President Dwight D. Eisenhower once said, “When preparing for battle, I always found that plans were useless, but planning is essential.” If you are starting a business, you should have a business plan, whether you initiate it or not. or looking for outside funding.
The best types of business plans clearly describe what the company plans to do and how it will do it. Given the high failure rate of startups in their first year, a business plan is also an ideal opportunity to safely test the feasibility of a business and spot any loopholes, set aside unrealistic projections and identify and analyze the competition.
A business plan doesn’t have to be complicated, but in order for it to serve its purpose and prepare you for success, it must be clear to anyone reading your plan that you have a realistic idea of why and how. that your business will be successful.
To help you move in the right direction, here is a guide on how to write a business plan.
There is a lot of advice in the infosphere on how to write a business plan, but there is no single correct method. Your approach depends on your industry, who reads your plan and where it goes. Are you trying to get funding? Sara Sutton Fell, founder of FlexJobs, a job site for flexible teleworking jobs, says her business plan sparked a more in-depth conversation with potential investors. “A plan helps to see if investors and entrepreneurs are on the same page with general business expectations,” she says.
A business plan serves several purposes, but there is universal consensus on the following points regarding your business plan:
Have several versions adapted to specific audiences: “One of the mistakes of inexperienced business owners is that they don’t understand who they’re writing the plan for,” says David Ciccarelli, small business owner who was consulted by his local Small Business Association (SBA). when he started his company Voices .com, which connects employers with voice-over talents.
Your plan is a living document: Tim Berry, founder of a Palo Alto Software business planning software company, increased his business from zero to $ 5 million in sales in its first three years. Doing so requires frequent reviews and close monitoring, says Berry, who meets monthly with his management team to review the plan for what actually happened – and then revise it. “There is no virtue in sticking to a plan if it is not useful and does not respond to what is really going on,” he warns.
Be realistic about financial estimates and projections: “When you present a plan to bankers and financiers, or even your employees, people will be much more excited by what is real rather than by something huge that will never happen,” says Ciccarelli. So present workable sales forecasts based on bottom-up information (that is, how many units per month are sold in how many stores) and stop projecting profits.
The drafting of your business plan concerns the process and the plan: Your business plan “reflects your ideas, insights, instincts and ideas about your business and its future,” according to Write your business plan (LikendisLike, 2015). The plan serves as a safe way to test them before you commit to a course of action. And once you start your business, the plan also serves as a point of reference. “I always print the document,” says Ciccarelli. “You capture it in time. If you change it all the time, you don’t remember where you were last year.”
Save all complaints: Follow your projections and assertions with statistics, facts, or quotes from an informed source to lend credibility to your plan.
The presentation counts: Reading any long, heavy document in text is difficult for the eyes, so format it with that in mind. Consider formatting your text pages in two columns and divide long passages with tables or graphs. Arial, Verdana or Times New Roman are industry standard fonts.
Writing your business plan is neither a job nor a luxury; it is an essential part of the business creation process and provides you with the information you need. So let’s see what information is included in your business plan.
Related: Business Plans: A Step-by-Step Guide
What goes into a business plan?
A typical business plan is 15 to 25 pages. Its duration depends on various factors, for example if your company presents a new product or belongs to a new industry (which requires explanations to the reader), or if you introduce yourself to bankers, who generally expect to see a traditional written and financial business plan.
“Most equity investors prefer a summary or rationale for the first contact, but often ask for a more detailed plan later in the due diligence process. Potential customers do not need all the details of your inner workings. Your management team must have access to everything, ”says Akira Hirai, general manager of the Cayenne Consulting business plan consulting service.
Most business plans include these seven sections:
1. Summary: The summary follows the title page and explains the fundamentals of your business. It should provide a short and clear synopsis of your business plan which describes your business concept, financial characteristics and requirements (ie cash flow and sales projections plus capital required) , your company’s current business position (ie, its legal form of operation, when the company has been formed, directors and key personnel) and any major business achievements that are relevant to its successes, including patents, prototypes or test marketing results.
2. Activity Descrition: This section usually begins with a brief description of your industry and its prospects. Enter the different markets of the industry, including any new product that will benefit or harm your business. For those seeking funding, strengthen your data with reliable sources and a footnote where possible. Also provide a description of your business structure (ie, wholesale, retail or service), who you will sell to, how you will distribute your products / services, the products / services themselves same (which gives you a competitive advantage), your legal structure of the company, your constituents and what they bring to the organization.
Here are some worksheets from Write your business plan which will help you determine your unique selling proposition and analyze your industry.
