If you’ve reviewed what a business plan is, and why you need one to start and grow your business, then it’s time to dig into the process of actually writing a business plan.
In this step-by-step guide, I’ll take you through every stage of writing a business plan that will actually help you achieve your goals. So if you’re just looking for a downloadable template or business plan template or business plan examples to get you started, you can skip ahead and download it now.
There are tons of articles and books on how to write a good business plan for you, but still I get a lot of questions on how to write a business plan effectively? What are business plan checklist? Where to download business plan examples pdf and so much of them. This post has almost everything, If read carefully there’s no need to hire business plan consultant
What Is A Business Plan
A business plan is a 30-40 pages long description of how you want to build your company. In the business plan you want to explain what audience you want to target via which marketing channels, what makes you different from your competitors, who the management team is, how you are going to make a profit, and what the milestones are for achieving your goals. So, in a nutshell a good business plan follows the following story.
3 Rules For Writing A Business Plan
Keep it short.
Business plans should be short and concise like I said In the first paragraph a business plan is a 30-40 pages long description of how you want to build your company.
The reasoning for that is two fold:
- First, you want your business plan to be read (and no one is going to read a 100-page or even 40-page business plan).
- Second, your business plan should be a tool you use to run and grow your business, something you continue to use and refine over time. An excessively long business plan is a huge hassle to deal with and guarantees that your plan will be relegated to a desk drawer, never to be seen again.
Know your audience.
Write your plan using language that your audience will understand.
For example, if your company is developing a complex scientific process, but your prospective investors aren’t scientists (and don’t understand all the detailed scientific terminology you want to use), you need to adapt.
Instead of this:
“Our patent-pending technology is a one-connection add-on to existing bCPAP setups. When attached to a bCPAP setup, our product provides non-invasive dual pressure ventilation.”
“Our patent-pending product is a no power, easy-to-use device that replaces traditional ventilator machines used in hospitals at 1/100th the cost.”
Accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide more specific details.
Don’t be intimidated.
Yes of course, the vast majority of business owners and entrepreneurs aren’t business experts. Just like you, they’re learning as they go and don’t have degrees in business.
Writing a good business plan may seem like a difficult hurdle, but it doesn’t have to be. If you know your business and are passionate about it, writing a business plan and then leveraging your plan for growth will be not nearly as challenging as you think.
And, you don’t have to start with a full, detailed business plan that I’m going to describe here. In fact, it can be much easier to start with a simple, one-page business plan—what we call a Lean Plan—and then come back and build a detailed business plan later.
Things To Include In A Business Plan
Good business plans are living documents that you return to on a regular basis and update as you learn more about your customers, sales and marketing tactics that work (and don’t), and what you got right and wrong about your budget and forecast. Your plan must sets out the goals you’d like to achieve and you should use it to track your progress and adjust course as you go.
There is no perfect blueprint for a good business plan, but the following elements are definitely part of a good business plan. When you write your business plan you should focus on quality (facts, crisp, simple English), not quantity. As a starting point you can use this or that free business plan template.
This means you’ll have to be very specific about your business model, because investors get hundreds of business plans every month, so make sure your business plan stands out from the crowd. I recommend you ask your friends and family for input on how to improve your business plan. After each investor meeting, use their feedback for improving your pitch and business plan. A good quality business plan will increase your chances of getting funded.
The executive summary should summarize the main messages from the whole business plan, while the further elements of the business plan should provide the supporting facts for these messages. The executive summary typically is 1-2 pages long.
In this section you describe the management team and other key people attached to your business (e.g. board of directors, key employees). A potential is mostly interested in what specific industry expertise, technical skills and business network you have in order to drive the business growth. One key skill, I find most people overlook, is that management should master the skill of allocating capital in the most efficient way.
Furthermore, you should show that your team is complementary meaning that the management team should have different backgrounds; this helps in making hard decisions as the whole team sees the problem from different perspectives.
Problem, Market, And Competitors
First, you need to specify what problem you would like to solve with your business. Be as specific as possible. The more precise you describe the problem, the better your solution will be and thereby you will increase your chances of success.
Bad example: People have cancer.
