A clear and compelling business plan provides you with a guide for building a successful enterprise focused on achieving your personal and financial goals. It can also help persuade others, including banks, to invest in what you are creating.
To write a business plan, start with an executive summary that lays out your grand vision for your business. Follow that with a section that describes what products and services your company will offer. Then, write a marketing section where you detail how you're going to inform people about your business.
You'll also want to include a section on your business model and how it will operate. Finally, conclude your business plan by letting investors know what you need from them. Analyze the potential markets for your business. This needs to be more than mere guesswork and involves doing accurate and intelligent research. You need to analyze secondary research collected by outside observers, as well as getting primary research that you collect yourself, with your own methods and observations.
Consider the following areas of inquiry: Is there a viable market for the product or service you want to sell? How old are your potential customers? What do they do for a living? Is your product or service attractive to a particular ethnic or economic population?
Will only wealthy people be able to afford it? Does your ideal customer live in a certain type of neighborhood or area? Establish the size of your potential market. It's important to be as specific as possible in regard to your market and your product. From there, you can analyze demographic information more specifically: How many car mechanics are in need of soap in any given community?
How many children in the United States are currently under the age of eight? How much soap will they use in a month or a year? How many other soap manufacturers already have a share of the market? How big are your potential competitors? What will you require to get started? Some may be tangible, such as five hundred file folders and a large cabinet in which to store them all. Other requirements may be intangible, such as time to create a product design or to do market research on potential customers.
What exactly will your mousetrap look like? What materials will you need? Do you require money for research and development to improve on your original toothpaste tube and paper clip construction? Do you need to hire an engineer to draw up accurate manufacturing designs?
Should you patent your invention? Will you need to investigate federal safety standards for mousetraps? Research possible locations for your business. Make a chart of the most expensive and least expensive sites by location and square footage. Determine your start-up cost. Make a list of all the tangible and intangible resources you need to get your business going.
Be honest and conservative in your estimates, but also be optimistic. Don't aim for the best of everything at the beginning. You can forgo the expensive trimmings of an office of a more well-established company and stick to the basics at the beginning.
Get what is affordable, works and is actually needed and don't buy frills. Put yourself in the shoes of potential investors. Depending on your product, you may need to search long and hard for relevant information. Don't lose heart if you discover some, or even all, of your ideas have been adequately covered by the market.
Don't ignore this reality; instead, work with it. Can you still do a better job or provide a better widget than your competitors? In many cases, it's likely that you can provided you know the market well and how to add value in ways your competitors are not doing. In other cases, it may be a case of focusing more narrowly or more broadly than your competitors are doing. They follow specific guidelines, such as the Risk Management Association R. A database, which are designed to ensure that they will make money by investing in or lending to your business.
Lenders will typically look to the company's Capital, Capacity, Collateral, Conditions, and Character or what is known as the 5C's of lending when underwriting a loan. You'll need to have covered all these bases well before seeking funding.
A business plan won't be useful until you're certain what your company exists for. What will you accomplish for others? What products and services will you produce or provide? Write down all the specific needs your company will satisfy. Potential investors need to know that your business will be meaningful and marketable to people who can use your product or service. So concentrate on the external needs your company will meet. What will your product or service enable people to do better, more cheaply, more safely, or more efficiently?
Will your new mousetrap help people capture mice without feeling sick to their stomachs? Will your new bubblegum scented bubble bath revolutionize the way children agree to take nightly baths? Choose a winning strategy. How will you distinguish your product or service from others? Although there are millions of types of businesses, there are actually only a few basic strategies that can be applied to make any enterprise successful. The first step in selecting an effective strategy is to identify a competitive advantage for your product or service.
Your competitive advantage may include designing special features not found in rival products. It may entail superior service characteristics such as speedier delivery, a lower price, or more attentive sales people——these are never to be sniffed at as possible winning ways, as many companies grow complacent and can be overtaken by giving customers experiences that are better than the average expectations. Consider how will you hire and organize your workforce. Keep in mind that your initial plans will undoubtedly change as your business grows.
You may need to hire more managers to supervise your expanding staff or to set up new departments to meet new customer demands. For now, you want to secure help in getting started and convince your funding sources that you will become profitable. Consider the practical issues of running a business.
Think about your role as leader or boss of the business. As you think about hiring personnel and organizing your workforce, you must also confront your desire and ability to be a good boss. Decide how you will handle your employees' entitlements. For example, salaries and wages, their insurance and retirement benefits, as well as analyzing the extent of your knowledge of tax related issues. Do you need to bring in experienced managers right away? Will you keep some of the existing employees or hire all new people?
