Your business plan is the foundation of your business, helps gives clarity to your business also helps you make better decisions. A well-written business plan can also help secure the funding you need for your business from lenders or investors.
An expert in business plan development and writing when asked about the value of a business plan said, “the value of a business plan is the decisions it influences, and ultimately, how much money is in the bank as a result of the plan.
What is a Business Plan?
According to Tim Berry, an American entrepreneur, and published business author, a business plan is any plan that works for a business to look ahead, allocate resources, focus on key issues, and prepare for challenges and opportunities. Business existed long before computers, spreadsheets, and detailed projections were made. So did business plans.
Businesses need plans to optimize growth and development according to plans and priorities. Business plans will help you run your business. They are also important for running a company, whether the company needs new loans or new investments or not. Businesses need plans to optimize growth and development in line with their goals and priorities.
A business plan will help you run your business
A good business plan guides you through each phase of starting and managing your business. You will use your business plan as a guide on how to organize, run, and expand your new company. It’s a way to work on the core elements of your business.
Business plans can help you get funding or bring new business partners together. Investors want to feel confident that they will receive a good return on their investment. Your business plan is the tool you’ll use to convince people that it’s a smart choice to work with you — or invest in your business.
Choose a business plan format that works for you
To write a business plan, there is no right or wrong way. What is important is that your plan meets your needs.
Conventional business plans also known as traditional business plans are more common, use the standard structure, and encourage you to take a closer look at each section. They seem to demand more effort up front.
The major focus would be writing your business plan the conventional way whether for personal use, for investment purposes, to bring in new partners, or generate more funds for your business.
Conventional business plan
This type of plan is very comprehensive, takes more time to write, and is thorough. This proposal is usually demanded by lenders and investors.
Conventional business plan format
You may not have to adhere to the same business strategy outline when you draft your company plan. Use the sections that make the most sense for your company and your needs, instead.
a. Executive summary
Let your reader know what your company is and why it’s going to be successful. Include your mission statement, the goals of your business, the vision of your company, your product or service, basic information about the leadership team, staff, and location of your business. You can also include financial information and high-level growth plans.
b. Company Description and Market Opportunities
Use your company description to provide the reader with comprehensive details about your company. Explain the problem(s) that your business solves in detail, how your business solves it, and any competitive advantages it has.
Market opportunities in the assessment of your target market, target audience, market trends, and competition.
Explain the competitive benefits that are going to make your company a success. Are there any experts on your team? Have you found the right location for your company? Your description of the company is the place to boast about your strengths.
c. Market Analysis
You’re going to need a good understanding of your industry outlook and target market.
Competitive analysis will show you what other firms are doing and what their strengths are. Look for patterns and themes in your market research. What are competitive competitors doing? Why is it working? Could you do it better than that? Here is the place to answer these questions.
d. Organization and Management
Tell your reader how your company is going to be structured and who is going to run it.
Describe your business’s legal structure. State if you have or intend to incorporate your company as a C or an S corporation, form a general or limited partnership, or whether you are a single owner or an LLC.
Show how the unique experience of each person will contribute to the success of your venture and your company’s goals. Consider having the resumes of key members of your staff.
e. Service or Product Description
Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you’re doing research and development for your service or product, explain it in detail.
f. Marketing and Sales Strategy
A marketing strategy has no single way of approaching it. Your strategy should evolve and change to meet your unique needs.
In this section, your objective is to describe how you will attract and retain clients. You’ll also describe how a sale is going to happen. When you make financial projections, you will refer to this section later, so make sure to describe your complete marketing and sales strategies thoroughly.
g. Funding request
This is where you will outline your financing requirements if you are asking for funding. Your goal is to explain clearly how much funding you will need over the next three to five years and what you will use it for.
Specify whether you want debt or equity, the conditions that you would like to apply, and the amount of time that your request would cover. Give a detailed explanation of how you’re going to use your funds. Specify if you need funds to purchase equipment or supplies, pay wages, or cover individual expenses before revenue rises. Often provide an overview of your potential strategic financial plans, such as paying off debt or selling your company.
h. Financial projections
Complement your request for financing with financial projections. Your goal is to persuade the reader that your company is stable and that it will be a financial success.
Include income statements, balance sheets, and cash flow statements for the last three to five years if your business is already established. Make sure to list it now if you have other collateral you can put against a loan.
Provide future financial perspectives for the next five years. Projected income statements, balance sheets, cash flow statements, and budgets for capital expenditure are included. Be even more specific for the first year and use quarterly (or even monthly )projections. Make sure to explain your projections clearly and match them to your requests for funding.
Use graphs and charts to effectively demonstrate your company’s financial story.
Use your appendix to provide supporting documents or other materials that have been specifically requested. Common items to be included are credit history, resumes, product pictures, reference letters, licenses, permits or patents, legal documents, and other contracts.
Check the numbers in your chart and make sure they match each other
Run your business plan through a final revision. Have you read it over again? Do you have someone who can read it for you? Sometimes you don’t see the errors because you are too close to them.
If the business plan is to secure an investment or to collect a loan, make sure you have answered questions that the reader is likely to ask.
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