How to write a business plan is always a tough question to answer. In this blog we will discuss each and every step in detail. The business plan is the timeline of any business, and a good plan decides the success or failure of the company. Planning is most important before taking steps towards the foundation of a business.
Preparation of any event before doing anything make your goal more manageable and smoother. Business planning is not an easy task; maybe it takes you 100s hours to draw the timeline of your business. It also required research of many aspects, types, targeted markets, substitutes, customers etc.
Before planning any business, please don’t do these actions; otherwise, it will spoil your business plan. These business planning errors will cause the failure of a good business plan and will hurt your future funds.
- Rough Copy: Submission of rough copy tells the readers that there is no management concept in this business.
- Outdated Financial Facts: If you quoted outdated historical information about the business. And making unworkable industrial comparisons will create doubts towards business planning.
- Too Many Assumptions: Avoid too many assumptions while you do planning business; this will damage your credibility.
- Too much Blue-Sky: This looks unrealistic to the readers if in your business planning too much fantasy. The business plan will lead readers to believe there is no real idea behind this plan.
- Lack of Financial Understanding: Financial clarity is the most approachable point for readers. There must be this precise regarding financial projections.
- Lack of Strategies: A general strategy of business must be clear in planning and include a general statement of process in the plan. Like, “we will provide you world-class financial services.” without essential details will be dismissed as fluff.
- Equity Capital: Equity capital must keep in your planning. The investor expects returns from investment and equity capital. If not in planning the downfall start of any business.
- Personal Guarantee any Loan: Sometimes, owners need to give personal guarantees for any loan for business. If the owner is not willing to provide security, then how is it possible that any bank will offer a loan to the company?
- Unrealistic Loan Structure: Always do your homework and plan a fundamental financial structure for the business.
- Focus on Securities: Always look at and emphasize the source of repayment and prepare your cash flow securely. If your focus is not on financial securities, bankers will not allow you any short or long-term loan.
Business Plan Outline:
When you start a business plan with a proper outline, it helps you to cover all the necessary information to complete your business plan. A traditional business plan typically includes
Part – 1 The Business Data
A. Description of Business:
A business description is the overview of your company more broadly. When start writing your business plan description must consider these questions.
- What type of business is this?
- What is the status of the business? Startup? Expansion? Take-over?
- What is the nature of your business? Sole? Partnership? Limited Company? Corporation?
- What are you selling?
- What will be your customers?
- Why will you be successful in this business?
- What is your experience with this type of business?
After considering all these questions, you can write a perfect business description of your business plan.
B. Products and Services:
The business plan’s most crucial head is where you need to provide a detailed overview of products & services offered. You must also describe the product benefits and why customers want to buy. For most businesses, the products/services are not unique.
If you are, take advantage of this and plan for the competitive battles.
If your products/services are not unique, you must find a way to position them in your customer’s minds. And to differentiate them from the competition. Positioning is the process of establishing your image with prospects or customers.
(Examples include: highest quality, lowest price, more comprehensive selection, Best customer service, faster delivery, etc.)
While start writing products & services detail considered these questions in mind
- What products/services will you be selling?
- What are the features and benefits of your product & service?
- What Position do you have in the market?
- How do your products/services differ from the competition?
- What makes your products unique and desirable?
- Why will customers buy from you?
C. Market Analysis:
Market analysis is crucial for startups and businesses for marketing plans and forecasting. Startups have a more significant challenge; they follow market trends and research using government statistics, surveys, predictions of trade associations, libraries, etc. While existing businesses rely on past performances and future indicators. In all cases, ensure your market analysis must be relevant to establishing the viability of the company and the reasonableness of the sales forecast.
While writing a marketing analysis in a business plan, consider these questions.
- Who are the buyers of your products? (Geographic, Demographic and Psychographic)
- What is the size of the market?
- What will be your market share?
- What is the industry outlook?
- Who are your competitors?
D. Marketing and Sales Planning
In this section of the business plan, discuss your business’s detailed marketing and sales plan. The essential elements of a Marketing Plan are what you are selling and who your customers are. How will you motivate them to buy your product.? Before writing a marketing and sales plan into your business plan, you must note these questions.
- How will products be packaged?
- How broad will your product line be?
- What new products will you introduce?
- What Position do you want to hold?
- What will be your pricing strategies?
- How will you compare prices with competitors?
- Why will customers pay your fee?
- What will be your credit policies?
- Which are your Target Markets?
