Starting a business can be an exciting and lucrative endeavor, but not without a little planning ahead of time. Enter: a business plan. Putting pen to paper and coming up with a detailed plan that covers a few key things like how you will finance your business, your marketing strategy, your budget, and your upfront costs, to name a few, will help. , you and potential investors, to get a better understanding of what profitability might look like and how to achieve it.
Types of business plans
Your business plan will be different depending on the type of business you plan to start and what may be the best practices for your industry. There’s no right or wrong way to approach it, but your plan will likely fall into one of two categories: lean or traditional.
Lean business plans tend to be shorter and only touch on key points like your value proposition, key resources and partnerships, cost structure, and revenue streams. This type of plan may be useful to you in the short term, but you can expect to need to review and revise it frequently, and your investors may request a more detailed plan.
A traditional business plan, which is more commonly used, covers a wider range of information and includes more specific details like your mission statement, detailed financial figures, market analysis, financial projections and more.
Here are some key elements of each plan, according to the Small Business Administration.
|Company Description||Key activities|
|Market analysis||Key Resources|
|Organization and management||Value proposition|
|Service or product line||Client relationship|
|Marketing and Sales||Customer segments|
|Request for financing||Canals|
|Financial projections||The cost structure|
Benefits of Writing a Business Plan
A business plan can help you better understand what your long-term roadmap should look like to run a profitable business and secure financing. Potential investors and partners use information from your plan, such as your financial projections and long-term goals, to better understand whether your business would be a worthwhile investment for them or whether they would like to get involved.
However, a business plan is not only for external parties, it is also a useful tool that you can use and refer to regularly as you start your business. Referring to your plan can help you determine whether you are meeting the goals you have set for your business and where you may need to modify your strategy in order to meet those goals and be more efficient.
1. Write an executive summary
One of the key elements of a business plan is an executive summary. A summary serves as an introduction to your plan. It should include essential information about your business in less than two pages. It’s a way for investors to get a more general overview of your business plan, without going into specifics, in the same way that your cover letter highlights the key points in your CV that you would like to see. a hiring manager knows.
When writing your summary, you should be sure to include your key business objectives, target market, products or services you offer, your marketing and sales strategies, information about your competitors, how your business is funded and how it will evolve. over time, the structure and organization of your business, and the number of employees you have and will need in the future.
This summary may need to be modified depending on your business, but you should aim to keep it brief, while including the most important details that you would want potential investors or partners to know if they only read your summary instead of your business plan.
2. Create a business description
Next, you will need a business description. It can also be brief and should tell anyone reading your business plan what your business does and how it stood out from others in the same space. Think of it as the elevating pitch of your business. Here are some common elements that business owners tend to include in their descriptions: business name, location, mission statement, products or services, goals, and vision.
3. Give a summary of the market research
Market research has probably been on your mind since your business idea came to mind, but it should also be included in your business plan. Market research tells potential investors and partners who your main competitors are and what they can and cannot do well, whether or not there is a real need for your goods or services, who your potential customers might be and how to establish a fair price for these goods and services. . You can conduct market research through surveys, questionnaires, and in-depth interviews.
4. Describe your product and/or service
Identifying your product or service is another important part of your business plan. In this section you will want to highlight what you are selling or providing to customers and why it is valuable and different from competitors who may be providing a similar product or service. You should also use this space to find out the price at which you are selling these products, how these products are currently produced and sold, any intellectual property you own, such as trademarks or patents, and any obstacles you face in regarding these products.
5. Summarize a marketing strategy
Your marketing strategy should also be included in your business plan. This section will highlight how your business will reach potential customers and turn them into loyal, repeat customers. When discussing this in your business plan, you may want to include your company’s value proposition, what your message and branding might look like, and the mediums you plan to use to communicate this information. to your target audience. This can include regular PR or social media campaigns, live events, or securing regular media appearances.
6. Explain the funding request
Your business plan should also include a section on financing, especially if you are presenting this business plan to a potential investor. This section should include information about your business’ current financial situation, the amount of capital you expect to need to scale your business over a period of time, what you will use those funds for, what repayment might look like, and any requests. specific that you have investors regarding this funding.
Investors like to know where your business is coming from and what the return on their investment could be. So it’s important to be as complete and accurate as possible when reporting these numbers, while emphasizing how this investment will benefit them as well.
The bottom line
Business plans play a vital role in growing and scaling any business. With key information about your target market, competitors, growth strategy, current and future finances, etc., a good business plan can serve as a benchmark to keep you on track and raise capital from companies. investors and/or potential partners.