How To Create A Successful Business Plan
You have a great vision for your business – its products or services, target market, promotion, technology, growth projections and more. Making it a reality, however, requires developing a business plan that enables you to effectively share that vision with others.
A business plan is essentially a “document describing the nature of the business, the sales and marketing strategy, and the financial” status and projections. Its purposes can vary, from helping flesh out your dream and attracting financing, to explaining your value proposition to potential partners and employees.
Depending on the purpose, you may have to develop different versions, but there is no denying you have to develop one. Your business plan is your key to building a better business. Writing a plan requires you or your management team to get to know your company, its products, the competition and the market closely.
It expresses your short and long-term goals and helps you stay on course toward them.
Elements Of A Business Plan
A good business plan guides you through each phase of growing and managing your business, according to the U.S. Small Business Administration. As a living document, you should update it on a periodic basis as you introduce your products or services, learn more about your customers, fine-tune marketing tactics, and do financial and strategic planning.
There are a variety of templates out there, but here are elements that readers expect to find in a business plan:
- Executive summary: In one or two pages, briefly introduce your firm, explain what it does and what differentiates it from competitors. This is your value proposition. The summary should also explain what you are looking for from readers, such as funding, for example. The executive summary may come first in your plan, but most people write it last to summarize the other content.
- Market analysis or opportunity (either name is commonly used): This section reflects your understanding of the industry outlook and target markets. It is where the real meat of the business plan appears. The section should explain comprehensively what sets you apart. The content should address trends, market research, target segments and your competitive advantage, including illustrating how your solution is different or better than other options for potential customers.
- Execution: This section should describe your firm’s plans to make the business work. It should cover your marketing and sales plans, production and/or operations, key milestones to achieve, and how to measure success.
- Team and company: This is where you provide details on who is on the leadership team and key personnel, with information on their roles and backgrounds. Readers want to believe your team consists of the right people to make the business successful. Depending on the audience for the plan, this section may also spell out details of ownership, including the legal structure, investors and partners.
- Service or product line: Explain what you sell or what service you provide, how will it help customers, the product life-cycle, sourcing, and how you intend to distribute your offerings. You do not have to give away trade secrets in your business plan, but you should mention any patents, copyrights or intellectual property your company owns. If you are still doing research and development, explain the status and expected timing. Lastly, talk about the life expectancy of your products or services to illustrate whether it will bring in repeat business or even recurring income.
- Financial plan: No business plan is complete without a detailed financial overview and forecast. It should outline financial plan, cash flow and, if raising money, projections of how much money you need to adequately get your business off the ground.
- Appendix: Any supporting documents or materials should be in your appendix. This makes sure they read the prose and then turn to the appendix for your financial statements, team resumes, legal documents, permits and other contracts.
Business Plan Writing Tips
Before panicking that you need to write a masterpiece, remember that a business plan is a dynamic description of your business. It is a tool to help you crystallize your vision and tell your story. Ideally, it will be updated periodically for years to come to reflect new products, new markets or other significant changes.
Filling in the blanks on a business plan template may help you get started, but your plan should reflect your company. Writing the plan involves articulating your thinking, research, and hard work into a comprehensive document. Initially, do not worry about grammar and proofreading. Worry about getting everything down on paper and have someone edit it later.
Here are some tips on writing an effective business plan:
- Keep it short. Your business plan should be concise to ensure it is read. For a startup or standard expansion plan prepared for people outside the firm, it should have 20 to 40 pages. A long plan will not be read. You want to whet their appetite; they can always ask for more information. Additionally, product images, charts and financial statements should be in the appendix.
- Know your audience and cater to it. If your product is technical or scientific, an investor will not want to read complex details about the research. A venture capitalist will be concerned about your concept, management team and market analysis. Accordingly, accommodate your audience with simple and direct language, using terms they will understand.
- It doesn’t have to be a full, detailed plan. You can start simple and build it up along the way. Some firms or entrepreneurs begin with a one-page business plan or executive summary. Having something to share that concisely explains your business, competition, and marketing plans is important. You can always build a more detailed business plan later.
- Make sure you offer a solution to an existing problem. Your business plan should detail the unique value your company brings to the market. Also, indicate key assumptions and risks you are taking. This part should change with every big change you make in your firm. For example, Amazon.com undoubtedly talked about the value of an online bookstore initially. Now, books are a small fraction of their offerings.
- Outline your financial strategies. The information about your products and personnel are interesting, but the whole reason a firm exists is to make money. Your readers – whether potential partners, suppliers or investors – want to know your business is viable. Your financial fitness and forecasts are vital parts of your business plan. In fact, some companies develop a detailed financial plan that can stand on its own.
Ultimately, your business plan is a blueprint for your business and its foreseeable future. It is a document that describes what you plan to do and how you plan to do it. It is a vital tool. HJR Global offers assistance to firms in planning and financing the business they envision and we can help businesses craft the perfect business plan.
Contact us to see how we can help you develop your business plan and see it to fruition.