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How to Write A Business Plan
A business plan is essential when starting a new business or expanding one that already exists. Not only does it serve as a roadmap to help keep you focused on the things that matter, but you’ll have a difficult time seeking outside investment without one. Loan officers and other investors want to see your game plan for success — you need to demonstrate that you understand the possible risks involved and have procedures in place to deal with them.
The process sounds daunting, but it doesn’t have to be. Below you’ll find a time-tested formula that will help you write a business plan sure to impress.
Start With a General Overview of Your Company
All business plans should begin with a general description of the company, both in its current incarnation (if it already exists) and where you expect it to be in the future. You don’t need to go into detail in this section, as you’ll be expanding individual sections later.
Talk about what your company will do and how you’re planning on approaching your market. Include top-level descriptions of your target audience, your mission, your products and services, and a demonstration of why these are essential to your prospects.
Next, fit these into the context of your competitive market, focusing on what you think distinguishes you from the competition. Provide critical insights regarding your competitive advantages and discuss how you plan to be successful relative to the other players in your industry.
Discuss Market Research Analysis
Now you’ll start developing some of the details you omitted in the last section. First, explore how your new or updated company will fit into its industry. You should look at trends, growth rates, challenges, and the competitive landscape. Include your pricing scheme and how it fits existing models, and how you plan to overcome barriers to growth that you’re likely to encounter.
Next, take a more granular look, comparing your business prospects to those commonly found in your niche. Discuss your target market and provide real-world comparisons with your competition.
Your market research should be data-driven. It’s not enough to speak in generalities. You need hard, accurate numbers to back up your statements. If your research isn’t thorough or if it’s too vague to be predictive, your business plan won’t build trust with readers.
Include Information About Your Management Structure
How you plan to structure your business is just as important as how it will interact with the outside world. In this section, provide a detailed view of your organization.
You should include information about your company’s legal structure, how ownership shares will be distributed, and your thoughts on why your proposed structure is ideal for realizing your goals.
Visual references can be helpful. Include your proposed org charts, along with detailed information like your overarching management structures and individual department compositions. Introduce your upper management roster and share their backgrounds. You want to demonstrate that your core team has the experience needed for success and that the management structures they’re building will adequately support their goals.
Do a Deep Dive on Your Service or Product
Now we take a step back from the company and look more closely at its offerings. Discuss your immediate plans, as well as your offerings’ future value. Describe your products or services in detail and discuss what differentiates them from the competition. Provide a thorough analysis of how they relate to market demand and how you view future development.
Don’t be stingy with details. Talk about how you plan to build long-term value, including R&D plans, your investment focuses, staffing challenges, and other critical areas for exploration.
Describe Your Sales and Marketing Strategy
You’ve established what you’ll be selling. Now you need to convince your readers that you have the necessary sales and marketing prowess to enter your market successfully. Discuss specific tactics and strategies and how they relate to the competition. Include proposed messaging, demographic targets, and relevant competitive advantages.
Examine the structure of your sales and marketing teams as well, introducing key team members when relevant. Take a deep look at your sales funnel and how each team member contributes to a successful outcome.
SEE ALSO: How to Incorporate Empathy Into Sales
Be Frank About Your Funding Requests
This section will be of particular interest to readers considering financing your venture. They’ll want to know specific funding needs and how you plan to use the money to further your goals.
Now’s not the time to be shy. Be frank about your funding requirements, including your initial investment needs and any additional investments forecasted for the future. Describe how the funds will be used within the first year or two. Pay specific attention to how the funds will drive achieving your objectives.
This section is critical because funding sources need to know that you’ll be a good steward of their money. They’ll want to see the steps you plan to take to ensure a profit from their investment.
Include Financial Projections
Get your accountant on the phone. You’ve reached the section of your business plan they’ll be most excited about. In this portion, you’re going to share detailed financial statements — cash flow and income statements, relevant accounts payable and receivable details, and of course, your balance sheet.
Your goal is to spin these statements into a compelling narrative that establishes how your current finances and future plans will contribute to your growth and development. Demonstrate an understanding of how your company finances will evolve and make informed projections that forecast likely income levels and cash flow at various points in your development.
Establish Performance Metrics
This last section unites everything you’ve discussed so far by establishing achievable milestones that will guide you on the path toward your listed business objectives. You’ll also detail the specific metrics you’ll use to gauge your progress along the way.
Be realistic. If your milestones are overly aggressive, your readers may doubt your ability to achieve them. Specificity is equally essential. It should be clear how you will measure your success and what you plan to do if you miss key projections. If you use vague language or unrealistic milestones, investors may consider your venture too risky.
Remember, when you write a business plan, your goal is to be as forthcoming and as detailed as possible. You should leave your reader with the impression that you have a deep understanding of what it will take to be successful and have the structures you need to best realize your vision. If you ever think you’re not providing enough detail, drill further. More information is always better.