Businesses require a business plan for their execution. If you are a well-developed businessman or starting a new business, it is a good idea to have a business plan. It’s not like that everyone follows or writes a business plan but if you write a business plan your success rate will be much higher. Now , before moving onto how to write a business plan , let’s first understand what is a business plan.
What is a business plan?
Business plan is basically a roadmap that helps you grow your business in the right direction. A business plan is a step-by-step guide or a document through which you tell your investors about your idea and how you are going to make it successful. A well-designed business plan is a must in order to convince your investors. It takes quite a long time to write a perfect business plan as a lot of research and detailing is involved.
Why should you write a business plan?
If you are planning to start a new start-up or launching a new product in the market or you need more funds for your existing business, then it’s a good idea to write a business plan. It will give your investor an insight into what is your purpose and how much potential your idea have.
Writing a perfect business plan requires detailed market research. An effective business plan will increase your success levels. Writing a business plan has many advantages, let’s discuss one-by-one.
- Increases your success rate- if you have a proper plan i.e. how you are going to carry out your business goals, it will definitely increase your chances of higher success rate. You will get a strong foundation for your business. This written plan will help you identify your goals and modify them as you progress.
- Decision making- a proper business plan will help you in confident decision making. You will be having necessary information, required to make decisions like when to hire, when to release a product and many other important decisions related to your business. It will also help you in outlining important business strategies in time. Also, it will reduce the potential risk factor for your business.
- Inclining investors- a business plan is a must for pitching in the investors. An investor would like to know about the complete idea of the business you are pitching for. A well written plan will tend to make things a lot easier. You need to have a solid business plan to present before your investor which not only includes the product detail but it’s market capability, financial projections and expected future in a coherent and logical manner.
- Reduces risk factor- a business plan will definitely help you in mitigating the risk factor for your business. Research proves that a business plan guarantees a more successful approach.
Points to be kept in mind before writing the business plan-
- Concisely written- a business plan must be short and simple so that an investor could understand it easily. It should be written concisely keeping all the details. An extremely long business plan will be a waste of time. As business evolves your requirements will also evolve. You need to refine your plan from time to time. So, it’s better to write precisely.
- Product evaluation- before pitching in for anything, it would be great if you test your product i.e. your business idea. Write everything for your product from the idea of conception , to visualizing how it works, branding and execution. After all these steps, get feedback for your work. Also, you can do a market research how different people reacts while using your product. This will help you in making better strategies for product launching.
- Target your investors- write your business plan according to the needs of an investor or in simple terms a plan that is easily understandable by your potential investors. Choose a simple and effective language which conveys your message easily.
- Defining the goals- a business plan should define your goals appropriately. For example- if you are launching a product , or expanding your business or starting a new venture, your business plan must define your goals. It must be able to express what you want to achieve. Although as your business evolves, your requirements will also evolve but as of now you must state clearly your goals as they will in decision making.
Structure for writing a business plan-
- Executive summary- it is the introduction of your company. It highlights the details of your business plan. You must be very precise with the business plan as it is going to catch the interest of your investor. An executive summary is ideally one to two pages long. It must briefly define your business, what you do, what you want to do further, your goals, your requirements. Executive summary is the overall outlining of your business plan.
- Venture description- In this segment you are going to describe your business. What you do( describe the soul of your business), your history(founding date, milestones you have achieved, no. of locations, patent products etc),your product line ( what you are going to launch) and your objectives. Make sure you give realistic and achievable objectives. It must give a full description about your company.
- Overview of management and operations- here you will describe your management i.e. the people working in your company, people who are working with you. Also, here you will highlight the requirements for the people you need to hire. You will also describe how the whole operations of your business are carried out with the help of your staff which includes logistics in some business.
- Market research- a potential investor will definitely like to see a business plan where he is able to figure out how he can make an attainable profit. A detailed market research will help you in finding out your target market. it will further help you in making strategies how to reach them in order to make a profitable outstretch. Also being specific will help you gather your investors’ confidence.
- Product description– in this section you will define your product line. What you have designed, how you are going to launch it. This section must give investors a clear overview of the product. You must briefly explain what are the features of the product, what are the raw materials that will be required, manufacturing process, managing the quality and supply chain management. further, you can add the future plans for your product.
- Competitive market- a competitive market analysis is a must for you before entering into the market. It gives you a clear picture of how your competitors are selling the product in the market you are looking to enter. It will help you in creating a more advanced approach on how to reach your target market.
If on the other hand , you have a brand new idea and you potentially don’t have any competitors then you must explain how your product will be a game changer. You must be able to make out for your investors what sets you apart.
- Marketing and sales- in this section you will include your marketing and sales strategy. It is the key strategy for getting all the business. These strategies play an important role in your business plan. you must start here by reiterating your target market, then how you are going to approach them. For your marketing you can use social media platforms, google adwords , newspapers, youtube etc.
- Financials- here you will state all the earlier financial data of the company which includes your income statements, balance sheets, cash flows, annual revenue of the company. Make sure your data is accurate and there are not any false statements. On the other hand, if you are starting a new venture then you will not be having any financial data. Yet , in this case you will prepare a financial plan or a budget for the product you want to launch.
- Funding- here you will layout the amount of funding you require for your business. Be logical so that you can make accurate funding requests. Your investor must know your realistic expectation so don’t make any false projection.
- Official document- here you will provide all the legal documentation that is required by your business. By providing this, you will create a confidence in your investor for your authenticity. These documents include business registration, permit, patents, memberships, identification number, contracts, deeds etc.
So this is the step-by-step format for how to write a business plan.
Now let’s discuss some points to be kept in mind while getting your business plan ready.
- Brief- keep in mind to write briefly. Try to cover more in less as no one will be interested in reading a very long report.
- Easy to read- use simple language so that it is easy to read and understand. Use language according to your audience.
- Presentation- make sure you present your plan in a proper way. A proper layout for writing and a decent printing will give you an edge.
- Proof-read- proofread your plan for any spelling and grammatical mistakes so that you don’t appear amateur.
Now, your business plan is ready to be presented before your investor.
Writing a business plan is not an easy task but if you are really serious about your business then you must spend some time writing one. It will not guarantee you a 100% success but it will not also let you fail. You will be having written data which in turn will help you in taking timely decisions. Hence reducing the potential risk to the business. An effectively written business plan will help you get investors more easily. An investor would also like to see where he can make a profit by investing in your idea. Hence a business plan serves as a perfect document for the investor. Hence one must invest some time in writing a business plan.