The thought of starting up a business can be an exciting time for many people. How to write a business plan is among the very first decisions you as a future business owner must make. Do you write it yourself or give in to the temptation to take an easier path.
By taking ownership of this first most important step in building your business you will gain far more than a crisp document to be read by others. You will develop a deep understanding of what it will take your business to succeed. For this reason, it is essential The business owner will be the primary thought leader or sole author of the business plan.
. Wait, what is the business plan? Business Plan is a researched and refined document that helps you to get business loan raise equity funding can define and fix business objectives. Get a review of your business idea. agreements between partners set a value on a business for sale or legal purposes. Evaluate a new product line, do unique selling proposition promotion and expansion.
If you are approaching a banker for a loan for a startup business, your loan officer may suggest a small business administration loan which will require a business plan. A business plan is simply a plan of what your goals are for the business and how you plan to go about accomplishing them. Some people will refer to it as a vision for your business. I like to refer to it as a blueprint or a roadmap to accomplishing your goals.
According to business experts, a business plan will identify the purpose of your business company description, business goals, structure, product or services required resources, financial plan with financial statements, business management and operation. Now the big question in our mind is how to write a business plan. Experts agree that a business plan is crucial if you want to develop a quality strategy for your company. The size and niche of your operation does not matter.
You need to learn how to write a business plan regardless, let us explain 10 steps on how to write an effective business plan for your business.
Step One: Write an Executive Summary.
A poorly written executive summary is often the reason why you don’t find investors for your business. No matter how qualified your team and you are. No matter how great the business idea. You should include in your executive summary all major information about your plan business in a concise, clear manner.
Do not write your executive summary for yourself. Write it for your readers. Ask yourself who are those people? What’s their educational backgrounds? What information really matters for them or what information is most likely to influence a positive decision? limit the executive summary to one or three pages delivering a physically attractiveness and uniqueness clearly stated will you expect from the investor simply state the returns and exit plan for the total project. compellingly state the top two or three selling points of your investment proposition.
Your executive summary doesn’t require a full pro forma. Instead, give a simple statement of expected income expenses and anticipated income and cash flows. Finally, provide the total capital needed and a summary of the return projections.
Step Two: Business Description.
A good business description will make your work a lot easier as you travel the road to starting your business. When you write a formal plan with the hope of qualifying for a business loan or attracting investors, you need to let them know that you know what you are doing. Your Business description first and foremost must meet the expectations that your customers have when they walk through your doors. Get inside their heads. What do they want?
If they are looking for something specific, you can bet there is something else related to it that they want as well understand them, offer what they want, and then break it down what it will take to provide it.
The business description section of a business plan should include information about the legal structure of a business, how the business came to be formed, the type of business location of your business types of business conducted, like internet sales, storefronts, mail order, etc. And what products and services you will provide to your customers and clients.
Step Three: Operations Plan.
Operational Plan is a necessity of every new business to get good results. In order to write an operation plan you need to include cash flow forecasting to project the cash position of the company, profit plan and preparation for future developments. Flexible Budget, breakeven analysis variance report to ensure control of expenses. Executive review daily, weekly and monthly management meetings. Weekly position report for a company mission statement, strategic team operating plan, organization structure, delegation of authority to outline the principles position guide development, hiring procedure, performance evaluations, progressive discipline, employee compensation, profit based incentive system.
Operation plan is simply a technique of probing into the present and past performance of an operational investment. It measures the performance against particular standard costs offered And services. It also considers how goals can be achieved in a better way, how cost effectively they can be achieved,
Steps Four: Organization and Management.
Organizational structure details about the ownership of the company who was part of the management team and who are the board members. In addition to who the board members are, you will need to describe why they were chosen to be a part of the board. Here you should include a chart describing the organizational structure which includes the managers, employees and other important point persons of the business.
Within this organizational chart. Each managerial position should list the name of the person, the position, primary responsibilities, education, who they manage special skills, number of years with the company and prior employments.
Step Five: Legal Structure of Your Business.
There are four legal structures and it depends on you as to which one you would like for your new business.
1. Sole Proprietorship.
This is the kind of business structure that has only one owner, which in this case is you. You decide on things you have the last say on everything.
