How to Write a Business Plan [Updated for 2020] — ENTREPRENEUR

ALERT : Originally published at https://proentreprenuer.com

Writing a business plan shouldn’t be complicated. In this step-by-step guide, I’ll show you how to quickly and easily write a business plan that will get the results you want. Don’t worry, you don’t have to have a business or accounting degree to put together a great business plan. This guide will show you how to get your plan done step-by-step without any of the complexity or frustration.

A business plan is essential to your company’s success. After all, seven out of ten businesses fail within five years. We know you’re starting a new business or moving to expand and want to stay focused on the positive and the last thing you want to talk about is a failure.

But for 70% of business companies, failure is the reality, and the primary cause is a lack of planning. Whether it is insufficient market research, financial planning, management, lack of social media presence, website or something else, these mistakes all boil down to a lack of planning that can be traced back to the roots of your company: the business plan.

What is a business plan?

Before we detail how to write a business plan, we should figure out what a business plan is. Then, we can cover the basics of how to write a business plan.

A business plan in any company is a document with every crucial detail. It covers the following information: what you are going to sell or produce, the structure of your business, your vision on how to sell the product, how much funding you need, information on financial projections, among other details.

Before you begin to implement your company’s business plan, it’s necessary to brainstorm to make sure your team is prepared to answer some questions:

• Why are we starting/ready to expand the business?
• What makes our company different? How can we differentiate ourselves?
• What solution are we providing? How do we offer it?
• Who are we? Be ready to introduce your management team, any key players, and advisors.
• Who are your customers? Target business?
• What needs to happen to break even?
• How can we make a profit? In one year? In five years?

However, there are dozens of other questions, industry-specific or otherwise, you should be asking. When first getting started, pay attention to those questions. Your business plan must address them in a clear, concise, strategic, and realistic way.

Why is a business plan necessary?

The critical perception of a business plan of any company is to show you that your business is worth starting and the idea is worth pursuing. It provides you with the possibilities to get a detailed look at your goals. In case there is something to change and improve, it’s high time to do it before the business plan of your company becomes implemented.

A business plan is integral in selling your company to potential investors and bankers. But as important, the process of writing involves you and your partners taking a real look at what you want the future of your company to look like and how you’re going to make it happen.

Who is responsible for writing a business plan?

An individual or a group of individuals who start a business are responsible for writing a plan. In most scenarios, it is up to the founders of the company.

It’s important to remember that this is not a document for internal use only. On the contrary, it’s a promotional document that will undergo constant updates and changes. Keep in mind whom you write it for (investors, customers, etc.) and do it in an easy-to-read language without challenging to understand words and terms.

When to Create a Business Plan

The big problem with business plans is that entrepreneurs often get bogged down in them. Getting lost in rehashing and dragging out a business plan for a year or more can cost your startup the optimal moment to get to market and the best funding opportunities.

It is evident that a business plan of your company should be documented before your business starts. Though this step is the first one, this is only one of those many steps to create and run a business. Even if you have prepared the best plan ever, it is worth nothing if you fail to implement it successfully.

Piece by piece

A business plan can be rather long — make sure it’s not too long. You want to make sure you include every vital piece of information, so organization is crucial. With that in mind, we are going to break down each component. There is no hard-fast rule for private business plans.

However, remember to follow whatever example a bank or loan agency gives you down to the letter. For a regular plan, as long as you address all the key points, there can be room for some creativity. We are sharing with you the most common headlines and sections found in well-received plans.

Step 1. Executive summary

The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though. The summary is where you introduce your vision. Try to make sure your exec summary answers these questions:

• What sector are you in?
• Who is your target audience?
• What does the future of your industry look like?
• How is your company scaleable?
• A brief description of products and services
• A summary of objectives
• A solid description of the market
• A high-level justification for viability (including a quick look at your competition and your competitive advantage)
• A snapshot of growth potential
• An overview of funding requirements
• What are the next steps?
• Who are the owners of your company? Backgrounds? Experience in sector/business?
• What motivated you to start your company? Why now?

Business Plan ## Step 2. Mission statement

Yes, this part is important to you and your team. However, this isn’t quite as important to your audience as you think it is.

Your mission statement should include your goal and the objectives that will lead you toward it; your industry, how you see it evolving in the short and long term, and who your customers are. Your mission statement also says who you are, and talks about the strengths of you and your team. This is where you, in part (and in brief), sell the features and benefits of your company.

Step 3. Products and/or services

This part includes information on what you do and what you plan to sell it for. This is also where you sell the benefits of your business.

This being a business plan and all, it’s important to list the cost of the products/services you are providing:

• How much does it cost to produce? Versus How much will you sell each piece for?
• Is there packaging?
• How will the client purchase the product?
• What system will you use to bill them?
• Are there extra costs in getting it to the customer? How will it be transported?

The products/services section should also differentiate your new business:

• What makes your business different?
• What gives your company’s product or service an edge in the marketplace?
• What distinguishes it from competitors?

If you are selling a product, sell the general idea and its benefits in this section, but don’t get too technical. Leave any diagrams or intricate designs for the addendum.

Step 4.Competitive Advantage

The Competitive Analysis section of your business plan is devoted to analyzing your competition -both your current competition and potential competitors who might enter your market.

