Think of a business plan as a roadmap to the success of your business; it is a guide to finding out, fixing, and achieving financial, marketing, and rational goals in your business.
Business plans are necessary if you want to properly strategize on how to achieve the objectives laid out for your business.
Although startup businesses need to have a business plan, already established companies also make use of business plans.
Not every business plan looks the same, but certain key elements should be present in every business plan.
This article points out these key elements, as well as ten ways you can write a good business plan with these elements, how long your business plan should be, and how to create a request for funding in your business plan.
Why Business Plans Are Important For Businesses
A business plan is an awesome way to share the general picture/vision of your business ideas with other people, especially potential investors, sponsors, and/or partners, and enables them to understand better what your business is all about.
The organized detailing of everything involved in your business would show your conviction and commitment to your business, enable contributions, suggestions, and corrections from others you present it to, and helps give clarity to aspects of your business for even you who own the business, as sometimes jumbled ideas get lost in the entire planning.
10 Ways To Write A Good Business Plan
To write a good business plan, there are certain steps you should consider, some of which are:
- Writing a clear and concise executive summary
- Giving details on your products and services
- Analyzing your business based on the market you plan to enter/are in
- Showing the operational structure of your business
- Outlining your business financial projections and funding requests
- Make sure your business is SMART
- Detailing your market research results
- Including an appendix in your business plan
Picking The Format Of Your Business Plan
Before you start writing your business plan, you should select the format you will be using, which could either be the traditional method, which is more commonly used, or the lean startup method.
The traditional format of writing a business plan is usually more detailed, informative and to the point; it is used in a lot of business cases, whether for startups or established businesses.
This does not mean the business plan should be unnecessarily long; a 50-paged business plan gets too cumbersome to read/go through, so get rid of redundant words, phrases, and statements if you see that your business plan is becoming too long, as you would lose the attention span of whoever you are presenting the business plan to.
A lean startup business plan is a less bulky(normally one-paged)outline, only detailed at the highest level, which does not break down every single part of the business, paying attention to important aspects of your business.
Business plans written in the lean startup format are usually for businesses with extremely short timelines or businesses that are most likely to change very quickly in short periods.
The Storytelling Approach
This approach to writing a business plan is normally used in the traditional business plan writing format and involves the 5W’s and 1H – the what, where, when, who, why, and how of your business.
This answers the question ‘what are you selling?’ ‘what does your business have to offer?’; it defines the products and services your business will be dealing with, and the features and benefits your goods have to offer the general public/your target audience.
With this, you explain the reason you have decided to start the business, the customer problem you must have discovered that has led to the business idea, and generally why you are in business.
This talks about where your target market is located, where the market state/size/segment of your business is located, and where your business would be based, in conjunction with your target market location.
You detail your business milestones with this aspect of your storytelling, talking about when you want to make a particular amount of money in your business, attract a particular number of customers, start a particular activity in your business, hire a group of people with particular talents and when you will get tools for expanding your company.
Running your company would need a team; this talks about the best type of people to work with, paying attention to particular responsibilities and roles, skills, and prior experience of whoever will be selected to be on your team.
This deals with how your company runs; how your products and services are made/manufactured, how you source for supply of raw materials, how you promote/market your goods and services, how you set your prices, and how you will treat customers that patronize your business in order not to lose them.
Writing A Clear Executive Summary
Writing an executive summary is the first step to take in the writing process of creating your business plan, and is considered an important section of the business plan; how your introduction sets the receptive mode for the rest of the business plan.
Think of your executive summary as a written ‘elevator pitch’ for your business, a clear and concise summary/rundown of what your business is about.
Your business plan executive summary should contain a brief listing of your business essentials; your business mission statement, a concise description of your products and services, and a general summary of how the business will operate.
Details Of Products And Services
In your business plan, there should be a description of the goods and services you are offering, as mentioned previously.
Be sure to discuss in detail what products and services are to be offered, how your products will stand out from other similar products in the market; how these products will be priced, and how that will pan out for your business in the market compared to your competitors.
Describe how you will promote and market your business brand; discuss how the marketing message you send across to potential customers connects to the products and how it will aid in building awareness of and retaining loyalty to your business brand.
Drawing Out The Operational Structure Of The Business(Business Description)
Your business description gives the hierarchy of your business management and operations; it describes who is who in your business team and how your business functions.
