Writing a business plan may sound very technical and demanding, but it is not much complicated. The great news is that it does not require you to have a professional business or marketing degree. Anyone with entrepreneurial ability can create a business plan.
This is a guide that will help you easily write an outstanding business plan. After you are done, you will be able to smoothly set up a business, operate it efficiently and focus on its growth. So, this article will illustrate how to write a business plan in 2023.
What is a Business Plan?
A business plan is a comprehensive document that outlines your business, its products or services, and your target market. Moreover, it describes your business and marketing strategies for growth and profitability.
A majority business plan may also include a financial projection of the business such as sales goals, expenses, and cash flow predictions.
So, a business plan can be much more than just a static document that you may create one time and don’t use later. Furthermore, it also serves as a guide that helps you plan and accomplish your goals. Else, it is a management tool that will help you appraise outcomes, make strategic decisions, and exhibit how your business will operate in the market, and grow. So, if you plan to launch a business or want to pitch to stockholders or venture financiers, then a business plan is the most important document that can elevate your success chances.
Why Do You Require a Business Plan?
You may probably have an idea about the best business stratagem you plan to adopt for business growth. So, you may think why is a business plan important? Here is the answer to your question.
Business with A Pre-Set Plan Grows 30% Quicker
Detailed research has been carried out on business planning, and has exhibited that corporates should take time to create a complete plan and evaluate it frequently to ensure that their venture grows 30% quicker than businesses without a plan. Besides swift business growth, such businesses may also have better performances and lower chances of failure.
Investors Demand Business Plans
If you plan to grow your business and require investor funds or a business loan for it, a business plan is a must-have. The majority of investors and financiers will demand a business plan, however, if they are not interested in reviewing the document, they may inquire about details that only a good business plan can address.
Setting up and operating a business is quite risky. Instead of putting yourself in a risky situation, the business plan can help you forecast expected cash flow problems and better deal with your potential roadblocks so that you are not unprepared. A business plan will help you cut down risk and steer your future.
While making major decisions about business spending, you should be aware of the possible influences on your finances. However, a business plan can help you examine several situations and analyse what effects does a new hiring or business expansion to a new location will have on your venture.
Step-by-Step Procedure for Writing a Business Plan
Whether you plan to create a business plan to raise funds or expand your business or just need to know whether your idea will be operative, accounting assignment help online recommend that every plan must include the following basic sections.
It is an overview of your business plan. It is the first section of your business plan and extends to one or two pages max. Though, it’s the first section but is always a good idea to write it at last.
Preferably, the executive summary can also be a separate document that includes the specifics of your thorough business plan. In fact, the majority of financiers demand an executive summary while appraising your venture. If the executive summary satisfied them, then they are likely to read the entire business plan, review the investor pitch, and assess the financial aspects.
Moreover, your executive summary may include a synopsis of the issue you are resolving, an explanation of your product or services, an outline of your target market, an introduction of your team members, an overview of your financials, and funding requirements.
An overview of the business is important to provide investors with the scope of your venture. A business description starts with a brief description of the industry and discusses its stance and future potential. You may also include info about several markets of the chosen industry, together with new products or developments that may benefit or harm your business.
Products and Services
The products and services page is the main gist of the business plan. It encompasses details about the issue for which you are providing a solution through your product or service.
A product or service description includes an analysis of the issue, what customer demands, and your solution. Moreover, you can mention your competitive advantage, intellectual property rights or patents that safeguard your product. Then, you may appraise your mileposts and metrics.
This part of the business plan is where you will include all details about your potential clientele. You may include details about your target market along with the market growth and industry.
Start by defining your target market, next include market analysis and market research. You may explain the market growth trends, and also shed light on your brand positioning.
Operations & Management Plan
An operations and management plan outlines how the business operates ongoing basis. While the operation plan will include the logistics of the business like the everyday jobs of the management team, the assigned tasks to every department, and capital and overhead requirements related to business set-ups.
Marketing and Sales
The marketing and sales plan part of your business plan outlines your approach to reaching out to your target market, your plan to market and trade to the target audience, pricing strategy, and business strategies you may adopt to boost business success.
If you plan to trade your products through online websites such as Amazon, Walmart, Target, Grocery store chains, and other retail outlets, you must include them in your plan. Moreover, you should discuss logistics and product prices.
