If your business idea is primarily in your head, it will be hard to convince others that you have a credible business proposition. Without a business plan, it will be challenging to find partners and raise funds. A business plan is a written document that describes what you plan to achieve, how you plan to position yourself in the market and grow over a specific period. In other words, it’s a blueprint to a successful and viable business.
With a business plan, not only can you spot potential weaknesses, opportunities, and threats, your plan can help you make informed decisions before you commit yourself financially. While writing a business plan can be time-consuming, it doesn’t have to be overly complicated. There are many resources and templates online that allow you to develop a good business plan. We will provide you with key tips on writing a good business plan.
What is Essential in a Business Plan?
Business plans can vary in length and scope; all successful business plans contain common elements. The following points are the most common in any business plan:
- Executive Summary
- Business Overview
- Products or Services
- Industry Overview
- Marketing and Sales Strategy
- Operations Plan
- Financial Forecasts
Executive Summary
The executive summary is effectively a mini business plan or a concise summary of everything in your plan. No one has the time to delve into a detailed business document without having a preview. The executive summary should entice the reader to invest his or her time in reading the entire document to get further details. You want to pay specific attention to the problem you solve, and your solution, and any traction you have so far. The summary should be no more than 1-3 pages long and should be written in the third person.
Business Overview
The business overview includes details regarding your business’s history, vision and mission, and objectives. The overview should inspire confidence and have a defined vision of what success looks like. Please be clear as to what financial goals you aspire to reach within 12 months.
Products or Services
You should be able to provide granular level details on your products or services. In essence, explain what gives your product or services a competitive advantage, including any new features or benefits you have to offer. If you are providing a service, elaborate on the expertise of the team. If you are selling a product, elaborate on the supply chain and explain how you plan to get it to market.
Industry Overview
Readers of your business plan want to invest in an industry on a fast-growth track with few established competitors and great potential. Or they may be more interested in a big market with competitors who don’t meet the markets need, leaving the door open for rivals.
This section needs to include market research that identifies specific competitors and outlines their strengths and weaknesses in addition to any barriers to entry into the market. Be sure to include citations to back up your opinions. You will have to describe what makes you better and destined to succeed convincingly.
Marketing and Sales Strategy
In this section of the plan, you’re going to spell out how you’ll market your idea, along with the specifics of how you’ll get business. The marketing strategy incorporates the marketing mix. This is a business tool that helps marketers position a product and includes the 4Ps: product, price, promotion, and place.
The sales portion should be short, simple and to the point. It’s basically the strategic and tactical plan for acquiring new business, growing the business and making expected sales targets.
Operations Plan
Your operations plan should cover major areas such as materials, facilities, equipment, staff and processes. You should highlight things that are critical to operations or that give you a competitive advantage. Keep this very simple and concentrate on major aspects such as producing a product or delivering a service.
Financial Forecasts
This is often considered the most important part of your business plan. Finances are the backbone of a business, so when writing the financial section of your business plan, it’s important to be thorough. If you are not familiar with financial projections, an accountant or financial professional can help you create these based on expenses and revenue that you believe you will earn.
Be sure to test various scenarios; with a spreadsheet, you can easily do this by changing your prices, costs and sales. You want your data to reflect various scenarios but present the one that is the most likely. You should understand how macroeconomic factors could impact the launch of your business.
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After completing all the sections, it’s critical to have it proofread by external parties for feedback. Through this process, you could discover that certain assumptions require reconsideration or that more clarity is required for people who are not familiar with the industry. It is normal for a business plan to go through several iterations before its ready to be presented to investors and financial institutions.
In the future, you should go back to your business plan and compare how you’ve done regarding your projections. While it is often said that no business plan survives contact with customers, it’s a great feeling to discover that many of your assumption in the plan was accurate.
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