Every business has competition. Understanding the strengths and weaknesses of your competition-or potential competition-is critical to making sure your business survives and grows. While you don’t need to hire a private detective, you do need to thoroughly assess your competition on a regular basis even if you only plan to run a small business.

In fact, small businesses can be especially vulnerable to competition, especially when new companies enter a marketplace.

Competitive analysis can be incredibly complicated and time-consuming… but it doesn’t have to be. Here is a simple process you can follow to identify, analyze, and determine the strengths and weaknesses of your competition.

Business Plan ## Step 5. Marketing plan

Providing great products and services is wonderful, but customers must actually know those products and services exist. That’s why marketing plans and strategies are critical to business success.

Now that you’ve proven what you want to do and how you will make it happen, next you will need to detail how you’re going to spread the word. This is where you prove you know what you’re talking about and that your company is ready to provide a service to a proven audience.

Your marketing plan should be the result of a blend of first- and (reputable) second-hand research into your marketplace. Break it down into sections, grouping by market topic. We suggest these seven:

1. Your customers: Are you B2B or B2C? Who are your customers? How do you plan to reach them? Where will you sell your product/service? How will you garner feedback from them? How will they know you care?
2. Your competition: Who are your direct/indirect competitors? What’s your advantage? Don’t be shy — tell them you are better and why.
3. Your niche: Or market or sector. Again, what separates your business from your competitors — how will you make yourself known in the niche?
4. Your distribution: Of course, this is a marketing plan, so they’ll want to know your tricks for promoting within the said niche. How are you selling it — directly to clients, to a vendor, online, at a store, an office, freelance, etc.
5. Your advertising: Are you advertising already? Where? When you have more funding, where do you advertise? How will you use advertising to retain customers? Get new ones? Make sure you outline your marketing budget either here or within the financial plan. How much will be spent on print, TV/radio, Internet, direct mail, external ads, etc?
6. Your sales strategy: Depending on the industry, this could be one of the most important parts — how are you going to sell your product/service? Online? A sales team? Telesales? How will you incentivize sales? Will you offer a free sample or trial? Host a free workshop?
7. Your face: You’ve described how you will market, what, to whom, on where. Now it’s time to explain the image you’re going to project. This can include your slogan, images, logos, website, social media channels, etc.

Step 6. Operational plan

This part takes a reader through the day-to-day of your company, explaining the:

• Location/Logistics of your business
• Transportation (if you’re selling a product)
• Legal — Do you need a permit? License? Do you need to join a union or other professional organization?
• Inventory — if you’re selling a product, where will you need to store it?
• Providers/Suppliers/Freelancers — Detailed contact info/pricing for anyone you’re outsourcing to.

This is a lot of solid, concrete info, but don’t be afraid to add a short lyrical introduction, painting a more visual picture of how your company will work, briefly walking them through your day-to-day operations. You can even include a photo or video showing it.

Writing a business plan isn’t just about including all important information. It’s also about capturing the attention of a reader and convincing him or her that you are a solid team. Show them why you make a good team, and then add some candid shots of your company team happily working together.

Step 7. Management organization

This part includes a hierarchical chart of your company and how the operations we talked about above flow through it. List the positions and briefly describe the functions of each integral member of your business, including but not limited to: board of directors, advisors, technical specialists, accomplished salespeople, accountants, and lawyers.

Then describe any steps for your staff to expand. Also, reflecting it in your financial plan, discuss any new hires you want to make and why. Your business plan isn’t just about where your company is, but where it’s future is headed.

Business Plan ## Step 8. Financial Analysis

The fiscal piece of your business plan puzzle is the piece investors and loan managers are going to spend the most time looking at. Without proper capitalization and financial planning, even the most excellent business idea that fulfills an urgent need is at high risk for failing.

We offer you a free and open business plan template, which includes a step-by-step, annotated guide and spreadsheet templates for each of the following charts. What must this most-looked-at part of your business plan include?

Cash Flow Analysis is the evaluation of a company’s cash inflows and outflows from operations, financing activities, and investing activities. This reflects what you are going to sell versus your business expenses. This analysis projects your profit margin.

Done in conjunction with the cash-flow, this looks ahead at least a year and includes revenue predictions, including graphical representations of those numbers.

Break-even analysis

This breaks down how much you have to, well, break even.

Seriously, this is the part they are going to spend the most time looking at, make sure it’s thorough and realistic.

Business Plan ## Step 9. Addendum

As you can probably guess, this is where you talk about the rest, the boring, the things that you probably won’t need to include. But the addendum shows you did your research. Also, this is where you add any technical diagrams of your business plan. The addendum is also a great place to put references and press about your company, as well as resumes/CVs, adding proof of your awesomeness.

The business plan project manager’s job is to organize things most pervasively. Anything that’s not essential and is interrupting the flow of information should be added to the addendum.

How to write a business plan for your industry

A business plan for an industry consists of common points that we discussed above plus a few industry-specific ones. But in general, its goals remain the same — to show anyone who is interested in how serious you are about your undertakings. Stakeholders, investors, bankers, etc. should have a clear answer to the question “ Why do people need this business? “

But also, keep in mind that you will need to consult specialists in the fields and should read professional literature to help craft your plan.

Did I Miss Anything?

Now i’d like to hear from you:

Which strategy from today’s post are you going to try first?

or maybe I didn’t mention one of your favorite tips ?

Originally published at https://proentreprenuer.com on May 24, 2020.