To be successful at any venture, you need a plan. Learning how to write a business plan is a great place to start your new business journey.
A thorough business plan will include details like your business’s goals, products, services, and finances.
This will help you to define what you want to do in your business, Why you want to do it and how you plan to do it.
Every business plan should express the business goals, objectives, strategies, financial projections and potential challenges.
Now that you understand this to an extent, let’s dive deeper to show you what you need to know about creating a successful business plan for your small business.
What is a Business plan
A business plan is a detailed document that shows your company’s overall objectives and goals and the steps through which these objectives can be achieved.
Your business plan is an important business tool and it can contain your operational strategies, your marketing plans, your business structure and even your financial projections.
Why do you Need a Business Plan?
A well-written business plan can serve as a road map for your business. Here are some reasons why you need a business plan:
1. Express Your Business Vision To Investors and Partners
Investors or potential partners will often request for your business plan before they think about financing your business ideas.
A well-written business plan will answer the possible questions your investors may have about the business and convince them that your business is worth the investment.
Some questions you can answer with your business plan will be:
- Is there a need for this product/service in the marketplace?
- What are the financial projections?
- What is the company’s exit strategy?
2. Uncover New Business Opportunities
As you work with your team to come up with a business plan, you begin to uncover areas of your business that you’ve never thought about before.
Through this process, you develop new business ideas, Marketing strategies, operational changes and even better business models.
3. Get Every Person in Your Business on the Same Page
This may sound strange, but a business plan can help you articulate the direction for the business and get everyone to see the plan for the future.
To do this, you need to lay out the long-term goals for your business and point out the milestones that must be reached to achieve them.
With this, you increase efficiency because everyone on your team knows the direction, understands the vision and knows where all the work is leading to.
4. Determine your Financial Needs
When you build a business plan, you are trying to figure out not just strategies but also the possible needs of the business – including financial needs.
As you Write your small business plan you may begin to answers the following questions:
- Do I need to raise capital to start this business?
- How much money will I need to procure the required facilities and human resources?
- At what point do I expect to break even?
Types of Business Planning
1. Operational Planning
This is the “HOW” of your business plan. Here you try to express how things should be done in the business.
This type of business planning clearly describes the processes involved in the day-to-day running of the company.
An operational plan can either be;
- A single use plan : This type of operational plan is basically for a one time event or activity like an annual event or conference.
- An Ongoing Plan : This is a type of operational plan that covers the steps that should be taken to achieve a particular business objective or solve a problem.
2. Strategic Planning
This is the “WHY” of your business plan. This part includes a long term overview of the business and clearly defines your vision and mission.
It forms the foundation of your entire business plan and describes the milestones, Values, vision and mission within a stipulated time frame.
3. Tactical Planning
This is the “WHAT” of your business plan. During tactical planning you describe what needs to happen usually at a specific and short term level.
Tactical planning makes the long term strategic plan achievable by breaking them into smaller actionable units.
4. Contingency Planning
Some business experts consider this to be a special type of business plan.
It is a business plan that occurs during an emergency or an unforeseen circumstance. This helps the company to navigate through situations where an immediate change is required.
List of the Top 9 Steps to Write a Business Plan
Here are some steps you can take to build an effective business plan.
- Start with an executive summary
- Describe your company
- State your business goals
- Describe your products and services
- Do your market research
- Outline your marketing and sales plan
- Perform a business financial analysis
- State your financial projections
- Write any additional information to an appendix
How to Write a Business Plan in 9 Steps
Follow the recommended steps below to get your Business Plan ready now.
1. Start with an executive summary
Use the first page of your business plan to write a compelling executive summary. To get the best out of your executive summary, see it as your elevators pitch.
In your executive summary, briefly describe your products/services, state your vision and mission. Then you can round up with some financial projections.
We recommend that you write your executive summary after you must have finished writing your business plan. This will help you to highlight all the important aspects of your business plan in the executive summary.
2. Describe your company
At this point you want to describe your business to the reader. You’ll need to highlight your business model and structure, and other necessary business details.
You can use this part of your Business Plan to tell your business story and describe your business history to prepare your readers for other areas of your business plan.
This part can contain information like:
- Your registered business name.
- Business Structure (Sole proprietorship, partnership or Corporation).
- Business Address and contact details.
- Important team members.
3. State your business goals
Next, you want to write down your business goals.
What are you looking to achieve with your business in a specific time frame? In this section you can lay out both your short term and long term goals.
You can also out line other objectives like;
- Need for a Business Loan.
- Need for an investment or financing.
When you’re naming your needs in this section, try to explain how the input will be valuable to your business growth plan.
4. Describe your products and services
At this part of your business plan, you’ll need to describe what your products and services are or what they’ll be.
Typically, this section tell the reader a lot about the product or service including;
- What the product/service is.
- The target market or customers for the product or service.
- The distribution plan or strategy for the product/service.
- The marketing and sales strategy for your product.
- The price structure of the product and service and lots more.
5. Do your market research
The market research area will show Investors and other readers that you understand the business you’re into.
This section will provide details about your competitors, your unique value proposition and your Unique selling point.
6. Outline your marketing and sales plan
Most investors will like to know how you intend to make your products reach the end users.
Therefore, you’ll have to pass across this information in this section by describing how you intend to persuade customers to patronise your products and services.
7. Carry Out a business financial analysis
Readers will want to know what your financial record has been so far especially if you’ve been in business for a while.
This is where you want to show your readers that you know your numbers. At this section of your business plan, you’ll include details like;
- Your income statement
- Your Profits and Loss statement
- Total profit margin
- Your liquidity and debt repayment ability.
You can make this more visually appealing by making use of charts, infographics and graphs.
8. State your financial projections
The financial projections of your business plan is one part of your business plan that is important to investors and partners.
Your financial projections will show how you intend to generate profit through your business over a period of time.
This will also show how you’ll be able to repay your business loans and how your investors will get their returns.
Before you make projections be very careful and reach out to financial experts if you need help.
9. Write any additional information to an appendix
If you have any other information you’ll like to share with your readers, this is a nice place to add them.
You could add supporting materials like:
- Resume and Profiles of Key Team members.
- Bank statements.
- Business history.
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