Two or more owners of the same business may file for partnership status. This type of business structure is very similar to sole proprietorship, all partners are held financially responsible for the debts of the business and tax burden is borne proportionally by the partners.
3. A Corporation.
Corporations can have many structures. But the most typical Corporation organizational structure consists of the one board of directors, two officers, three employees and for shareholders or owners, there is no limit your corporation can have as many as are desirable or expedient to do business.
4. Limited Liability Corporations.
Like a corporation, a limited liability company or LLC is a separate and distinct legal entity. This means that an LLC can get a tax identification number, open a bank account and do business all under its own name.
Step six: Products and Services.
Using a business plan to outline what products will be produced or sold, or what services are offered is a wonderful way to communicate information to others. This section should highlight the biggest sellers, unique products or services that your business provides and give a description about your items.
This section will show the heart of your business and what you’re offering to the public.
Step seven: Marketing and Sales Strategy.
By developing a marketing and sales strategy. You understand the type of clients you’re going for it by developing a strategy to approach those clients to buy your products or services. You must understand your demographics so you can develop a proper strategy that will work. If you are a real estate agent. Your target would be anyone that’s selling or buying a home. That’s your demographics. You would plan your strategy based on areas where buying and selling homes are active.
There are four things to add into your sales and marketing strategy.
- Write your sales and marketing goals and milestones per month or year.
- Define your target customer profiles and your marketing strategies.
What forms of communication Do you plan to use to market to customers prints, radio, internet or viral campaigns. All forms of advertising should be discussed in depth.
- Set up success oriented revenue targets.
- Develop an action plan to implement your sales and marketing strategy.
Step Eight: Competitive Analysis.
Do competitive analysis to perform better competitive analysis can depend on four major factors.
- Categorizing the competitors. it is necessary for the management to categorize the top 10 companies in the market who seem stronger and larger than their company.
- Analyze their promotional strategy. Competitors these days utilize hundreds of ways to promote their products or services. The management needs to get deep into these promotional strategies of top 10 companies.
- Competitors products analysis. The management needs to evaluate the competitors products and services from different aspects like product features, product values, and targets taken by the competitors.
- Competitors advantageous aspects. Once the competitors are categorized, the management can start to evaluate their strategies and spot the most vulnerable areas of the competitors. This can be done through an assessment of the competitors weaknesses and strengths. The best method for understanding competitors weaknesses and strengths is implementing SWOT analysis. A SWOT reference strengths, weaknesses, opportunities and threats. It is a tool used to provide a general or detailed snapshot of a company’s health. Write about competitors strengths, which areas they are weak and strong. Are there any future possibilities to beat your competitors? also write down threats of your competitors like legal issues, business policies and other personal issues.
Step Nine: Unique Selling Proposition.
So what is your unique selling proposition? What differentiates your offering to the marketplace? What combination of features who your customers find benefit them more than your competitors offerings? If you’re a distributor or manufacturer? Can you deliver complete borders faster than your competitors, allowing your customers to keep less inventory? If you’re in financial services or real estate? Do you have some special education or experience that your clients would find valuable if they knew about it?
Do you have so much confidence in your product or service that you can offer your customers a performance guarantee others can’t or won’t match? Can your customers call in and speak with the real human being on the fourth ring or better 90% of the time making working with your business an exceptionally pleasant experience. You get the idea? Right down USP for your product or services.
Step 10. Financial Plan.
Financial Planning is paramount to the success of any company whether that business is just starting up or well established. The first steps to business finance startup are to determine and estimate the amount of funds needed to open a business.
These startup expenses may include one time fees, such as permits and licenses needed to operate the business. initial costs may also include ongoing fees such as rent and utility payments. Business owners usually only include the necessary expenses when determining the total cost to start up. In order to estimate the amount of funds needed for the business owners should set a worksheet that lists each expense and how much it costs.
Make your business plan clear and concise, where appropriate. And always be thinking of a what if situation and every part of the plan. After all the reader will be if you answered the question before it can be asked. That’s the best way to convince your audience that you are serious, realistic and can adapt and overcome. Let your business plan become the blueprint that you can work to in the first 12 months of your business.