This section should contain the key members of your team and their positions, your business name, and your location.
It helps if you give details on exactly how each position held functions in the business and how these positions affect the growth and success of the business.
Results Of Your Market Research Analyses
Before this, you must have carried out surveys and conducted proper research on the market your business is venturing into.
This section of your business plan contains the results of the research you have carried out; research on consumer behavior toward the product you want to work with, trends and opportunities in that product niche, and the competitors present.
Analyzing Your Business With SWOT
SWOT stands for Strengths, Weaknesses, Opportunities, Threats.
Discuss your business based on its potential strengths, aspects where your business flourishes the most, and its weaknesses, and discuss how these weaknesses can be reduced or managed.
Be on the lookout for opportunities for your business and note them down in this section of your business plan too.
Using this analysis method will also help better in the research analysis you carry out on your business market.
Outlining Your Business Financial Projections And Milestones
Your finances and how they are managed are an integral part of your business, especially if you are looking out for sponsors and investors.
Make use of charts and images to project how you think your business will do financially as it progresses.
If your business is already established, show previous financial performances and records like bank statements, invoices, balance sheets, and cash flow statements over a period of time(at least three years) and discuss how you plan to boost your financial performance in your business.
Provide future projections of your business’s financial performance over a particular period, and keep your projections as realistic as possible; for instance, if you have been getting an annual profit percentage of 5%, do not project to get a 50% increase in profit percentage over 4 years, that is more unrealistic than it is ambitious.
Also, create financial milestones; fix financial goals and points in time when you expect to make particular amounts of money, or reach particular levels of financial stability in your business.
Writing Out Your Funding Requests
Take care in writing out your funding requests at this point, although the success of your requests also rests on the feasibility of the rest of the business plan.
Do not be overly optimistic and provide unrealistic/unreasonable sales estimates in trying to better your chances of getting loans, sponsorship, or investments; have ambitious goals and be optimistic, but don’t go overboard with your aspirations.
Be sure to proofread the entire business plan to this point and after, to be sure there are no misspellings, miscalculations, punctuation, or grammar problems; a grammatically correct and carefully edited business plan boosts the chances of getting loans and investments, as it shows your high level of competence to whoever it is being presented to.
Making Sure Your Business Plan Is SMART
SMART is a business acronym for five things you should consider when editing your business plan – Specific, Measurable, Achievable, and Time-bound.
You do not want to be vague in your descriptions, from your products and services description to the description of the business’ operational structure; ensure to be specific in whatever details and descriptions you give.
As mentioned earlier, be sure that the goals in your business plan are realistic and reasonable; avoid overblown projections on unreasonably high estimations of sales and marketing results.
Every part of your business plan should be effective, important, and straight to the point; avoid redundancy and adding parts to the business plan that would make whoever is going through it feel like they’re wasting their time, and make sure every part is utilized in passing your business objectives across clearly.
Make sure your business plan has time frames attached to every goal and task to be achieved; leaving time frames on tasks vague and uncertain leads to procrastination and a lot of delays and depicts unseriousness and levels of noncommitment to your business.
Creating An Appendix
At the end of your business plan, you should add a section for additional supporting materials that can’t fit anywhere else in the business plan.
Do not make this section of the business plan too bulky or longer than the rest of the business plan; however, if the length and bulkiness of the business plan appendix can’t be helped, be sure to include a table of contents at the beginning of this section, to help in easy navigation of the documents.
Contents Of A Business Plan Appendix
A business plan appendix contains extra documents that support what is contained within the main body of the business plan, some of which include:
- Bank statements
- Business credit history
- Legal documents
- Permits and patents
- Resumes of key workers
- Reference letters
You may not have time to properly write out a good business plan, or you may still be uncertain about how good your business plan writing skills are.
It is okay to seek and accept help from sources that offer it.
Several non-profit organizations offer resources like free mentoring and consulting on business planning and business plan drafting/writing, such as SCORE; if you are a woman starting up a business or a member of a minority, the National Women’s Business Council is always of great help in providing free resources and assistance in creating good business plans.
Writing a good business plan is quite easy, as long as you remember to be clear, realistic, and straight to the point in explaining details about your business, how it operates, the goods and services being offered, the opportunities to be utilized in the market, and the financial goals you aim to achieve at specific points.
If you have found this article on writing a good business plan helpful, do share it with everyone you think will need it.