What is a Business Plan?
Widely recognized and highly regarded, a business plan is a written document that is clear, concise, and credible. It outlines what your company does, identifies its unique values and business goals, and describes how you will mitigate risks and deliver forecasted returns. Although it bears all relevant details to the reader, an effective business plan is simple and straightforward. Apart from securing funds to start or grow your company, a good business plan is your key to staying on track. It provides you with a concrete vision to help you work in alignment with overall goals. In short, a business plan is also an essential reference for you- the business owner.
How to Write a Successful Business Plan
Here is a list of 12 essential business planning basics to help you create a successful business plan.
- Keep it detailed yet simple. Writing a business plan is easier than you may think. The best ones are not voluminous pages bound thickly in a book but rather a concise document that clearly states everything one needs to know about your business. So, set a professional, persuasive tone that proves you have the resources, skills, and drive that will make your company succeed. Write these points out simply and succinctly. Avoid jargon and excessive wording, because when it comes to what the reader is reviewing, less is more.
- Address the questions you anticipate being asked. What may seem basic to you may require clarification by the reader. Describe your target customer, the exact nature of your business, the products or services you sell, and your growth plans. Investors want to be given clear answers, not be left with more questions. Again, instead of a novel, stick to a nutshell.
- Sell Your Unique Selling Point. What is it about your product or service that will entice customers? What value can you add to their lives that will attract them to you? Your marketing begins right here, so state your unique selling point (USP) early on in your business plan.
- Include Your Market Research Proper business planning includes thorough market analysis. This provides vital insights on your target clientele, competitors, and customer demographics, to name a few. Market research shows investors and lenders how well-versed your business is and how well your goods or services match your consumer needs.
- Show a Competitive Analysis Research on your competition is also something potential backers want to see. So, identify your competitors’ strengths and weaknesses and indicate how you will exceed them or use them to the company’s advantage for financial growth and market share.
- Lay Out Your Company Structure A neat chart showing the organizational flow of key personnel is an excellent informative visual. Here you can clearly show the roles of managers, perhaps in a hierarchal manner, and the number of people you anticipate to recruit in your organization.
- State Your HR Needs Strategic business planning involves putting Human Resources protocols and procedures in place. You likely may not have hired HR managers, so describing how you plan to recruit and hire employees is a start. It would help if you also address your plans for employee retention since high turnover is undesirable and costly to any business. Showing financiers how you plan to maintain employee satisfaction is vital to winning their trust.
- Outline Your Legal Structure Another critical element to a business plan is to address legal issues, from taxes to liability concerns. Clearly show what your legal structure will look like. Provide details on limited or incorporated companies, partnerships, and proprietorships, and have a trusted lawyer review all contracts and legal documents. If you plan to purchase an existing business, make sure to get it produced and reviewed by proper buy-and-sell agreements for Canadian or international businesses.
- Assess Capital Goods and Premises Capital goods are not for the consumer end but rather what your company requires to produce your products or deliver services. Investors and lenders want to see what your capital goods needs are, including vehicles, machinery, or IT equipment. It would be best if you also define where you will conduct your business- a factory, a warehouse, or an office space.
- Outline Key Financial Metrics Penultimately, but by far least, do include key financial data.Expect to slightly adjust what information you provide depending on who is reading your business plan.
- Write Your Executive Summary Once you have done all of the above, it is time to summarize it all in your executive summary. Doing this part last might seem counter-intuitive since it appears first in a business plan. But it is best to write it last because you will have a true idea of all the plan’s components and be able to summarize it completely. Keep the length of the summary to one page, to at the most, and focus on highlights only. Be specific and as granular as you can by including the following elements:
- Nature of your business- a new business venture, an expansion, or a purchase of an existing business
- Your business and industry type
- Your target market and consumer
- Your Unique Selling Point (USP)
- Your main business goals and company objectives
- Management career bios
- Realistic projections of timeframes and resources
Things to remember when writing your executive summary:
- Be transparent; even if there are some financial concerns, it is best to be open and honest.
- Be confident but not overly boastful or unrealistic.
- When showing weaknesses in competitive analysis, do not put other individuals or organizations, but rather show how you will improve on their downfalls.
How to make a business plan ready for prospective financiers:
- Be prepared to show your credit history, and know what credit agencies have you on file. Your or your company’s credit score is a key indicator of how likely the bank or lender is to be repaid.
- Calculate your assets minus liabilities to show both your personal and business net worth.
- Show investments to the business, including collateral, assets, or backing by yourself or others. Money begets money, so showing this data will make other investors or lenders more likely to offer your business their funding.
- Forecast how much cash you will require to run your business, including payroll, technology, equipment, and inventory.
- Provide your market analysis and financial projections for a minimum of two years.
- Be transparent about how you intend on executing your business plan to make it work. This includes timelines, personnel or equipment required, and realistic budgets and goals.
Organizing Your Business Plan
There is by no means a one-size-fits-all method on how to make a business plan. However, a good arrangement for your business plan should look something like this:
- Table of Contents
- Executive Summary
- Company Overview
- Market Analysis
- Sales & Marketing Plan
- Management Structure
- Operational Plan
- Legal Structure
- Financials (targeted at key audiences.)
Simply follow these 12 tips and include all the elements described above to make your winning business plan.