As a small business owner, you’ve probably heard that you should write a business plan. But how do you write one? What goes into it? How long should it be? And why are they so important in the first place? We’ll answer all these questions (and more) in this post!
| Takeaways |
|---|
| 1. Writing a business plan is a crucial step towards turning your entrepreneurial idea into reality. |
| 2. A well-written business plan is essential in attracting investors and securing funding for your business. |
| 3. Key elements of a business plan include an executive summary, company description, market analysis, and financial projections. |
| 4. Regularly reviewing and updating your business plan ensures it remains relevant and aligned with your business’s goals. |
| 5. A business plan can also serve as a valuable tool for internal management, guiding and tracking progress within your company. |
Start With The Executive Summary
What is it?
The executive summary, also known as a business plan overview or mission statement, is a one-page synopsis of your entire business plan. Its purpose is to give potential investors an overview of what you’re trying to accomplish and why you need funding.
It should be written in such a way that anyone who reads it can get the gist of what’s going on. Think about how you would explain your company in 30 seconds or less: What makes it unique? What problem does it solve for customers? How does money make its way from start-up to bank account?
How long should it be?
It should be no more than two pages and certainly no longer than three pages (unless otherwise specified). Remember: The point is brevity! You’ll want to keep everything concise and straightforward so people don’t get lost while reading through all your details later on in the actual business plan itself.
Writing a business plan is a crucial step towards turning your entrepreneurial idea into reality. Our comprehensive guide on how to write a business plan in 9 simple steps provides you with actionable tips to craft a winning plan.
Make Sure You Have A Cover Page
Writing a business plan can seem like a daunting task, especially if you’ve never written one before. However, you can use this guide to help take the guesswork out of writing and creating your plan!
First things first: Make sure you have a cover page. The cover page is the first thing people will see when looking at your business plan so it needs to be good! Include the following information on your cover page:
- Company name and logo
- Contact information (your name and phone number)
- Mission statement – what are you trying to accomplish with this business? What will make people want to buy or use whatever product or service that you offer?
- Name of the person who wrote the plan (make sure it’s yours!)
- Date when the plan was written
Write Your Company Description
Describe the background and history of your business and its products or services, including any relevant information you may have about its founding, management team, goals and objectives, culture, and mission statement.
Highlight any notable awards or recognition that your company has received in the past five years.
Explain Your Value Proposition
Write a description of your company’s value proposition, or how your product or service is different from others in the market. If you have competitors, compare and contrast your business plan with theirs. In particular, explain why yours is better than theirs this should be one of the major points in your business plan.
Also, explain how you are going to use this product or service and how it will be paid for. Will customers pay per use? How much are they willing to pay? Will they subscribe to a monthly or annual fee?
Are you wondering how to impress investors with your business plan? Check out our article on how to write a business plan that investors actually read to create a compelling document that captures their attention.
Describe Your Market And Customers
In this section, you’re going to describe the market in which your business will operate. You’ll also want to tell who your customers are, who are your competitors, and what makes your company different from them.
You can also use this section to go into detail on key metrics that you’ll use as benchmarks for success. For example:
- Revenue growth (year over year)
- Net Income (year over year)
- Market share by quarter
Define Your Company’s Organizational Structure
The organizational structure of your business is the foundation for all other systems, processes, and procedures. It establishes how decisions are made and who makes them, as well as how information flows throughout the company.
You should therefore start your business plan by clearly defining your organizational structure:
Describe who does what in your company. For example, if you’re planning to hire employees, describe their roles and responsibilities. Also outline any relationships between different departments or teams within your organization (for example, sales with marketing).
Describe reporting relationships who reports directly to whom and decision-making structures who makes which decisions within each department or team in the organization chart. If there’s no formal hierarchy in place yet, write down how things could work once there is one!
You might want to consider including some tips on communication etiquette as well too; make sure everyone knows when it’s okay/appropriate/expected for someone else at another level above yours to contact them directly instead of going through management first.”
Every successful business plan should answer critical questions. Discover the key questions and how to address them in our post on 12 questions every business plan answers, ensuring your plan is well-prepared and comprehensive.
Outline Your Business Model
A business model is a plan that helps you determine what your company does and how it makes money.
