As is commonly said in the business arena, “Failing to plan is planning to fail.” Creating a business plan is the very first step to being a successful entrepreneur. You need to pay attention to details to ensure you come up with a reliable actionable plan, which will also help avoid financial complications that often arise. How do you write a business plan?
Typically, a business plan can be categorized into a traditional business plan, which is more detailed, or a lean startup business plan, which serves as a thumbnail sketch. Regardless of the plan you want to create, there are essential factors you need to consider to develop the ideal business plan.
Learn how to create a successful business plan in six simple steps:
1. Executive Summary
This is the first section of your business plan where you outline the key points of your plan. It typically includes background information about your business, mission and vision, capital, competition, management, competitive advantages, and so on. Pay attention when writing this section as it will determine whether investors take an interest in your business. Additionally, ensure your executive summary is succinct (ideally 2-3 pages). Many professionals write this part last to ensure it summarizes everything included in the plan.
2. Business Description and Overview
This is where you get into details about your company. You may include your products or services, present and future business outlook, and of course, a brief history. Make sure to mention how you intend to solve a problem through your business in the face of competition and economic contingencies.
It is important you focus on the core of your business to make your plan comprehensive and attractive. This may include mentioning the top talent you have to get you started, the uniqueness of your business, and the target market.
3. Product and Services
Under this section, you should talk about everything pertaining to the products and services you provide. For instance, if selling a product, mention whether you are the manufacturer, your production process, availability of material, and how you will handle
inventory. Also, make sure to include patents and trademarks, as well as information on whether you intend to offer a new product or service in the future.
4. Market Analysis
Your business plan will also entail how you intend to approach the market. Here, you need to address topics such as market analysis, customer relationship, customer service, advertising, etc. This is the section where you indicate the factors that make your business different from competitors, your marketing strategies, and current and future customer trends.
While writing this section, keep in mind financiers want to work with differentiators who are authentic and able to see things that others don't see. Therefore, make your market analysis comprehensive and detailed enough to ensure you capture all important issues.
5. Operation and Management
A business needs leadership and management to thrive. How you plan to run your business should be a consideration when writing a business plan. Address issues such as the hierarchy, responsibilities of each department, and expenses required for each management team. Highlight who owns the company and their stake, as well as how you will address legal issues.
6. Financial Factors
This is where you lay out your company's financial statements by indicating projected profits, loss statements, and cash flow numbers for the next three years or so. Make sure the information you provide is accurate to avoid budget misalignment in the future. Your funders will also be keen on your financial plan, so do not make mistakes that can end up costing you.
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