Good example: People have cancer and I know why. I found the biological reason for the existence of cancer in chromosome 0815 which is driven by malnutrition in the early childhood mainly caused by visiting McDonalds too often (I totally made this up, I don’t have a biology background)
Then, you need to estimate the current and future market size for solving this problem either via market research reports or a back on the envelope calculation.
Lastly, what competitors are out there and how do they tackle this problem? A lot of people think, they don’t have competitors. Let me assure you, you have competitors. Either you have competitors that offer a similar product or at least you will competitors who try to solve the customer problem in another way.
Example: Imagine you want to sell a super new type of juice which nobody sells. Cool, you don’t have competitors! WRONG! Every company that sells any type of drinks (e.g. water, juice, tea, coffee) is competing for satisfying the thirst and taste of customers.
Show the investors in your business plan how you will position your business in comparison to the competition.
Here you describe how your product or service solves the problem. Make sure you describe why your product or service solves the problem in a more effective or efficient way, so you will have a value proposition over competitors.
Your business plan should also specify the customer benefits of your product (making something faster, cheaper, more reliable, more effective, more beautiful). This discussion will later help you to pitch your product to potential customers.
Briefly explain how you source and produce the product and how this might translate into a competitive advantage. If you have any sourcing or production related partnerships, then state them here. This might also indicate some traction.
Marketing And Sales
You have your product defined and why customers should buy your product.
Now, you need to show which advertising and sales channels you want to use for approaching potential customers. You need to show which channels have the lowest customer acquisition cost, amount of customers and product preferences of customers.
Generally, you can advertise your product via these advertising channels:
Offline marketing; using guerilla marketing techniques, advertising on public transport, radio and television advertising.
Print advertising; putting your advertising on newspapers or magazines
Search engine marketing, you bid for keywords on Google, Bing and Yahoo.
Display advertising; you buy ad impressions of larger websites, so that customers can click through to your website.
Search engine optimization; your website gets visitors from Google & co. by ranking high for specific keywords (e.g. business plan, greatest entrepreneur ever, startups)
Retargeting; you try to retarget visitors that have visited your website by showing them specific ads on selected other websites.
Paid social media; you advertise your product on Facebook, Twitter, Linkedin and co.
Furthermore, your business plan should state whether you already have some signed marketing or sales partnerships. One technique, I like a lot, is the piggy back. When you have developed a specific product and you can piggy back on a larger distributor to sell your product to thousands of people. Example: If you have developed an amazing web application for enterprise resource planning, then it might make sense to talk to companies like Cisco or HP for promoting your product by having a revenue share agreement with the distributor.
At least one member of your management team should understand the basics of accounting so you can build a decent financial plan.
The financial plan should at least include a historical and forecasted income statement so that investors get a feeling for the revenue forecast, margin forecast, and overhead forecast. If you are awesome, then build an integrated financial model that interlinks the income statement, balance sheet and cash flow statement.
Next, you should show investors why your business is a good investment. Basically, an investor will assess the risk and return of investing in your business relative to other investment opportunities he might have. I recommend, you help the investor by calculating the IRR for your business and identifying the mayor business model risks and measures how you tackle those risks.
Lastly, the investor wants to know how much funding you need and for what (e.g. marketing, HR, product development, having a party) you plan to spend it.
The last financial statement that most businesses will need to create as part of their business plan is the balance sheet. The balance sheet provides an overview of the financial health of your business. It lists the assets in your company, the liabilities, and your (the owner’s) equity. If you subtract the company’s liabilities from assets, you can determine the net worth of the company.
Instead of providing additional detail on the balance sheet here, I’ll refer you to this article on building and reading balance sheets.
Roadmap And Milestones
If you don’t know where you’re going, then your chances of getting there are quite low! Therefore, you should specify what actions you want to perform and what objectives you want to achieve over a specific period of time; this is called a milestones plan.
The milestones plan should be categorized by business segments such as product development, marketing, HR, and finance and include the funding need for each milestone.
We will look at business plans in more detail in future posts. This article should give you a good introduction what a business plan is and what things you need to consider for writing a good business plan.
That’s it, the above step will make your business plan great if carefully implemented. Think or have another point to add? Please use the comment section below.