Figuring out how to write a business plan should be the first step in opening your new small business. This is the document to get all your ideas organized in one place so that you can write them down on paper. Some small business owners have been open for years and never found the time to sit down and write their business plan. If you’re part of the procrastinating crowd, don’t worry.
This article can show business owners from any industry how to write a business plan that can leverage your efforts.
Commonly Asked Questions:
- How long should my business plan be?
- Should I use a business plan template?
- Are business models industry-specific?
- How important is it to have a written business plan?
A formal business plan comes in handy if you need to pitch your business to a bank or investors. You can also refer to your business plan to answer questions on the business concept, market strategies, and specifics on the product or service you offer. Many contemporary business plans are shorter than their older predecessors. But they still include a wealth of information. A typical business plan runs from 15-20 pages with most information presented in bullet points. Using an industry-specific template will be helpful to streamline the writing process. Also, sitting down with your accountant will help procure financial information.
A business plan also helps you brainstorm the strengths and weaknesses of your business model. This delineates areas you can improve to optimize your bottom line. For a small business owner, taking the time to flesh out all the intricacies of your business concept is one of the strongest ways to boost your entrepreneurial strategy. Think of your business plan as a preventative measure against any challenges that occur down the road.
Following the title page is where you write the executive summary. This section of your business plan acts as a general outline and tells readers your goal. Instead of sifting through the entire business plan to find an answer, readers can use the summary as a quick snapshot.
The executive summary should include:
Start off by describing the industry and sector your business operates within. Discuss the current state of this industry like expenditures and a market analysis. You will also want to include any information about projected industry growth. Industry market research that shows future possibilities is also part of the marketing plan.
Next, describe the structure of the business. Are you a brick-and-mortar retail business or a SaaS developer? How is your product or service delivered? Answer these fine points of your product description. Be specific and remember to include whether your business is new or previously established. Include relevant information on warehouses, storefronts, and supply chains. Applicable legal form information will be outlined here. Also, disclose information on whether your business is sole proprietorship, corporation, or partnership.
Market Analysis & Strategies
How will your business bring in cash flow and leverage itself against the competition? How will your marketing efforts impact the potential consumer? What does your marketing strategy illustrate to an investor? To answer these questions, you must produce a thorough market analysis.
A market analysis will specify in-depth details of the consumer demand in your industry. First, add the total sales of your competitors in the industry. This number provides a relative composite of your market potential. These figures also show the current state of the market as well as growth potential. Discuss your business’s impact on the market. Next, organize your research on your key target audience here. Information on demographics, income, age, etc. all comprise your target market. Finally, detail your price points, distribution methods, and promotional strategies. Also, explain how your business will thrive in this competitive environment.
This section of your business plan will dive into the strengths and weaknesses of your own business first. For instance, say your business sells a product that can potentially revolutionize a market space. The only caveat is that your management team needs capital and resources to educate the consumer on the benefits. This listing of pros and cons of your business is the brief introduction to the competitive analysis.
After this, you will juxtapose your business’s analysis with the competition. The advantage of your product design and any protective barriers against competition entering your market space goes here. Also, any weaknesses that your direct competitors may have should be included alongside these details. Say you have a design patent or an exclusive distribution agreement. This information should be included.
Design & Development Plan
Investors will want to know how the product was originally developed and how it fits into a production line. The design and development section of the business plan explains the scalable potential of your product. This section also addresses how you plan to market that product. With this information, write a draft of the development budget. Include how this budget can reach the company’s end goal. For example, a business develops medical equipment that costs $4 a unit to make. If capital were invested into optimizing a production line, the same equipment could be made for half this price. If you can make the medical equipment for two dollars you can reach your financial goals—increasing your bottom line.
Operations & Management Plan
The operations and management plan tools describe the day-to-day management operations. The functions and tasks of your management team and the structural divisions of the company are written in this section. Capital and expenses like employee salaries and operational expenses like equipment purchasing are also stated here.
This section describes the financial portrait of the company. Cash flow statement, income statement, and balance sheet help readers of your business plan understand your costs of operation.
Deciphering how to write a business plan is one small task in the giant checklist of items on a small business owner’s agenda. Getting this done can help your business profit in ways you wouldn’t have realized if you didn’t take the time to surmise the complex details of your business. Good luck!