How To Write A Business Plan Step By Step
Every business needs a business plan before starting out, and it doesn’t have to be complicated. Planning helps you to foresee problems in your business, and provide solutions to them even before they come up. It also helps you to strategically lay out what your business goals are, and how you intend to achieve them. You can never know everything your business entails when you’re just starting, but having a business plan can give you an idea of what to expect and look out for.
It is alright to have a great business idea but you won’t go far if you don’t put it down in writing- business plan. Research has it that businesses who didn’t have a plan before they started are likely to crash in the first few years of starting up. Having a business plan positions you to be able to get funds from investors and banks if you want to. No one wants to put their money in what does not work, so it is your business plan that shows how serious you are with your business and how viable it is to succeed. Some entrepreneurs and businesses have started out without a business plan, but the odds that they will still fail are greater.
A business plan does not guarantee that the business will work or succeed, but great planning is always the difference between success and failure. You cannot just jump into starting a business because you have an idea, you have to do more than that and that requires planning. A business plan has 6 essential components that it is supposed to cover, and to prepare a great plan, you have to put them all into consideration.
Components of a business plan
- Executive summary
This is a general overview of your business and your plans. It is the first thing that should come up in your plan. It is a brief summary of what the whole plan is about. It should include a description of your products and services, summary of objectives, description of your market, and an overview of funding channels.
This section shows what exactly you’re offering, what problems it solves, how it solves the problem, and your target market. This includes information about what your products or services are about, who you’re offering it to, and how it fits into the current market or your projections into the future. When people read this section of your business plan, they should have an idea of what your business is offering.
Here, you describe your competition, and the advantages you have over them. You can use a “competitor matrix” to compare your features against those of your competitors. The main focus in this section is to highlight how what you’re offering is different and better than those of your business competitors. You will always have competition, so it is wise to state them in the business plan.
- Future products and services
The whole idea of a business plan is to forecast what is to happen in the future. This helps to show your investors that you have a plan for the future, but you do not need to expand much on it in this section because parameters can change in the future. You shouldn’t just put down a vague plan for the future.
This includes the steps you plan to take to actually achieve your business. This section will cover your marketing and sales plan, operations, and the great achievements you wish to succeed in. it explains how you plan to reach your target market, different strategies to use, the pricing of your products or services. Your price should reflect what your business is offering to customers as this will send a message to your customers even before they come in contact with you. It also includes how you plan to promote your brand, your packaging strategy, and advertising methods.
This section shows how you intend to get your products to your customers. It can be direct, retail, or manufacturer’s distribution.
- Financial plan
This shows a forecast of your monthly sales and revenues. It doesn’t have to be complicated like most entrepreneurs think, and thereby, leaving it out of their business plan. It helps you know what to expect as you go on in the business.
Below are step by step guide on how to write a business plan
Read Also: A Simplified Guide to Business Plan Format
Step 1: Create your executive summary
This is a brief overview of what your business offers, where you stand now, and where you hope to be in the future. This might be the most important part of the business plan because it gives your investors an idea of what your business is about. In short, it answers the question of the “what”, “why”, and “where” of your business. This section should include your mission statement, general information about your company, brief description of your products and services, financial inclusion, and your future plans.
Step 2: Write your Company overview
The first step might have incorporated this into it, but this part is a full description of what your business is about and what you offer. This section highlights the legal structure of your business, the marketplace of your business, and what your business really does. It doesn’t have to be long one, just catchy pitch that shows what your brand represent.
Step 3: Perform market analysis
You’ll start getting into details in this section, unlike the first two steps. You have to perform an in-depth analysis of your market and competitors. It shows investors that you have a full understanding of what the industry entails and who your competition are. It includes the industry description, target market and overview, your market share potential, your target size and growth, market price and barriers and competitor research.
Step 4: Define your business’ organization
This section explains your employee and stakeholders background. It shows what each person does in the business, and their past experiences. It includes organizational structure, ownership structure, hiring need, and background of your board of directors.
Step 5: Describe your products and services
This shows the products and services your business offers, how it solves a problem, and who it is meant for. It includes a full description of your products and services, current status of products, product development goals and research, intellectual property, sourcing, and fulfilment.
Step 6: Explain your marketing and sales plan
This explains how you intend to sell your products and services to customers. It includes how you plan to get customers and get them interested in what your business offers. It shows how you’ll position your products for customers to interact with you, promotion strategies, selling strategies, and your sales force.
Step 7: Financial plan and projections
In this section, you give a full detail of your financial plan and projections, where you are financially now and where you hope to be in some years to come. Your financial statement should include cash flow statement, income statement, balance sheets, accounts payable and receivable. It shows the funding you have now, the amount you’ll need now and later in the business. Any investor who goes through this section should be able to know how any funding they put into the business will affect and impact the business.
Step 8: Add an appendix
This will include all other information you didn’t include in every section of the business plan. Things like data points, charts, footnotes, or further explanations are included in this section. You can also include your resume and those of the key members of your board and management.
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