10 Tips for Entrepreneurs on Writing a Business Plan
You can’t enjoy an epic vacation without a map, and you can’t build your dream house without blueprints. You also cannot start a successful business without writing a business plan.
Before something spectacular arises, there has to be a dedicated plan in place first. This way, you know what to expect and can anticipate any issues before they occur.
As a small business owner, are you gearing up to launch your company into the world?
If so, writing a business plan can help you lay the groundwork for a successful, sustainable venture. Not sure where to begin? That’s why we’re here.
Today, we’re sharing 10 tips that make writing a business plan as easy as possible. Read on to learn how to get started.
1. Include an Executive Summary
If your business plan is a novel, the Executive Summary is your introduction.
Before you launch into the nitty-gritty details of how your new company will be organized and managed, the plan should open with the big picture.
Here, you’ll simply summarize what your business intends to accomplish. Keep it concise and make sure to include these details:
- Company mission statement
- Short description of your products and services
- Company location
- Employee structure
- Leadership team
One tip? Since you’ll be delving deeper into these categories in the subsequent pages, leave a space for your summary and write it last. That way, you can pull from the data you created and make sure everything is cohesive.
2. Add a Company Description
Next, you’ll provide more details about your new organization.
The Company Description section should immediately follow the Executive Summary. In it, you’ll include more granular details on what your company will do and the main points it will solve.
This is where you’ll explore who your target audience will be and how you intend to reach it. If you’re not sure how to identify these consumers, this guide is a great place to start.
From there, discuss your company’s key differentiators. What sets you apart from similar companies in your niche? Think about any advantage you bring to the table including:
- Subject Matter Experts (SMEs)
- An ideal location
- An innovative product or service idea
This is the time to identify your strengths, as these will soon become the cornerstones of your marketing plan, and will help you with writing a business plan.
3. Know Your Market
You could have the best business idea in the world, but if there isn’t a need for it, it might not be the smashing success you imagined.
That’s why it’s important to include a Market Analysis section when writing a business plan. Take the time to research what others in your space are doing, and the success levels they’re experiencing.
As you analyze their performance, look for key trends.
What are they doing well and why does it work? Is there anywhere they’re coming up short? What can you offer that’s above and beyond?
Competitive research can take a little time, but it’s always homework worth doing.
4. Detail Your Company Structure
Your business plan is incomplete until you define how it will be structured and who will be at the helm.
Begin by describing your business’ legal structure. There are many different structures to choose from including:
- Sole proprietorship
- S corporation
- Limited Liability Corporation (LLC)
Then, illustrate the organizational structure of your company. Rather than listing it out in narrative form, it’s easiest and clearest to create a simple organizational chart.
Beneath it, explain the unique experience and skills that each person brings to your organization. You can even include resumes or CVs of your key team members if space allows.
5. Describe What Products or Services Your Business Will Provide
Be sure to include a section in your business plan that covers what products you will sell or what services you will provide.
In addition to details on the offering itself, include information on how it will benefit your target audience or help solve an existing gap.
Then, take a close look at what your product lifecycle will include. How will you source the raw materials necessary for your product? Who will your suppliers and partners be?
If you have plans to acquire intellectual property, such as a patent or copyright, add those into this section, too.
6. Highlight Your Marketing Approach
Of course, it can be difficult to define a clear marketing strategy right out of the gate. Until you officially launch your new business and test it out in your target market, you won’t know what’s going to work and what will fall flat.
Still, it’s critical to include at least a rudimentary marketing approach in your business plan.
How do you plan to get your offering in front of the people who need it the most? What channels will you use to share your message (email, social media, print-based marketing)?
Understand that along the way, you’ll need to adapt and tweak your marketing plan. As your audience evolves, your strategy should, too.
7. Introduce Your Sales Strategy
In the next section, include a brief write-up on what an actual sale will look like for your business.
Will you operate strictly via an e-commerce website or will you have a brick-and-mortar storefront? What are your anticipated sales targets?
If you plan to hire inside or outside sales representatives, mention this here, including as many details as possible. What is your approach to building your sales team? Will your reps be commission-based, salary-based or a combination?
You’ll reference your sales data later in the Financial Projections portion of your business plan. Make sure to completely describe your strategies so the two parts correlate.
8. Outline Your Funding Requirements
If you’re requesting a small business loan to help fund your new company, most lenders will request a copy of your business plan.
Not only will your plan give them insight into how you plan to create and operate your new business, but it will also include details on your specific funding requirements.
Using a five-year timeline, list exactly how much money you’ll need from a potential lender. Keep in mind that this isn’t the time for vague generalizations. You’ll need to break down your exact financial requirements, including the following details:
- Whether you require debt or equity
- The loan terms you prefer
- The timeline of your request
- How you plan to use the funds (equipment, hiring, expansion, etc.)
End this section with a forecast of your future financial strategy. Do you have steps in place to help you pay off your debt by a certain time? Do you plan to sell your business down the road?
Lenders will need to know that you have a set plan in place to ensure you don’t default on your loan. While it might be impossible to pinpoint exact numbers, you should know which approach is the most viable.
9. Add Financial Projections
You can round out your funding request by including financial projections that speak to the stability of your company.
Remember: You want to convince any lender that you’re a responsible business owner. Your financial data is a critical part of that persuasion, as is any collateral you can put against the loan.
If your business is brand-new, use charts and graphs to illustrate the growth you anticipate based on market trends and competitor research. Be as specific as possible, using quarterly or even monthly projections.
If you’ve been in business for a few years, add detailed financial reports to this section. These include:
- Income statements
- Cash flow statements
- Balance sheets
- Capital expenditures
Go three to five years back when compiling your historical data, and forecast five years into the future. Then, go back and make sure your projections line up with your funding requests.
10. Don’t Forget an Appendix
As you create your business plan, you may find that you have a significant amount of documents to include outside of the core plan itself.
Rather than inserting them into their respective sections, you can add an appendix at the end and organize them there. A few of the most common add-ons found in appendices include:
- Your credit report
- Team member resumes
- Pictures of your products
- Important legal documents
- Copies of business licenses and permits
- Professional contracts
You can point to the location of these documents within your business plan by using parenthetical references.
Writing a Business Plan That Works For You
Whether you’ve been in business for years or you’re just starting out, you need a solid vision to know where you’re heading next.
This is why writing a business plan is such an important task. While it can take some time to gather all the details you need, the final result is a comprehensive, organized document that can help direct your company toward future success.
Need a little assistance as you start down this exciting new road?
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