Another valuable thing to include in this section is the SWOT analysis. However, it is optional but an effective way to evaluate your products and services, and how your company plans to deal with competition, and market threats and avail opportunities to grow.
Company Organizational Structure
Investor’s trust boosts if your company is supported by a talented team. So, you should use this section to highlight your team’s qualifications, industry experiences, skills and capabilities. You may also provide a quick synopsis of your legal structure, site and company history. Brief bios of all key team members with all relevant details are required.
Moreover, you may also include a summary of your company’s existing organizational structure such as LLC, C-corp, S-corp, Sole proprietor, or partnership. Potential financiers might be interested in knowing the business structure before approving funds.
Then comes the financial plan. It is usually what entrepreneurs find most intimidating, however, business finances for most start-ups are less complex than you assume. You might not require any expert knowledge to create a solid financial projection. You may take assistance from many tools and resources available online.
A basic financial plan may encompass:
Sales and Profit Projection
It is a monthly sales and profit projection for the initial year, and then yearly financial forecasts for the next three to five years. Help with economics homework experts recommend that three-year projections are sufficient, but some investors may request a five-year forecast.
The income statement or profit and loss statement include your sales, gross profit and net profit.
Cash flow Statement
A cash flow statement encompasses the amount of cash or bank balance a business possesses at a time.
A balance sheet includes the assets, liabilities and equity of a company. In actuality, it is a synopsis of the financial health of your venture.
While these are the main sections for financial projections, the optional sections may include your plan of how you will use funds. Moreover, investors may also be interested in a brief section of your exit strategy that defines how may want to sell your business. It can be either to another organization or to the public. And if you are operating a business for which you want to maintain ownership, it’s totally acceptable to skip the exit strategy.
Lastly, include any assumptions and key business risks. If you are aware of your assumptions as you launch a business, you can certainly differentiate between business success and failure. When you identify your assumptions, you can validate that those are correct. The more you minimize your assumptions, the greater the chances of business success.
The appendix section of your business plan is not mandatory. However, it can add more value to your plan if you wish to include any relevant charts, tables, definitions, notes or crucial info that either was too detailed or seemed extra in the above sections. Some businesses may have a patent or a product or service illustration, so the appendix is the ideal section to include such details.
Tips for Writing a Business Plan
Now, that you know how to structure a business plan, here are a few tips that will help you avoid errors and pan out a commendable plan.
Determine the Purpose of Your Business Plan
If you are clear about the purpose of your business plan, it will help you determine the approach to planning the task. For instance, when writing the plan for your guidance, or internal use, then you may miss the team and organizational structure section.
However, if you plan to seek investment, you will have to spend a lot of time explaining why you want the funds and how you wish to use those. So, before you begin writing the plan, you should contemplate the purpose of writing the plan, and what you want from the process.
Keep it Short and Simple
If you want an appealing business plan, you should keep it concise and simple. A detailed plan does not guarantee quality. In fact, too much detail can cause a person to lose track. So, the art of writing an exceptional business plan is to diminish things to basics, and include only what your reader wants to know. For instance, you may exclude the extra detail about your target market, rather than focus on being on point.
Ask Someone to Review Your Business Plan
Your first attempt at writing a business plan might not be perfect. So, you should take the time to ensure that your plan is rational and meets the requirements. Use simple English, so it is easy to comprehend. Once you are done, review it many times.
This is your review, after that, you should start sharing the plan with other business-related people and follow their feedback. This will help you identify your flaws and keep you on track. Else, if you want more professional guidance, you may hire an expert.
Free Business Plan Templates Are Useful
Although you may know what info you need to include in the business plan, still it might not be sufficient. If you are unsure of where to start over or are looking for extra guidance, you may search for an online business plan template and use it as a reference. If you plan to use a free downloadable template to get you started, then choose the template that has been used by more than a million companies.
The above is a comprehensive guide on how to write a business plan in 2023. However, you might be unable to predict things for your venture accurately. In this case, you should take proactive steps to reduce the number of complexities that may hinder your smooth writing. The best way is to acquaint yourself with the award-winning business plans and identify how other businesses may have successfully achieved their plans.