A business model canvas is a visual way to organize all the components of your business model so it’s easier to see them all at once, rather than in separate documents or spreadsheets. It can help you identify which parts of your plan are working well, which parts need improvement, and whether or not they’re aligned with your overall vision for the company.
The first step in creating a business model canvas is developing an understanding of what factors go into making up a successful one this involves evaluating three main areas: strategy (the industry), innovation (new products/services), and analysis (marketing).
Once these points have been determined, they can be organized using one of several different frameworks such as those below:
Describe Your Products Or Services
The next section of your business plan should be about describing your products or services. You need to describe the benefits of your products or services, and also provide general information about them (what they are, how they work). Be sure to include all the features that make them unique from other offerings on the market.
Finally, talk about who your target market is the people you’re trying to sell these products or services to.
Discuss Your Marketing And Sales Efforts
Marketing and sales are key to the success of your business. Your marketing and sales efforts will determine how many customers you have and how much they buy from you. It’s important that you provide a thorough, detailed explanation of how you plan to market and sell your products or services, including:
Your marketing and sales strategy (for example, print ads in newspapers, radio spots on local stations)
The channels through which your customers will find out about your business (for example, social media sites like Facebook)
The tactics that will be used to reach them (for example, shareable content on Twitter or LinkedIn)
Cover Your Startup Costs And Financial Projections
Your plan should include a table that shows your startup costs and financial projections. This will include:
- Sales costs (i.e. materials, labor, and other necessary elements required to produce the product)
- Fixed operating expenses (your office rent, utilities, etc.)
- Variable operating expenses (sales staff salaries and commissions)
You need to make sure that your financial projections are realistic. A good way of doing this is by presenting them as a table with assumptions, this allows you to see where your numbers are coming from so that if something changes later on in the business plan process you can easily adjust it accordingly!
Seeking funding for your business? Learn why a well-written business plan is essential in attracting investors from our guide on does a business plan help you get funding and increase your chances of securing financial support.
Provide An Appendix Where You Can Include Details To Back Up Claims Made In Any Section Of The Plan
Provide an appendix where you can include details to back up claims made in any section of the plan.
Include a table of contents, glossary, list of acronyms and abbreviations, list of tables and figures, and appendices (if needed).
Avoiding common business plan mistakes is vital for success. Check out our tips on 10 mistakes business plan writers make to steer clear of pitfalls and craft a powerful plan that drives your business forward.
Conclusion
In the end, it’s not about whether or not you should write a business plan. It’s about how well you do it. The process we outlined above can help you create a quality plan that will serve as an important tool in your startup journey.
However, there are many ways to write a business plan and just as many opinions on what makes one good or bad. We encourage you to seek out advice and feedback from others who have experience writing business plans before diving into this process yourself.
Further Reading
Shopify Blog – Business Plan: Explore Shopify’s blog post about business plans, providing valuable insights and tips for entrepreneurs starting their ventures.
Indeed Career Advice – Business Plan Introduction Example: Learn from a real-world business plan introduction example on Indeed’s Career Advice platform, gaining inspiration for crafting your own introduction.
Bplans – How to Write a Business Plan: Bplans offers a comprehensive guide on how to write a business plan, equipping you with the knowledge to create a well-structured and successful plan for your business.
FAQs
What is the importance of a business plan?
A business plan outlines your business’s goals, strategies, and financial projections, providing a roadmap for success and serving as a crucial tool for attracting investors and lenders.
How can a business plan help secure funding?
A well-crafted business plan demonstrates to potential investors that your business is well-thought-out and has the potential for success, increasing your chances of securing funding.
What are the key elements to include in a business plan?
A business plan should include an executive summary, company description, market analysis, product/service offerings, marketing and sales strategies, financial projections, and an appendix with supporting documents.
How often should a business plan be updated?
It is recommended to review and update your business plan annually, although major changes in your business or market conditions may prompt more frequent updates.
Can a business plan be used as a tool for internal management?
Absolutely! A business plan can help you align your team’s efforts, set goals, and track progress, making it a valuable tool for guiding and managing your business’s operations.
Costantine Edward is a digital marketing expert, freelance writer, and entrepreneur who helps people attain financial freedom. I’ve been working in marketing since I was 18 years old and have managed to build a successful career doing what I love.