How to Write a Business Plan
Posted on January 1st, 2009 by monsterguide
Loading ...
If you are starting a business or even if you already launched a business, a business plan can be extremely beneficial. Business plans are sort of road maps for a business. They detail a business’ main purpose and define its market, strategy, products and mission. Business plans can be difficult to write if you are unclear about your business’s goals or if you are unorganized. However, by writing a thorough and organized business plan, you can better understand your business’s goals and be more productive as a result of it.
Why Create a Business Plan?
There are two main reasons entrepreneurs write a business plan. The first reason is that they require financing and the second reason is that they want to organize their business on paper in order to analyze it better and ultimately use this knowledge to succeed in the marketplace.
Writing a Business Plan for Financing
Many entrepreneurs require financing to launch their business. While you might be able to explain your great business idea to your best friend or parents hoping that they will lend you money, if you go to a bank and have nothing written down on paper, the bank’s response will be a definite no-go. When people or corporations are looking to lend money out, they want lending opportunities that are genuine. One of the ways to convince lenders that you are serious, organized and have a well thought out business idea is to write a business plan. Without a business plan, very few lenders will take you seriously.
Writing a Business Plan for Success
Another reason one should consider creating a business plan is that the act of creating a business plan makes you think about your business, analyze it in many different ways and realize its possible strengths and weaknesses. A business plan is an exercise in creating a roadmap for success. A business plan can be looked at as a plan of action or an intricate detail of your business’s purpose. Writing a business plan is extremely beneficial and can lead to several new ideas for success.
Elements of a Business Plan
A business plan is usually a lengthy document. There are many elements to a business plan and each business plan (depending on the type of the business) will have its own specific parts, however, here are some common components to a business plan.
Executive Summary
Since business plans can be very lengthy, an executive summary is presented. An executive summary is just that- a summary of the business plan. Because anyone who reads your business plan will usually focus on your executive summary, make sure this part of the business plan is written well. The executive summary should be straightforward and focus on some basic questions such as:
- What kind of company are you?
- What are the products or services that you offer?
- What is unique about your products and/or services?
- Who are the managers or executives in your company and what special skills or experience do you bring to the table?
If you are creating a business plan specifically for financing answer questions such as:
- What type of financing do you need?
- How would you use the money?
Table of Contents
A table of contents is a useful component to have included in your business plan. Not only does it make it very easy for others who read your business plan to find information fast and easily, but for those writing the business plan, it can work as an outline making your business plan easier to organize.
Company Description
The company description is where you tell others about your company and specifically the history of the company, how you got started and how you have grown your company since its inception. You can also detail your current sales and include your big plans for the future. The company description is an excellent place to sell your company to those that read your business plan. No matter what type of business you are in, this is the part of the business plan that you can definitely show off how great your company, products and ideas really are.
Products and Services Your Company Offers
In this section of your business plan, you will want to describe the specific products and services that you offer. You should try to be as straightforward as possible. It is also important to answer specific questions such as how do your products and/or services differ from other companies? What do your products and/or services offer that other companies can’t? How are your products created? Are any of your products patented? Can they be patented?
Marketing Analysis
You should prove to the reader that you know how your products perform in the market and understand how to sell your product in the current marketplace. In order to write the marketing analysis component, you should engage in a market analysis for your company. One type of marketing analysis that is popular is called SWOT (Strengths, Weaknesses, Opportunities and Threats).
This section is very important to investors, because they want to be sure that you have done your research and have already figured out how much potential a product has in the current market and later down the road.
Marketing Plan
A marketing plan announces your strategy to sell and succeed in the marketplace. Some of the factors that should be taken into consideration in this section are how will customers learn about your products or services, what will make them choose your company over the competition and which resources you will use to both advertise and sell your products or services.
Operations Plan
Your day to day operations are extremely important to most investors. An operations plan will help you detail how you will run your business on a day-to-day basis, what resources you will need to tap, where your will business be located, what type of equipment or supplies you will need, how much labor you will need to run your business and any other specifics regarding operations.
Financial Plan
Your business’s main goal is to make a profit and understanding your company’s financials is essential. A financial plan should communicate to the reader that you and your company understand the financial aspects of your company. You should show knowledge of sales forecasts, cash flow, balance sheet, P&L statements, etc. If you have hired a team of accountants or other financial officers, mention that in this section.
Management
Your management team can be extremely important to those that want to invest in your business. This is the section to state who is part of your core management team and what special skills and credentials they bring to the table. For many lenders, a strong management team can be a huge plus for approving financing.
Appendices
The appendices is the place all your charts, pictures of products, resumes, promotional materials and independent assessments should be located. Although the appendices section doesn’t sound like a vital component of your business plan, sometimes the contents of a company’s appendices is what wins financing.
Resources for Writing a Business Plan
Writing a business plan is not easy and takes a considerable amount of time, energy and analysis. You should be aware of the many resources that can help an entrepreneur write a business plan. Online alone, there are dozens of great sites and forums that can help one understand the intricacies of a business plan and offer free templates and advice on writing the perfect plan. Besides online resources, there are tons of articles and books available that go deep into the process of creating a business plan.
Once Your Business Plan is Completed
Once your business plans is completed, you should definitely have other entrepreneurs, your local small business association or close friends proofread it. Many times what seems clear to us can be quite confusing to others. By having it reviewed by others, you can gain a good idea on how effective it is.
Ask a question
Comments