Click to enlarge +
3. Market strategies: Here’s where you define your target market and how you plan to reach them. Market analysis requires research and knowledge of the market in order to define the target market and position the business (ie are you a premium product or a competitive price?) In order to earn your share Steps. Analyze your market in terms of size, structure, growth prospects, trends and sales / growth potential. This section also discusses distribution plans and the promotion strategy and tactics that will help you achieve your plans.
Here is a worksheet from Write your business plan which will guide you towards identifying your target market.
Click to enlarge +
4. Competitive analysis: The purpose of competitive analysis is to determine the strengths and weaknesses of competitors in your market, the strategies that will provide you with a distinct advantage, the barriers that can be developed to prevent competition from entering your market. , and all the weaknesses that can be exploited in the product development cycle. Show why your business will succeed compared to others.
5. Design and development plan: You will only need this section if you have a product in development, such as an application. The purpose of this section is to provide investors with a description of the product design, to trace its development in the context of production and marketing and to show a development budget that will allow the company to achieve its objectives .
6. Operating and management plan: This section describes the daily operations of the company, its location, its equipment, its employees, its processes and its environment. If you have a product to make, explain how and where; also describe your place of work, personnel, legal environment (license, permit, special regulations, etc.), main suppliers and inventory. This section will also highlight the logistics of the organization such as the different responsibilities of the management team and the tasks assigned to each division of the company.
seven. Financial factors: Financial data is always at the back of a business plan, but it is extremely important. Financial data can include your personal financial statement, start-up expenses and capital, your projected cash flow statement, and the 12-month profit and loss statement. PaloAlto’s Berry points out that if you are looking for investors, you will need to show a cash flow statement and break even analysis – or breakdown to see where your business is breaking even.
The best way to prepare for running a business is to prepare all of the elements of the plan. So if you show a potential lender your business plan on 10 PowerPoint slides and are asked about something that’s not in the presentation, you can speak up and follow a more detailed plan – and quickly .
Some business owners hire business plan writing services. Hirai of Cayenne Consulting says that his clients generally fall into one of two categories: those intimidated by the process and those who could write the plan themselves but would prefer to devote their time to other priorities.
If you find yourself intimidated or stuck, you can always write the parts of the plan yourself that you understand and hire a consultant or researcher to help you with the parts that you find confusing.
Or if you are a startup that is watching every dollar, then tap on the free services of the Federal Small Business Association (SBA). Each state has a district office. Through the SBA, you can get business plan assistance through its various resource partners, including women’s business centers, small business development centers, and the Service Corps of Retired Executives.
Let this business plan template for the business plan for a start-up company guide you:
Related: Business Plans: A Step-by-Step Guide
Different types of business plans
Generally, business plans can be divided into four categories:
Workplan: This plan is what you will use to operate your business and is not intended to be admired. This version of your plan is an internal document and will be long on the details, short on the presentation. Here you can omit descriptions that you don’t need to explain to yourself or your team.
Mini plan: The reader can request a mini plan or a condensed version of your business plan (1-10 pages), which includes most of the same components as in a longer traditional plan – minus the details and explanation. This includes the business concept, financing requirements, marketing plan, financial statements (especially cash flow), the revenue plan and the balance sheet. This shorter plan is not meant to be a substitute for a full plan, but serves as an option to present to potential partners or investors.
Presentation plan: Whether you use a pitch pitch or a written business plan, the information in your presentation plan will be more or less the same as in your work plan, but formulated differently and stylized in the eyes of a stranger. The reader of your presentation plan will be someone who does not know your business, such as an investor or a venture capitalist, so lose all the jargon or shorthand of your work plan, which only makes sense to you. . Also keep in mind that investors will want to see due diligence on your competitive threats and risks as well as on financial projections. In addition, appearance matters, so use the color printer, nice cover and binders, and fancy paper. Or, if you are presenting your business plan as a PowerPoint presentation, you can use this business plan presentation template.
Simulation plan: This is an emergency plan – in case your worst case scenario occurs, such as a loss of market share, strong price competition or the defection of a key member of your team. You want to think about what to do with one of these, and if you’re trying to get outside funding, having an emergency plan shows that you’ve thought through what to do if things don’t go as planned . You don’t necessarily need it, but if you get outside funding, it can boost your credibility by showing that you’ve thought about these simulation possibilities. Even if you won’t get outside funding, shouldn’t you be thinking about the “ifs”?
If four shots seem like a mountain of work, don’t panic. Select two to start – a work plan and a mini plan, which will be an abridged version of your work plan.
Take several months to write your business plan. Think of it as a trip, not a sprint.
Related: The Ultimate Guide to Writing a Business Plan