A good business plan is like a blueprint detailing your business’s journey. It outlines your business’s financial and performance goals and provides solutions and plans for achieving them. It is a crucial document for starting and running a business – research shows that regular planning increases a business’s performance by as much as 30%.
Writing a Business Plan
Writing a business plan isn’t complicated – you only need to know what factors to cover in your plan. Here is a simplified six-step guide on how to write a business plan.
Step 1: Executive Summary
The executive summary chapter of your business plan is a summary of the plan’s details. It briefly discusses the various factors in your plan, including:
- A summary of the problems your business will solve.
- A description of your products or services.
- A summary of your financials, including funding requirements and options.
- A brief description of your team.
The executive summary should cover one or two pages. Ideally, it comes first when writing the business plan – however, it is more practical to write the executive summary last to cover the business plan’s full scope.
Step 2: Products & Services
The products and services chapter of your business plan essentially discusses how your products/services can solve an underlying problem. It contains the following details:
- A description of the problem your products/services will solve.
- A description of the solution offered by your products/services.
- An outline of your competition and competitive advantages.
- A review of your goals, milestones, and metrics.
This chapter should be detailed and elaborate. It should also be updated regularly to reflect changes in factors such as the competition, your competitive advantages, and the nature of your products and services.
Step 3: Market Analysis
The market analysis chapter should cover all relevant information about your target market and potential customers. It also includes information about your market’s and industry’s performance. It is the foundation of your business’s sales and marketing plans, so it is recommendable to be as detailed as possible.
Step 4: Marketing & Sales
The marketing and sales chapter should answer the following questions:
- How will you reach your target market segments?
- How will you sell to those markets?
- What is your pricing plan?
- What do you need in terms of partnerships and activities to succeed?
This chapter should offer a detailed and accurate breakdown of the costs and logistics involved in getting your products or services to your potential customers. It is also recommendable to include a SWOT analysis to get a clearer picture of your situation.
Step 5: Company Organization & Management
Great ideas and goals need great people to implement and accomplish them, and this chapter gives an overview of the company’s employees and their roles. The information should give insights into the employees’ backgrounds, education, and experience.
This chapter also includes an overview of the company’s history (if any), location, and legal structure. It also includes a breakdown of the company’s ownership.
Step 6: Financial Projections
The financial projections chapter covers everything involving the business’s revenues and costs. All relevant financial documents are required when making financial projections, including:
- Profit and loss statement.
- Sales and revenue projections.
- Balance sheet.
- Cash flow statement.
This chapter should also include an overview of your exit strategy. Interestingly, this is one of the most daunting chapters for most entrepreneurs, so hiring a professional (or using accounting software) is always recommendable.
Writing a business plan becomes less complicated when you know what to cover. Using a template also helps reduce the workload, but you should only use the best business plan template customized to suit your business. You can also review business plan examples for guidance and inspiration. Ultimately, hiring a professional is always advisable if the process proves complicated.
