Have a great idea that you want to turn into a successful business? The first step to this is, usually, writing a business plan. If you’ve never done this before, the process can seem daunting, which is why Circle Hub has broken things down into easy-to-follow steps that will give your business plan the winning edge that it needs!
Why is a Business Plan So Important?
There are several reasons to create a quality business plan, with some of the biggest being:
- It will help you to solidify the ideas that are floating around in your head
- It will force you to set tangible goals for different areas of your business
- You’ll be able to spot potential problems that you may not have otherwise noticed until too late
- It will serve as a point of reference for you to be able to measure your progress and success
- You’ll be able to rely on it when making important decisions for your business
- It’s a must if you’re hoping to secure funding for your business
Whether you’re starting a new business from scratch or you’re an established company that needs stability amid uncertain times, a business plan will provide foundations and all-important guidance.
It Starts With an Executive Summary
While the executive summary may be at the very start of your business plan, it’s actually the last thing that you should write. It’s essentially a summary of your entire business plan, outlining your goals, products, operational information, financial health/projections, and more. It should contain a distilled version of each section of your business plan so that people on a time crunch are able to quickly see what you’re all about.
Keep your executive summary short – it shouldn’t be more than half a page or so. However, don’t rush through it either – it’s the first part of your business plan that will be read so it needs to be perfectly executed.
Write Your Company Description
Next up, you’ll need to describe your company. This section should explain who your business is and what it’s trying to do. It encompasses some of the intangible aspects of your business, such as your values, mission, and objectives.
This would also be a good time to explain your business structure. Are you a budding startup that’s going to be running as a sole proprietor or are you already an established, incorporated company? While you’re at it, bring in your team too. An organizational chart can make it easier to visually depict everyone’s roles. Talk about the skills and talents that you all bring to the table too. This will show how your team is able to give your business a competitive advantage.
Market Research and Analysis
If you’re writing a business plan for yourself, then yes, some parts, like the executive summary, could be skipped. However, when it comes to market research and analysis, this is something that you’ll definitely want to do for your own benefit too.
Start by describing the market you plan on selling to. Put together a detailed profile for your target customer – fictional personas can be helpful. You should also discuss consumer trends and how the market has changed over the years.
Ideally, include a SWOT analysis too. This takes into account the strengths and weaknesses of your business, pitting them against potential opportunities and threats. The grid-like structure of this technique is an effective visual way of portraying this information.
Examine Your Competitors
Of course, it’s very unlikely that your business isn’t going to have any competition whatsoever, which means that this is something else that needs to be addressed in your business plan. This is a great opportunity to spend some time doing some in-depth research into your competition.
Once you’ve done this, you’ll then be able to talk about what sets your business apart from the competition. Whether you plan on competing in terms of pricing or by offering something distinct and unique that your competition hasn’t yet thought of, discuss what differentiates your business. However, make sure that you do so without being critical of your competition.
Describe Your Products/Services
Now that you’ve set the scene, it’s time to delve into the details of the products or services that you plan on selling. Provide some information on each one, including where and how they’re made, while also explaining how customers will benefit from what you’ll be offering.
If you own any intellectual property, such as copyrights, share the details in this section. Again, make a point to highlight how this could improve the profitability of your business.
Include Operational Information
Your business plan should also cover operational information. Describe your business premises, along with how this might change in the future to accommodate growth. For example, if you’re currently working from home, you may want to make the move to a coworking space once you start nearing your launch date. Not only is this a very cost-effective base for a business but it will also give you a more professional edge.
Include information on your production facilities too. What is your current capacity and how does this compare to the demand that you’ve forecasted? Management information systems should be discussed as well, along with any regulatory standards that your business adheres to.
Lay Out Your Plans for Marketing and Sales
Although your marketing and sales strategies will evolve along with your business, this part of your business plan should talk about how you plan on attracting, and then retaining, a customer base. This section will be heavily influenced by the market research that you did earlier, so tie the two in together.
Usually, a business plan includes information on “the four Ps”:
- Price – set a pricing strategy and explain why you’ve chosen it
- Product – highlight how you’ll be marketing the unique features of your products/services
- Place – this is all about sales channels. Where will you sell your products, and how?
- Promotion – this is the bulk part of this section. Describe how you plan on getting your products in front of potential customers
Focus on Finances
In the end, it doesn’t matter how good your ideas may be if they aren’t financially viable. If you’re going to be using your business plan to attract potential investors, you’ll need to include a large amount of detail in this section.
The best way to showcase your financial health is with the following:
- An income statement – whether this is with real or projected information, it should show your various sources of revenue, as well as your expenses
- A balance sheet – this is where you list your assets on one side and your liabilities on the other
- A cash flow statement – this is similar to an income statement but it takes timeframes into account. It shows when both expenses are paid and revenue is collected. If there are any gaps in your cash flow, this needs to be addressed ASAP
Extra Tips to Keep in Mind When Creating a Business Plan
While the above briefly describes the various elements needed for a winning business plan, here are a few extra tips to keep in mind:
Be Concise and Avoid Complex Jargon
While you may be tempted to draw things out in an attempt to make your business plan seem long, it’s much better to keep things concise. No one wants to read more than they have to, so stay away from unnecessary details and flowery language.
Speaking of language, keep this simple. Avoid using technical jargon – you want your business plan to be understood by everyone.
Provide Supporting Documents and Reference Data
While your business plan itself shouldn’t be longer than necessary, feel free to go all out when it comes to the appendices! This can be as extensive as needed. In fact, the more supporting documents in here, the better.
Everything from the market research that you’ve done to the CVs of your team members to examples of marketing slogans should be included in this section.
Be Objective
It goes without saying that you’ll want your business plan to portray your business in a good light. However, it’s important to remain objective throughout.
Whether it’s in relation to your finances, market research, or anything else, don’t try to gloss over the negatives. You want to show that you’ve thoroughly considered every contingency. If your business plan highlights potential problems, this is your chance to explain how you plan on overcoming them. This is much more advantageous than pretending that those problems don’t exist in the first place.
Showcase Your Passion
As important as it is to write your business plan objectively, don’t be afraid to show how passionate you are about your ideas. Let this really shine through so that everyone can see how much you care about your business. This on its own is already something that will help your business to succeed.
Keep it Professional
Although the content of your business plan is what matters the most, it’s always a good idea to make sure that it looks professional too. Include a cover page, as well as a numbered contents page so that it’s easy for people to quickly get to the section that they need.
Lay it all out professionally and incorporate charts whenever possible. Being able to see things visually is always helpful!
Put Your Business Plan to Use
Last but not least, remember to use your business plan! Don’t create one just to forget about it. Use it for guidance and allow it to help you when making decisions.
You may need to adjust your business plan as you go along, and this is completely normal. Keep it close at all times as a good business plan will be a huge asset in the years to come.
Summary
While the thought of putting together your first business plan can seem daunting, break it down into various sections before working your way through each one. Don’t rush the process – put plenty of time and thought into what you’re creating as this document is one that your business will come to rely on in the future.
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