Before you launch a firm, a strong business plan can assist you in defining your strategy, seeing potential obstacles, choosing the resources you’ll require, and assessing the sustainability of your concept or expansion plans.
Many founders find benefit in taking the time to step back, investigate their idea and the market they’re aiming to enter, and comprehend the scale and the strategy behind their methods, even though not every successful business debuts with a formal business plan. Writing a business strategy can help with that.
What is a business plan?
A business plan is a document that describes a company, its products or services, how it makes money (or plans to make money), its management and staffing, funding, operational model, and many other crucial information.
A step-by-step guideline on how to write a business plan
Produce an executive summary
The first page of your company strategy is this one. Consider it your elevator speech. A purpose statement, a succinct rundown of the goods or services provided, and a general outline of your financial expansion strategies should all be included.
Even though your investors will read the executive summary first, it may be simpler to write it last. This will enable you to underline important details when you write more in-depth parts in subsequent sections.
Describe your business
The next section is a description of your business, which needs to include details like:
- Your company’s official name.
- Location address for your company.
- The titles of the company’s important players.
Be careful to showcase any special abilities or technical know-how that individuals of your team possess.
Your company description should also specify the legal form of your firm, such as a sole proprietorship, partnership, or corporation, as well as the percentage of ownership and level of involvement that each owner has in the business.
The history of your firm and the current state of your industry should also be included. This gets the reader ready to read about your objectives in the following section.
Outline your company goals
An objective statement comes in third place in a business strategy. The goals you have for the short term as well as the long term are clearly stated in this area.
This section can be used to justify your need for the money, how the finance will help your business grow, and how you intend to meet your growth objectives if you’re asking for a business loan or outside investment. The idea is to clearly explain the opportunity being offered and how the loan or investment would help your business expand. If your company is launching a new product line, for instance, you might describe how the loan would help your business introduce the new range of products and how much you anticipate sales will rise over the following three years as a result.
Describe the goods and services you offer
Give specifics about the goods or services you provide or intend to provide in this section. You ought to incorporate the following:
- A description of how your service or product operates.
- Your product or service’s pricing structure.
- The average clients you deal with.
- Your order fulfilment and supply chain strategy.
- Your sales approach.
- Your plan for dissemination.
- You can also talk about the trademarks and patents that are connected to your goods or services, either registered or pending.
Research the market
Investors and lenders will be curious as to how your product differs from that of the competition. Identify your competitors in the market analysis part of your paper. Talk about what they do well and what you can improve upon. Explain if you’re catering to a niche or underserved market.
Describe your sales and marketing strategy
Here, you can discuss your strategies for convincing clients to purchase your goods or services or for cultivating recurring business.
Conduct a financial study of the company
If your company is still young, you might not have much knowledge of its financials. If your company is already established, you should nevertheless include income or profit-and-loss statements, a balance sheet that identifies your assets and obligations, and a cash flow statement that illustrates how cash enters and leaves the business.
- You might also incorporate metrics like:
- The portion of revenue that is kept as net income is known as the net profit margin.
- The current ratio measures your liquidity and debt-paying capacity.
- Accounts receivable turnover ratio: a gauge of how frequently receivables are collected annually.
This is an excellent spot to incorporate graphs and charts that help readers of your plan quickly comprehend the state of your company’s finances.
Create financial forecasts
If you’re looking for funding or investors, this is an essential component of any business plan. It describes how your company will make enough money to pay back the loan or how you will provide investors with a respectable return.
Here, you’ll give projections of your company’s monthly or quarterly revenues, costs, and profits for a minimum of three years, with the future figures presuming you’ve gotten a fresh loan. Before making projections, carefully review your previous financial accounts because accuracy is essential. Your objectives should be aggressive while yet being attainable.
Include supplementary data in an appendix
Include any supplementary materials or information that you couldn’t fit elsewhere, such as important employees’ resumes, license, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories. You might want to think about including a table of contents at the start of this section if the appendix is lengthy.
Resources and Tips for business plans
To make your business plan stand out, consider the following tips:
Refrain from being overly optimistic: If you’re looking for a business loan from a local bank, the loan officer probably has a good understanding of your industry. Giving irrational sales projections can reduce the likelihood of your loan being approved.
Proofread carefully: Since spelling, punctuation, and grammar faults can jump off the page and turn off lenders and potential investors by drawing their attention away from your business and to the errors you committed. You could choose to employ a business plan writer, copy editor, or proofreader if writing and editing aren’t your strong suits.
Utilize free resources: The nonprofit organization SCORE has a sizable network of volunteer business mentors and professionals that may assist you in writing or editing your business plan. For extra advice, you can look for a mentor or a nearby SCORE chapter.
For Tutorial on how to write a business plan:https://www.youtube.com/watch?v=YYpDOu4Pgcw