A business plan is a detailed description of how a business formulates its objectives and the strategies to achieve them. The plan often serves as a guide for how a company will operate. This is because it covers all things marketing, sales, financing, and operational plan of action. For startups, creating a business plan can be the most essential step to take. Apart from helping business owners organize their projects, it also helps them get funding, and businesses could also consider using e-commerce development services, as it will be easier for them. If you’re running a new business and you’re still skeptical about the benefits of a business plan, keep reading. In this blog post, you’ll learn why you need a business plan and how to write a business plan’s outline.
Benefits of a Business Plan
Many business owners believe that creating a business plan is only necessary when looking for funding. However, a well-crafted business plan actually brings a variety of benefits, such as if you start a business in a consultant or agency, you would want exposure by creating a website for your company. In this section, let’s have a look at what a business plan may offer for your company.
Provides Business Directions
Typically, a business direction covers a company’s long-term and short-term goals. The former often includes bigger objectives, such as driving more quality leads and increasing revenue. Whereas the latter helps determine the measurable actions to take in order to achieve the long-term goals. Most business plans have an Objectives section. When defined, business objectives help a company stay within its strategy. In other words, they offer reminders of what you need to accomplish so that you can set your focus on working towards it.
Offers Marketing Roadmap
Part of a business plan’s purpose is to clarify your marketing roadmap. A marketing roadmap refers to a document containing specified plans and timelines for finishing a company’s projects or marketing campaigns. Having a marketing roadmap helps you get the big picture of your marketing operations and action plans. On top of that, a well-organized marketing roadmap provides a better structure for your overall strategy. It makes it easier for your marketing team to focus on what to do and when to do it.
Eases Decision-Making Processes
A good business plan can be a great tool to keep track of your company’s milestones. It helps fill up the gap between what the business owners expect and the actual results. As you’ve learned from the above point, a good business plan provides a more structured roadmap. However, interruptions happen, and they may hinder your progress. Having a business plan lets you make more informed decisions when facing such a situation. This is because you’ve had your big goals set up. Therefore, it may be easier to find the perfect solution that helps you move forward.
Bits of Help Find Talents
Attracting qualified workers is vital for a business’s success. However, the most talented staff may not be looking at your business if it doesn’t offer value to them. Your potential employees need to know your business’s visions and how you plan to achieve them. This information is vital as they want to make sure they’re the right people who can help you move closer to your goals.
9 Simple Steps to Writing a Business Plan
There are two types of business plans: traditional and lean startup. In this article, let’s focus on the former. Here are the nine easy steps to writing a traditional business plan.
1. Write the Executive Summary
An executive summary explains your business’ vital information concisely. It usually comes in a paragraph and only takes up one page or less. An excellent executive summary often includes:
- The company’s target audience.
- The problems that it wants to address.
- The products that it offers as solutions.
- The key features that make the products different from other similar ones on the market.
If you plan to ask for financial support, including your business’ financial information and growth plan may be necessary. That way, your potential investors or collaborators can see that you’re taking your business’ development seriously.
2. Include Company Description
Example of a mission statement. Source: Taylor Stitch
As the name suggests, this section informs the reader about your company. It contains details about your business name, goals, locations, and size. Apart from that, it also often covers:
- Company history. It doesn’t have to be very thorough. An infographic may be the best choice to make it less boring. For it, you may include the founding date, locations, and milestones. Additionally, adding the number of employees throughout each point of the development process helps emphasize your business’ growth.
- Mission statement. It’s a short statement about why you established your business. It often contains a company’s purposes for the public and people involved in the organization.
- Objectives. Refer to what your business wants to achieve in a certain period of time. Providing this key aspect helps make sure your employees are working towards the same goals.
- Competitive advantages. Explains why your company has the best products or services among other businesses in the same field. Including your company’s competitive advantage is vital to building credibility for your brand.
When creating a company description, let your passion and excitement show in your writing. This will help you keep your readers engaged.
3. Summary of the Market and Competitor Analysis
Market analysis helps determine a company’s ideal customers and the potential size of its market. For the analysis, business owners are suggested to create a customer persona. It’s a semi-fictional character that describes a company’s target market. Here’s what to include in a customer persona:
- Pain points.
Competitor analysis is about finding out who your competitors are and what their marketing strategies look like. To note, there are two types of competitors: direct and indirect. Direct competitors refer to those that sell similar products or services as your business and compete for the same market. For example, GTMetrix and Pingdom, as both tools offer website speed tests. Indirect competitors are the types of competitors that share the same demographic but offer different products or services. For example, WordPress and Wix. The former is the most popular content management system, whereas the latter is a website builder. Should you have a hard time identifying your competitors, running a search on your products or services is sure to provide results about similar businesses. From there, you may want to check their websites and study the About Us pages to start your research. Here’s what you have to pay your attention to:
- Product pricing. This is about how your competitors price their products or services. You can also check the benefits that come with them, including freebies, discounts, and free shipping.
