Creating a business plan is crucial as it serves as a guide for your business at every stage and helps convince others of its viability, especially if you’re seeking capital investment. A well-crafted plan acts as a roadmap, outlining how to navigate from your current position to your desired goals.
Why do you need a plan?
When starting a business, you may have a clear vision of your destination but not always the exact path to get there. A concise business plan provides focus and direction, explaining the business’s objectives, offerings, market strategy, operational approach, and promotional activities. It serves multiple purposes, such as securing financial investment, setting goals, monitoring performance, and reinforcing your belief in the business during challenging times. The more thorough your plan, the higher the chances of business success.
How to write a business plan
When writing your business plan, ensure clarity and explain any technical terms that may arise. Back up your propositions with key market statistics and accurate sales and profit projections. Follow these essential steps:
1. Executive summary
A snapshot of your business
The executive summary provides a snapshot of your business and is often the first and only part busy investors look at. It should be compelling and informative, summarizing the basics of your business, what it sells, and to whom. Consider starting with an “elevator pitch” that concisely sells your business idea, crystallizing its purpose and objectives.
2. The business
Ownership
Provide details about the founders and managers, their roles, experience, and qualifications, both received and planned.
Trading
State briefly where your business will operate and where it will source goods and materials required to operate.
Products & services
Describe in more detail than the executive summary what your business will provide to its customers. Include images of products or the proposed service in action. Highlight what makes your products and services unique.
SWOT analysis
Review your business’s strengths, weaknesses, opportunities, and threats. Explain how you propose to respond to them.
3. Market and competition
Customers
Identify your target market segment and describe your customer profile. Explain why they are likely to buy your product or service. If applicable, identify any niche segments based on your market segmentation research.
Competition
Compare your business to existing competitors. List your direct and indirect competitors, their products, services, prices, and gaps in their offerings. Clearly state your unique selling propositions (USPs) in comparison.
Trends
Include research on the market’s static, growing, or declining nature. Highlight any interesting trends you have spotted that may present opportunities for your business.
4. Marketing & sales strategy
Promotion
Define the methods you intend to use to promote your product or service, such as press and publicity, advertising, or direct and digital marketing.
Social media
Describe the social media channels you will use to build your business’s profile. Explain the type of posts you will share to attract a community.
Pricing strategy
Indicate the cost of making and delivering each unit or establish what customers might be willing to pay for your service. Discuss the price point, compare it to competitors, and state your anticipated profit margin.
Sales methods
Outline how you intend to find, reach, and retain customers. Describe the customer experience and strategies to encourage repeat purchases.
5. Business operations
Premises & structure
Describe the base from which your business will operate and any equipment you will use. Explain why this location is well positioned to serve your target market.
6. Financial forecasts
Sales vs costs
Show a projection of your sales and costs on a month-by-month basis over at least one year, ideally three, accounting for seasonal fluctuations.
Profit forecasts
Provide a forecasted gross profit figure (predicted revenue minus cost of goods/sales) and a projected net profit figure (what remains after deducting all expenses from gross profit).
Cashflow forecast
Define the payment terms of your customers and suppliers and forecast the cash flow over a 12-24 month period.
Writing a comprehensive business plan is crucial for effectively navigating the challenges of entrepreneurship. It provides a roadmap, showcases your business’s potential, and enables informed decision-making. Remember to conduct thorough research and ensure your plan is well-written and compelling.