- How will you reach your Target Markets? (What Media will you use?)
- How will you motivate them to buy?
- What are the budget and suitable times for implementing the marketing plan?
E. Location of Business
The location of a business is always vital to the success of the companies, especially for retail businesses. However, areas with colossal customer traffic are costly to buy or rent. But these locations required less marketing budget for advertising to attract customers.
- What is the business address?
- Is the Island owned by a business or on a lease? If on the lease, what are the terms?
- Is renovation or modification required? Mention cost.
- Describe the location and the surrounding area.
- Why is this a good location for your business?
Competition in business is always healthy, and competitors allow you to grow up in the market. You must mention your competitors in your business plan; this will help you focus on the market. Usually, when newly business startup is at a time of loan taking, banks ask about competitors. If you have no competitors, it may have no products or market.
- Who will be your most significant competitors? Name them
- How will your products and services be better than your competitors?
- How are competitors doing?
- What are their sales and profits?
- What is their market share?
- How will the competition respond to your market entry?
G. Organizational Management
Research proves that all successful businesses have an effective management system. And ineffective organizational management cause business failures. So it is essential to discuss and describe management qualifications and structure.
While writing organizational management in the business plan, keep in mind these fundamental questions.
- What is the experience of your management team?
- What are the functional areas of the company?
- Who will be responsible for each function?
- Who reports to whom?
- What will salaries be?
Part – 2 Financial Data
A. Income Statements
While writing a business plan, financial projections are essential and describe the business’s economic structure. So must report projected incomes from all sources in the business plan: projected sales revenue, estimated gross income and net income.
B. Cash-Flow Statements
Positive cash flows always indicate business growth and are a vital financial document of the business plan. Projected cash flows from all three activities (Operating Activities, Investing Activities and Financing Activities) are mentioned in the program. Write your projections and explain how you will achieve your estimated cash flows.
C. Balance Sheets
The balance sheet of a business indicates the worth of the company and gives clarity to the investors to check the Asset to debt ratio. Must write all assets (Inventories, Fix Assets, Floating Assets, investments, etc.) and all liabilities (Debts, Payables, etc.).
D. Break-Even Analysis
After all, financial analysis fixes the point where cost and revenue are equal. The point at which total income equals the total cost is known as the break-even point in business, meaning there is no loss or gain for your small business. In other words, you’ve reached the production level at which product revenue equals production costs.
E. Sources and Usage of Funds
When you start writing a business plan, highlight all the sources from those funds that will inflow to the business, such as; equity capital, commercial loans, investments, projected sales etc. That will encourage the investors to trust your company. There should also be clarity in the usage of funds. There should not be any contradiction in these.
Personal Equity + External Equity + Loans + Debtors + Others
Usage of Funds:
Purchase of Building + Purchase of Equipments + Renovations + Inventories + Working Capital + Cash Reserves + Others
Part – 3 Supported Documents
Part – 3 of the business plan contains some supportive documents to bring more detail to the project.
A. Personal Financial Statements
If you are a startup business, attach a personal financial statement to strengthen your business plan—this document such as; Bank Statement or any property. But if you are expanding your business, you can attach business financial statements like income statements, cash flow statements or balance sheets.
If you get any contract, discuss it in the business plan and attach a copy.
C. Purchase Orders
Purchased orders are the inventories order you buy to start production. But when you are a starter, you can attach any evidence you purchased for your business, such as; land, furniture, equipment etc.
What is a simple business plan?
A business plan document is a company’s timeline where tasks are mentioned with solutions to achieve declared goals.
How do I write a business plan as a student?
You can follow these steps to write a business plan
- Conduct detailed research.
- Write your company overview.
- Analysis of your product and service.
- Write up your market and competitor analysis.
- Define your marketing strategy.
- Set up your management.
- Discuss your business operations.
- Forecast your financial statements.
- Write a SWOT analysis
- Write your executive summary
What are the four parts of a business plan?
These are the basic four steps of a business plan
- Executive Summary.
- Detailed marketing plan.
- Management structure.
- Financial structure.
What is the most crucial part of a business plan?
The Executive Summary is an essential part of the business plan. It should be well-managed, concise, and well-written; in most cases, viewers decide at the executive summary stage whether they should continue to read or leave it.
This article provides a complete and detailed overview of how to write a business plan. To my knowledge, you can write a well-detailed and organized business plan after following all these steps. A well-written and organized business plan help you move towards your business glory.