- Marketing channels. See if your competitors use websites, blogs, or social media to promote their products and services.
- Maintenance fee. If your competitors use a website, estimating how much they spend on its maintenance may help you with your budgeting plan.
- Google My Business’ rating. This provides insights into how well your competitor is doing in terms of business positioning.
- Customer service. It’s among the most crucial factors in shaping a business’s image. Do your competitors offer 24/7 support? What communication channels do they use.
- Environmental certification. The Go Green movement has encouraged a number of companies to rethink their environmental impact and reduce their carbon footprint. Having hold of this value helps you stand out from the competition.
On top of everything, identifying your business’s strengths is among the most vital steps for competitive analysis. It helps determine what sets your company apart from your competitors and which aspects your business can offer better services.
4. Describe Your Product
This section is where you get into details about your products and services. Covering your products and services’ key features helps emphasize their value to your potential customers. However, don’t forget to translate those features into benefits. Apart from giving a clearer picture of your products or services, it also helps minimize misunderstanding. Including your plans for intellectual property is also one of the essential elements to take care of, especially for funding request purposes. This assures your potential investors that your products, services, and other business assets won’t get you snared in legal proceedings.
5. Showcase Sales and Marketing Strategies
In this segment, your goal is to explain how your business will attract and retain its customers. Apart from describing your ideal target market and existing customer base, here are some of the aspects that you should cover:
- Value proposition. This key aspect tells your target market that your products or services have the best quality among the competition.
- Growth strategies. They explain your approach to solving current and future challenges. In this section, you’re also allowed to share your long-term goals and how you plan to achieve them.
- Retention strategies. Refer to a company’s rules and policies to retain its employees and customers in order to reduce turnover rates.
- Advertising channels. They describe your company’s chosen medium for promoting its products and services.
6. Describe Team Structure and Organization
This is where you explain how you’ll structure your company for the day-to-day operations. You may start by introducing your business’s legal structure. It can be:
- Sole proprietorship.
- S corporation.
- Limited Liability Company (LLC.)
By making your business structure clear, you build legitimacy for your business. Next, identify your team members and their responsibilities. You can also highlight their expertise and qualifications to further convince your investors that your company has the best talents for achieving its goals and objectives. Thus, it may be helpful to include your employee’s educational background, professional experiences, awards, and honors. This section also allows you to promote your available positions and hiring costs. If you want to include your company’s organizational chart, this is the best place for it as well.
7. Include Funding Requests
Funding is one of the biggest motivations for business owners to create a business plan. A funding request often includes the what and why you need the money for. Before writing your funding request, be sure to outline how much money your business needs to help it grow. It’s also recommended to estimate your business’ funding requirements for the next five years. By doing so, you can make more accurate funding requests. Specifying if you prefer debt or equity financing is also crucial. The former means companies borrow a certain amount of money that they pay back after a certain period of time. The latter is a mutual fund that allows investors to purchase a company’s shares or stocks. In addition, your investors may also want to know where their money will go. From buying equipment and renting office space to paying employee’s salaries and covering the company’s bills, it’ll be helpful to clearly state what you’re going to use the money for.
8. Provide Financial Projections
Financial projections refer to the estimated numbers of your business’s future revenues and expenses. Providing financial projections is how you can convince your potential investors that your business will be financially successful. Having said that, you’ll need to provide some kind of proof that your business is stable. Including your business’s invoices, balance sheets, and cash flow for the last three or five years may help you get your potential investor’s attention. Additionally, you can set up a forecast for your business’s financial condition in the next few years based on your financing pattern.
9. Add Appendix
In your appendix, only include information that your potential investors may be interested in checking. This may include:
- Local permits.
- Legal documents.
- Patents and intellectual property.
- Letters of reference.
Be careful with your appendix, as it’s easy to dump your company documents in this section. One of the excellent ways to prevent that situation is to ensure that all the information provided in your appendix supports your overall business plan. Including footnotes throughout the business plan that links to the appendix is a great way to connect the two.
Whether you’re building a new business or searching for a way to expand your existing one, a business plan brings many benefits. A business plan provides more precise directions for your company as you need to formulate your goals and objectives when creating it. A business plan also helps you find qualified people to help you achieve your goals. By clearly stating your vision, you may attract prospective employees that share it. On top of everything, it lays out a marketing roadmap for your business. This tool helps you stay within your strategy and make decision-making processes easier. Here is a short recap of how to write a business plan:
- Write the executive summary.
- Include company description.
- Summarize market and competitor analysis.
- Describe your business product.
- Showcase sales and marketing strategies.
- Describe team structure and organization.
- Include funding requests.
- Provide financial projections.
- Add an appendix.
There you have it – the benefits of a business plan and a detailed guide on how to make one. We wish you the best for your business!
Very informative Blog