A great business plan can help clarify your strategy, outline potential obstacles, identify necessary resources, and assess the feasibility of your idea and growth plan before starting your business.
What is a business plan?
A business plan is a strategic document that outlines the company’s goals, strategies for achieving them, and the timeline for accomplishing them. It covers aspects such as market analysis, financial projections, and organizational structure, and serves as a roadmap for business growth and a tool to secure funding.
Why write a business plan?
Investors rely on business plans to assess the feasibility of a business before funding it, which is why business plans are often associated with obtaining a loan. Business plans also help business owners identify weaknesses before starting the business and avoid costly mistakes in the future. “Having a business plan helped us pinpoint the unknowns and made it easier to see the gaps we’d need help with or at least develop our skills,” says Jordan Barnett, owner of Kapow Meggings.
How to write a business plan in 9 steps
Here are the nine steps to writing a business plan:
1. Craft an executive summary
A good executive summary is one of the most important sections of your plan – and it’s also the last section you should write. The executive summary aims to summarize everything that follows and gives readers an overview of your business, persuading them to read more.
2. Write a company description
This section of the business plan should answer two essential questions: Who are you and what is your plan? The company description provides these details and offers an introduction to why you are in business, what makes you unique, what advantages you have, and why you are a good investment.
3. Conduct market analysis
Regardless of the type of business you start, your market can make or break you. Choose the right market for your products – a market that has many customers who understand and need your product – and you’ll be off to a good start toward success. Market analysis should include an overview of the expected market size for your products, an analysis of your business’s position in the market, and an overview of the competition.
4. Define management and organization
The management and organization section of the business plan should inform readers about the people running your company. Identify your business’s legal structure and explain whether you will establish your company as an S corporation, create a limited partnership, or operate as a sole proprietorship. If you have a management team, use an organizational chart to display your company’s internal structure, roles, responsibilities, and relationships among individuals in the chart. Explain how each person will contribute to the company’s success.
5. List products and services
Your products or services will be highlighted in most parts of your business plan, but it is important to provide a section that outlines the key details about them for interested readers. If you sell multiple products, you can include additional general information about each product line you have. If you sell a few products, provide extra information about each product. You should also describe any new products you will launch in the near future and any intellectual property you own.
6. Analyze customers
Your ideal customer, also known as your target market, is the foundation of your marketing plan, if not your entire business plan. You should keep this person in mind when making strategic decisions, so having an overview of them is important to understand and include in your plan. Customer analysis should include a description of a number of general and specific demographic traits. Often, customer analysis includes information like where they live, age range, education level, and some common behavioral patterns, how they spend their free time, where they work, what technology they use, how much they earn, where they typically work, and their values, beliefs, or opinions.
7.
Defining a Marketing Plan
Your marketing efforts are directly influenced by your ideal customer. Your marketing plan should outline current decisions and future strategies, focusing on how your business idea aligns with the ideal customer. For example, if you plan to invest heavily in Instagram marketing or TikTok ads, it may make sense to include whether Instagram and TikTok are leading platforms for your audience – if not, it might be a signal to reconsider your marketing plan.
8. Providing a Logistics and Operations Plan
Logistics and operations are the workflows you will implement to achieve your business idea. If you are writing a business plan for your own planning purposes, this is an important section to consider, even if you don’t need to include the same level of detail as if you were seeking funding. It should cover all parts of your planned business, including suppliers, production process, facilities, equipment, shipping, execution, and inventory management.
9. Preparing a Financial Plan
No matter how great your idea is and no matter the effort, time, and money you invest, businesses live or die based on financial health. At the end of the day, people want to work with a company they expect to be sustainable in the near future. The level of detail required in your business plan depends on your target audience and goals, but you typically want to include three main financial views: income statement, budget, and cash flow statement. It may also be appropriate to include financial statements and forecasts.
These are the nine steps to writing a business plan. You can use this framework as a starting point to write your own plan and fill in the details according to your business needs and goals.
Source: https://www.shopify.com/blog/72494917-how-to-write-a-business-plan-lenders-cant-shrug-off
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