. All of this makes writing a business plan sound like a complicated task, but don’t worry! Writing a business plan takes effort, yes, but anyone can do it regardless of whether they have prior experience or a business degree or not.
But Do You Really Need a Business Plan?
The short answer is yes, you do. But in case you are still on the fence about whether a business plan is worth the effort and time, here is the long answer. While it may be tempting to jump right into running your business, this would mean missing out on the key benefits provided by a business plan. Some of these are as such:
- A carefully thought-out and comprehensive business plan has been proven to be essential to the success of both corporate managers and entrepreneurs, especially when it comes to making confident strategic decisions;
- When it comes to pitching your idea to investors and getting funding, only a well-packaged and well-conceived plan will win you the investment and support your idea needs;
- Once you have the proper financing and can make effective business decisions – all thanks to your business plan – you will enjoy a much faster growth rate for your business!
4 Tips for Making Your Business Plan Stand Out
Before you begin writing your business plan, you should know some of the “rules” that can make all the difference between a winning business plan and a mediocre one. Here are four quick tips for writing a killer business plan!
- Keep things simple: the best business plans are short and concise;
- Know your audience and use language that they will understand;
- Define your objectives upfront: give your audience a tangible idea of what you want to achieve with your business;
- Remember that most successful business owners and entrepreneurs don’t have any fancy degrees, so don’t feel intimidated!
What are the Key Components of a Business Plan?
Just like how every business idea is unique, every business plan is unique as well – this means that the overall structure of your business plan will vary depending on the nature of your business. However, having a general idea of what to include in your business plan will make the writing process much more manageable. A typical business plan comprises the following sections.
Executive Summary
This section should summarize the entire business plan, so you may want to write it last. The executive summary includes your mission statement, a brief description of your business and its product or service, and some basic financial information if you plan to seek financing.
Company Description
Use this section to detail your business: describe the problems it solves, its vital demographic, and the competitive advantages that will make it a success. Boast about your strengths here – whether they are the perfect location or an expert management team!
Market Analysis
To develop a good understanding of your target market, you will have to conduct some competitive research about market trends and your competitors’ strengths and weaknesses. Summarize your findings in this section and explain how you will use them in your decision-making.
Organization and Management
Next, describe the structure of your business. Begin by telling its legal system – whether you intend to incorporate one, etc. – and then describe the management structure. For the latter, you may use an organizational chart to explain better who is in charge of what in your company, as well as what makes each person unique.
Service or Product Line
This is where you describe your key offering in detail: how your product or service benefits your customers, what the lifecycle of your product looks like, and whether you have plans regarding securing intellectual property rights. If your operations include research and development, include the details here.
Marketing and Sales
Marketing is subjective and evolves based on a business’s unique needs. Describe your marketing strategy in this section: your goal is to educate your readers on how you plan to attract and retain customers, as well as what your sales plan looks like. This section needs to be especially thorough because you will refer to it later when making financial projections.
Funding Request
If you are not looking for funding currently, you may skip this section. If you are, this is where you outline your funding requirements for the next 5 years, at the least. Specify whether you want to use debt or equity, what terms you would like for it, and how you intend to use this funding once you have it.
Financial Projections
If you request funding, your financial projections will supplement the last section. If you skipped that section, your financial projections would show your audience that your business is stable and financially viable.
For already-established businesses, this section should include financial statements: income statements, balance sheets, cash flow statements, and any other notes from the last 3-5 years. For a start-up, you need to provide a financial outlook for the next five years – which means forecasted financial statements and capital expenditure budgets. Be sure to rationalize your projections and use graphs and charts to better tell your business’s economic story!
Appendix
The appendix is the last section of a business plan. It consists of documents or other materials that were either requested by an investor or support any previous sections, such as the financial projections. An appendix may include credit histories, legal documents, product pictures, or licenses and permits.
Most of these topics are discussed in my two books:
Being A Visionary: Going After Your Vision
Being A Visionary: Going After Your Vision Workbook
