If you’ve never done a business plan for your business, it’s not too late. A business plan can take your business far when you’re looking for a course of action. Starting a business without a business plan is like taking sail without a compass. You need it to stay on course.
Studies show that businesses that use business plans have a greater chance of survival than businesses that don’t use them. That doesn’t mean your business is guaranteed to succeed if you have a business plan, it just means your chances of succeeding are greater.
If you started your business without a business plan, don’t get discouraged. This post will provide you with the information you need to get that business plan up and going. If you’re just starting your business, you’re viewing this at the right time. Read on to learn everything you need to know about how to write your business plan.
Benefits of a Business Plan
The main reason why a business plan is so essential to your business is that a business plan provides you with the guidance you need to run your business. A good business plan guides you through each stage of your business by providing the roadmap for how to structure, run, and grow your business.
Another great benefit to business plans is they potentially help you to get the funding you need for your business.
Types of Business Plans
There’s no right or wrong way to write your business plan, but your business should meet your business needs. There are two types of businesses: traditional or lean startup, and either one of them can work for you, depending on how you intend to use it.
Traditional Business Plans
Traditional plans are more common. They use a standard structure and provide comprehensive details about your business. That means it requires a little more research and could be a little lengthy. Some traditional business plans can be 15 to 25 pages long. If you plan to use your business plan as an opportunity to seek funding, a traditional business plan would be more beneficial.
Components of a Traditional Business Plan
The following components make up a traditional business plan. Use the components that make the most sense for your business needs. It’s okay if your components are some variations of the following:
The executive summary is a summary of all the components of your business plan and is usually written last to reflect some highlights about each component. It should also include your mission and vision for the business.
Describe what your company does and why it exists. Define the goals and objectives of your business. Go into detail about who your customers are, the problems they have, and how your product or service solves the problem.
Research your target market and industry to show what other businesses are doing and what their strengths are. What are they doing so well? How can you do it better? What’s your competitive edge?
Let the reader know how your company will be structured and who the leadership team consists of. Use an organizational chart to help describe this and talk about how each person’s unique experience will contribute to the success of the business. Include their resumes and bios to prove why they are qualified. Describe the legal structure of your business.
Service or Product
Let the reader know what you offer with your business. Explain how it benefits your customers and what the product life cycle looks like. Share your plans for intellectual property, like copyright or patent filings.
Marketing and Sales
Explain to the reader how you will attract and retain customers. This should consist of your marketing plan. Don’t just think up some ideas of marketing but do the homework and market analysis to come up with a smart, feasible marketing strategy for your business.
If you’re trying to get funding for your business, this is where you’ll outline your funding requirements. You want to explain how much funding you’ll need for the business over the next five years and how you will use the money. This should be a comprehensive explanation of funds
Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success. Include income statements, balance sheets, and cash flow statements (if applicable) for the last three to five years.
Provide a clear financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. Use graphs and charts to tell your financial story.
Use an appendix to provide supporting documentation like resumes, pictures of your product, licenses, permits, patents, legal documents, or other documentation.
Lean Startup Business Plans
Lean startup business plans are not as common as traditional plans. They focus on summarizing only the most important points of the key elements of your plan. They don’t take as long to pull together and can be as little as one page long. They’re good if you plan on changing or refining your business regularly.
Components of a Lean Startup Business Plan
These components serve the purpose of keeping you on track with your business venture.
Describe your key partnerships, like suppliers, manufacturers, subcontractors, and similar-type partners.
List the ways your business will gain a competitive advantage. Highlight things like selling directly to consumers or using technology to tap into the sharing economy.
List any resource you’ll leverage to create value for your customer. This could include staff, capital, or intellectual property.
Describe the unique value your company brings to the market.
Describe how customers will interact with your business. This should answer a string of questions like: Is it automated or is it personal? Is it an online business face or personal?
Be clear and specific in describing your target market.
Write a description of how you will be communicating with your customers. Most businesses use multiple ways to communicate with their audience: social media, YouTube, LinkedIn, Email, etc.
Will your business focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.
Explain how your business will actually make money. Some examples are direct sales, membership fees, selling ads, etc. If you have multiple revenue streams, list them all.
While your business plan may be useful to multiple audiences: potential investors and business partners, suppliers, creditors, etc. Don’t forget the business plan is also something you hold close — like in your back pocket to help guide you through the different stages of your business. So, it’s okay to update it as you go to keep you on the right track.
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