And where do you find these potential employees? Funding sources will also want to know if any of your partners expect to work alongside you or if their obligations are only financial. Your plan will need to specify the key management jobs and roles. Positions such as president, vice presidents, chief financial officer, and managers of departments will need to be defined along with stating who reports to whom. Decide on a marketing plan.
Consider how will you reach your customers. What will you say to persuade and convince customers that your product or service is better value, more timely, more useful, etc. If it currently has no rival, how will you properly explain the purpose of and the consumer's need for the product?
What advertising and promotional efforts will you employ? For example, two for the price of one specials or free coupons inside those same kid-oriented cereal boxes? Where can you locate lists of the greatest concentrations of children under the age of eight or whatever group constitutes your market?
Build a dynamic sales effort. In a nutshell, this part of your business plan is about how you will attract customers or clients for your product or services. What will your basic sales philosophy be?
Building long-term relationships with a few major clients or developing a clientele of many short-term customers? Organize all the relevant information about your business. Begin creating section headings and putting the appropriate information under the appropriate headings. Title Page and Table of Contents Executive Summary , in which you summarize your vision for the company General Company Description , in which you provide an overview of your company and the service it provides to its market Products and Services , in which you describe, in detail, your unique product or service Marketing Plan , in which you describe how you'll bring your product to its consumers Operational Plan , in which you describe how the business will be operated on a day-to-day basis Management and Organization , in which you describe the structure of your organization and the philosophy that governs it Financial Plan , in which you illustrate your working model for finances and your need from investors.
Write the executive summary last. The executive summary is basically your big appeal to investors, or really anyone who reads your business plan, that should summarize and articulate what it is that's great about your business model and product.
It should be less about the nitty-gritty details of operations and more about your grand vision for the company and where it is headed. Gather all the information together and prepare multiple drafts.
You've done all of the hard work researching, deciding what your business is about, targeting it accurately and selling it. It's time to put the business plan together and articulate all your thinking, research, and hard work into a comprehensive description of your structure and service. At first, do not worry about capitalization, punctuation, and grammar.
All you need to worry about is putting your ideas down on paper. Once you have a general form, you can spend time proofreading your plan and correcting mistakes.
Have someone else read over it for you and take heed of their comments. Sell yourself and your business. The idea of the business plan is to present yourself in the best light.
The talents, experience and enthusiasm you bring to your enterprise are unique. Describe the activities you will use to promote and sell your product or service. You should touch on each of the "four Ps" of the marketing mix:. Your marketing strategy should also include information about your budget — how much money have you budgeted for marketing and sales costs?
You may also want to include a profile of your "ideal customers". You can create profiles based on customer type — consumers, retailers, or wholesalers — or base your segments on demographic information such as age, location, and income level.
Keep in mind that solid market research is the backbone of an effective marketing strategy. Your business plan should outline your current operational requirements as well as your projected requirements for the next 3 to 5 years. Your inventory management and accounting systems should have the ability to produce up-to-date reports. Conducting a SWOT analysis is an important part of business planning.
A properly prepared SWOT analysis shows investors that you have realistically and objectively considered these elements. Banks and other lenders understand that businesses will encounter difficulties at some point, and want to know how you will deal with these challenges. Remember that overestimating strengths and opportunities or ignoring potential problems will undermine your credibility.
This section addresses how you plan to manage your employees and human resources processes. You should also discuss your short-term and long-term plans for employee recruitment, training, and retention. If appropriate, discuss any advisors, mentors, consultants that offer you support. Don't underestimate the importance of this part of your plan. Investors need to know that you and your employees have the necessary balance of skills, drive and experience to enable your business to succeed.
It is also advisable to outline any recruitment or training plans, including timelines and costs. In this section you should discuss ways in which your business honours ethical values and respects people, your community, and the environment. Effectively using information technology is an important part of managing a business. In this section, you should outline how you plan to use internet technologies to reach customers, manage your business, and reduce costs.
You should include information about:. This section of your business plan essentially turns your plans into numbers. As part of any business plan, you will need to provide financial projections for your business. Your forecasts should run for the next 3 to 5 years.
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A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.
Writing your business plan. From (e.g. sole proprietorship, corporation), the market, and your own experience. Although the executive summary is the first section of the plan, you should write it last. writing guides and interactive tools to help you develop a professional business plan. Business planning FAQs Find the answers to. Essential tips and advice on how to write a business plan to grow your business. Video Podcasts Start A Business Subscribe Books. Opinions expressed by Entrepreneur contributors are their own.
A business plan is a description of the enterprise you want to establish and a plan for running and developing it. The plan covers all the various aspects which have formed part of your preparations and guarantees that everything is thought through. To benefit fully from the workbook and to make sure you cover all aspect of your start-up, you should read the book/app: The Dynamic Business Plan. The book/app explains the reasons behind the questions asked in the workbook.