A business plan is one of the most important documents to have, whether your business is just beginning, or readily established. Many people mistake it as a tool only used in order to attract investors and obtain bank loans, and believe it is not necessary if they feel their company is already financed. However, a business plan also lays out growth projections and the direction you wish to take the business in a few years’ time. Drafting a business plan forces you to review your business strategies in order to make sure your goals are viable.
Before You Write:
Length: Concise and straightforward is the way to go. The plan can be anywhere from ten to forty pages. Just make sure it’s long enough to clearly state your goals and projections.
Language: Try to stay away from very technical language and acronyms, as that would be confusing to a regular person. You want your business plan to be as accessible as possible and easily skimmed when read.
Visuals: A block of text is too dense to read comfortably. Back up your data with appealing graphs and charts so that readers will have an easier time understanding the information. This will also make it easier to put together a presentation for investors later, who prefer engaging with visuals and oral explanations rather than written ones.
Business Plan Body:
Executive Summery: This first part of your business plan gives a quick “elevator pitch” style summary about your business, including the mission statement and long-term goals that the business has. Include financial information, growth highlights, and also a convincing argument on how your business differentiates itself from the competition. Your executive summary should be short and to the point, so that people will be interested in reading the rest of your business plan.
Business Description: Go into more detail about your business, the services that you provide, as well as information about the business owners. This includes information about the market your business belongs to, the marketplace’s needs, and how your services satisfy those needs. What makes your business different from others? Why do you think your business will succeed?
Marketing Strategies: Explain your industry, making sure to include its historical trends and future projections, the size of the market, and the types of customers you expect. Who are the major players, both consumer and competition? Address the needs that your services are solving for potential customers and how much of the market you are expecting to capture, as well as the demographics of the targeted consumers. You should also take the time to discuss your pricing and promotion strategies and how aggressively you plan on marketing in your initial years. Additionally, note any government or industry regulations that may impact your market and how they could affect your business.
Competitive Analysis: What is the market competition like? What percentage of the market do they control and how much overlap is there between your target consumers and your competitors’? Think about the barriers to entry and the ease of success in the market. Ensure that you have a thought-out market penetration plan and growth strategy. Make projections for the next year, three years, and five years. These will become your goals and keep you on track after your business gets rolling.
Operations and Management Plan: How is your business structured? List out the important directors and managers and describe their roles and qualifications. Additionally, describe the different departments in your company and their purpose. Block and line charts, as well as flow charts are useful in situations like this. Explain the backgrounds of the owners as well. Underline the merits of the organizational team that you have put together, explaining how every person’s strengths complement each other.
Financial Plan: If your business has been established for some time, you should include your public financial information, including cash flow statements, income statements, loan collateral, and balance sheets for the previous three years. If you are just starting your business, include your forecasts for all of the above, as well as other financial information projections such as capital expenditure budgets. It is important that your funding requests are compatible with your projections. Be sure to include graphs and charts in this section to aid the visualization of the information you have shown.
Appendix: Depending on your business, you may or may not need an appendix. This section is used to include information you may not want to disclose in the body of your business plan. While your business plan is public, certain readers such as creditors and banks will request your credit history, permits, leases, or legal documents. Add these to the appendix on a need-to-know basis in their copies of the business plan.
A business plan is often called the roadmap of your business because it dictates your goals and plans on achieving those business goals. It provides guidance and reassurance. You should revise your business plan once every few years in order to set new long-term goals for your company.