A business plan is a written statement that describes a business in detail and outlines projections about its future. A business plan also covers the financial aspects of starting or expanding a business. Most importantly, the financial plan section must include details on how much money a business need and repayment plan of the loan.
To create a great business plan, you must answer the below questions. Bear in mind that the questions below apply to most small businesses.
- What problem do my business will solve for customers?
- Who is the targeted customer?
- How will you communicate with the targeted customer?
- What the values, products or services, that the business will provide to the costumers? More specifically, are there any products or services your customers may expect the business to provide that are not in your initial business plan?
- Where will the business be located?
- Where will you supply the business?
- What hours will the business operate?
- Who will work for you and how will they be paid?
- Who will handle critical tasks, such as selling, ordering, bookkeeping, marketing, and shipping?
- How will you advertise and promote the business?
- What are the competitors’ strengths and weaknesses?
- How your product will be different from the competitors?
What Are The Benefits of Creating A Business Plan?
The following are few example of the specific and immediate benefits that will derive from writing a business plan:
- Helps You Raise Money For the Business
The majority of entrepreneurs apply for a business loan to start their business. Most lenders or investors require a written business plan before they can consider
your loan application. To approve a loan, some creditors require a sound business plan before proceeding. Before making a commitment to you, some creditors want to see that you have thought through critical issues facing you as a business owner and that you understand your business. They also want to make sure your business has a good chance of succeeding.
- Helps You Decide Whether To Go Ahead Or Not
As an owner, you are the most important person you must convince of the soundness of your business proposal. Therefore, not only the business plan is designed to provide answers to all the questions that prospective lenders and investors will ask. But it also teach you how money flows through your business, what the strengths and weaknesses in your business concept are, and what is realistic chances of the business’s success.
- Helps You Improve Your Business Idea
By writing a business plan, it will allows you to identify weaknesses to amend parts of the plan, which will result to increase profits or accomplish other goals.
- Helps You Keep Track Of The Business
The majority of business owners spend time on handling emergencies, as they lack a knowledge on how to plan ahead. A written business plan gives you a clear course toward the future and makes your future decision easier. Some problems and opportunities may represent a change of direction worth following, while others may be distractions that referring to your business plan will enable you to avoid.
What To Include In A Business Plan
- An executive summary
- Business description
- Market research and potential growth
- Competitive analysis
- Description of product or service
- Marketing and sales strategy
- Business financials
- Description of organization and management
- Appendix or attachment
Create an executive summary
The business plan executive summary should emphasize the important points of your business plan. It must include a statement of the total amount of money you need. The owner of the business must explain to creditor who he or she is, what he want to do, how much money needed, and how much money the business expect to generate.
Also, the executive summary should include a mission statement, a brief description of the products or services, and a broad summary of your financial future growth plans. The executive summary is consider to be the first statement your creditors will read. However, the owner of the business can write it last, by highlighting information you’ve identified while writing other sections that go into more detail.
Business description
The business owner should describe how the business will solve customers’ problem. The business description should explain exactly what the business will provide for the customer as well as what exclude.
Market research and potential
In the market research the business owner should assist the business planning. It must include collection information that provides an insight into customers thinking, buying patterns, and location. In addition, market research should also assist and monitor market trends and keep track of what the competitors are doing.
Competitive analysis
business plan should include competitive analysis for each competitor. Competitive analysis should perform a SWOT Analysis and include the following information:
- Competitor’s name
- Overview of competitor, where are they located; how long have they been operating
- Competitor’s product or service
- Competitor’s pricing.
- Estimated market share
- Location
- Potential customers, concerning both geographies and segments
Description of product or service
In the description section, the owner should explain in detail the products or services he or she expected to offer. Most importantly, the description should include the following:
- An explanation of how the product or service works.
- The pricing model for the product or service.
- The typical customers to be served.
- The supply chain strategy.
- Sales strategy.
- Distribution strategy.
The description section can also discuss current or pending trademarks and patents associated with the product or service.
Marketing and sales strategy
The sales and marketing strategy is a plan for reaching, engaging, and converting target prospects into profitable customers. It’s the charter that guides marketing and sales in daily activities, helping clarify shared objectives and how to achieve a successful marketing and sale.
Organization and management
The organization and management section of the business plan should summarize information about business’ structure and team. It usually comes after the market analysis section in a business plan.
Business financials
Business plan financials is the section of the business plan that outlines the entity’s past, current and projected financial situation. The financial section includes all the data needed to plan for your business’s future, and to make case to potential creditors.
The financial statements of the business plan must include the following
- Profit and loss statement, also known as the income statement
- Balance sheet, and most importantly
- Cash flow statement
Appendix
The following are several things that you should commonly attach into the appendix:
- Copies of proposed lease agreements
- Copies of bids for any needed construction work
- Plans for construction work
- Drawings of business signs or logos
- A list of what will be purchased for the opening inventory
- Key employees’ resumes, if available, and finally
- Copies of any newspaper stories or other publicity you have received which relates to the business. This is particularly important for people who are entering service businesses, where they are their own main product.
Finally, organize the material in a logical order and include a table of contents for the appendix.
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