6 Dec · 6 min read
Before you start a business, a good business plan can help you clarify your strategy, identify potential roadblocks, decide what resources you'll need, and assess the viability of your idea or growth plans.
Although not every successful business starts with a formal business plan, many founders find it beneficial to take a step back, research their idea and the market they want to enter and understand the scope and strategy behind their tactics. Business planning can assist you with this.
A business plan is a written description of your company, its offerings, and the clients to whom you offer services. It describes the strategy of your company. How you plan to develop and grow your business, your marketing strategy, and who your competitors are are all important considerations.
Most business plans include financial projections for the future, like sales goals, budgets for expenses, and cash flow forecasts.
A business plan is no longer just a static document that you write once and then forget about. It's also a guide to help you highlight and achieve your goals. A management tool used to analyse results, make strategic decisions, and show how your business will conduct business and grow. In short, a business plan can help you succeed if you're wondering about starting up a business or presenting it to investors or venture capital firms.
A large percentage of venture capitalists (VCs) and all financial institutions will just not invest in a tech company or small company unless it has a well-thought-out plan in place. A business plan not only helps you focus on specific goals but also reassures third parties that you have planned ahead of time.
In 2018, Bplans, an entrepreneurship resource center, partnered with the University of Oregon to gather and evaluate research on the advantages of business planning. Here's what they discovered:
Perhaps the most compelling evidence comes from a 2010 meta-analysis of 46 separate studies on 11,046 organisations published in the Journal of Business Venturing: Its findings support the notion that "both new and established small businesses benefit from business planning."
Most likely, you already have a business strategy in mind. So you might be wondering, "How do I start making a business plan?" Here is a step-by-step guide to writing a successful business plan.
A good executive summary is one of the most critical sections of your plan, and it should also be the last section you write.
The purpose of the executive summary is to summarise what comes next and give people with limited time (like potential investors and lenders) a high-level look at your business that makes them want to read more.
Again, this is a summary, so emphasize the key points you discovered while writing your plan. If you're writing for your planning, you can skip the summary entirely—though you might want to try it anyway for practice.
Following that is your company description, which should include information such as:
Your company description should also define your business structure, such as sole proprietorship, partnership, or corporation, as well as the percentage of ownership held by each owner and the extent to which each owner of the company is involved in the business.
Finally, it should go over your company's history as well as the current nature of your business.
Your company will sell products, services, or both. This is where you'll describe precisely what you intend to sell.
This section of it should contain the following details:
This section will contain all of your potential customers' information. You'll discuss your target market as well as the growth of your industry and market.
Begin by describing your intended audience. The group of people to whom you intend to sell is known as your target market. Just try to be as specific as you possibly can. If you have a solid target market, it will be easier to develop a sales and marketing plan that will reach your customers.
Following that, provide any market analysis and market research you have. You'll want to explain how your market has grown over time, as well as how your company is positioned to capitalize on expected changes in your industry.
Your business plan's management and organization section should inform readers about who runs your company. Describe your company's legal structure. Discuss whether you'll incorporate your company as an S corporation, a limited partnership, or a sole proprietorship.
If your company has a management team, use an organizational chart to show the internal structure of your company, including the roles, responsibilities, and relationships between the people in your chart. Communicate how much each person will contribute to the success of your startup.
If you're looking for financing or investors, this is an essential part of your business plan. It explains how your business will make enough money to pay back the loan or give investors a good return.
Assuming you've gotten a new loan, you'll have to give your company's monthly or quarterly sales, expenses, and profit estimates for at least the next three years.
Because accuracy is critical, carefully review your previous financial statements before making projections. Your goals should be aggressive while also being realistic.
A marketing strategy must be developed together. Your strategy should evolve and change to meet your specific requirements.
The purpose of this section is to explain how you intend to attract and retain clients. You'll also describe how a sale will take place. You'll refer to this section later when making financial projections, so describe your entire marketing and sales strategy thoroughly.
A good business plan will help you get there, whether you're writing one to find a new business idea, putting together steps to start a business, trying to get money from investors or a loan, or just trying to run your business well.
Business planning is a continuous process that can assist you in validating your idea, setting goals, managing your business, and successfully pitching it. One of the most helpful traits you can have to create a successful enterprise is to step in and begin planning.
If you need more than a template, we recommend looking into business planning software like LivePlan. It includes step-by-step instructions to ensure that you have only what you need in your plan and that you spend less time formatting and presenting.
You will also receive assistance in developing solid financial models that you can rely on, without having to worry about getting everything right in a spreadsheet. Finally, it will turn your plan into a management tool, allowing you to easily compare your forecasts to your actual results. This makes it simple to track your progress and make changes as you go.