How to write a business plan
Written By Naomi Fisher
So you have decided to set up your own business, what now? The first to do on the list would be to create a business plan. You’ll need a road map to guide you along and allow you to get focused on what it is you are trying to achieve. In order to get started on your business plan, you should ask yourself a few questions to get yourself thinking and figuring out your goals and desires for your business.
- Why am I starting a business?
- What type of business will it be?
- Who is my target market?
- What are my products or services?
- Do I have time and finances to get started?
- What makes my business stand out from my competitors?
- What’s a good location for my business?
- Will I need staff? If so, how many?
- What types of suppliers do I need?
- How much money do I need to get started?
- Will I need to get a loan?
- How soon will it take before my products or services are available?
- How long do I have until I start making a profit?
- Who are my competitors?
- What is my price range?
- What will the legal structure of my business be?
- What taxes do I need to pay?
- What kind of insurance do I need?
- How will I manage my business?
- How and where will I advertise my business?
Once you have answered these questions, you can begin to create your business plan. Here’s a guide and how you need to structure your business plan and what you need to write under each heading.
This section is written last and should be no more than two pages. The executive summary is essentially an overview of your company, your uniqueness in the marketplace, and a brief description of the services or products to be sold. You will also include an overview of your financial projections, including your expected revenues, profits, and expenses for the next five years. If you are seeking funding, you should outline this briefly as well, describing the exact amount of money you seek and how it will be used.
Describe your company, including how long you have been in operation, where you have operated, your achievements so far, and what type of legal entity you are (sole proprietorship, Limited Liability Corporation, etc.).
Organization and management
A good business plan will not only describe the business and its services, but the people actually implementing and operating the business. Include a description of the key people involved, their roles in the company, and their background and suitability for contributing to this venture. Include their resumes in the appendix of your business plan. If your business is just you, that’s fine. Give yourself a title and write a brief bio highlighting your relevant experience that has prepared you for your current business idea.
Service or product line
Describe the service or product you are offering. What is unique about your product or service, and why do your customers need you to offer it?
Marketing and sales
This section describes the industry or market that you are entering and how you plan to bring your product or service to your customers. What size is your market, in terms of population and in terms of potential sales? You should have a solid argument about how your product or service will be a welcome addition to the market, meeting a currently unmet need. Talk about your target customers, describing their demographics and their potential to buy your product or service. Include information about your competitors, both direct and indirect. Then describe how you plan to price your product or service, reach your customers, expand your services, and promote your business.
The financial picture has a couple of different components. You should give an overview of the financial viability of your business through financial projections (projected revenue, expenses, profits), as well as funding or investment strategies. The financial information you include doesn’t have to be extensively detailed in a basic business plan, but they should include a good indication of the potential financial well-being of this venture.
While you want to remain positive about the potential success of your business, it is good planning to think about the ways in which it might be challenged or fail. Think through how you will respond to problems, such as a downturn in number of customers or the loss of a key supplier. If you have specific parts of your business plan that might not work out, what are they and how will you respond to and accommodate these shortcomings?
Create an action plan by answering: What are the specific action items and tasks you need to complete now? What are your future milestones? What will need to be accomplished by those milestones in order to meet your objectives?
Depending on your business and the level of detail in your business plan, you may want to include additional materials to support your plan. Some possible materials to include might be: tax returns, balance sheets, cash flow statements, contracts, letters of intent, resumes or curriculum vitae of key management, and so on.
A business plan can be a quite a long daunting process, but it doesn’t have to be, if you start of asking yourself the questions at the top of the page it will allow you to start getting a clearer idea of what it is exactly that you are trying to achieve. Once you are aware of this it will make it a bit easier to start filling out the sections of the business plan, it is important to do as much research as you can, and if after this you are still struggling you can hire somebody to assist you with this.
Extremidy is a business management company. Our aim is for small businesses to, connect, grow and succeed, by providing them with support, networking and assistance.