When you first start a business, having a plan is important. Having a written business plan can be useful for you, your employees, and your investors and can set you up for success.
By failing to prepare, you are preparing to fail. Benjamin Franklin
A business plan is a roadmap of your business’s future over the next three to five years. It spells out what you plan to do and how you plan to do it. There are a lot of tasks you have to keep up with when starting a business, and a written business plan can help you stay organized.
When you are creating a business plan, you will have to do in-depth research into your competitors, as well as reviewing your own marketing strategies and operation, financial and staffing plans. This will help you determine if your plan is realistic and if you have the tools needed to be competitive in your industry.
To be effective, your business plan can’t be something you write when you are just starting your business and never look at again; it needs to be a living document – something you come back to time and again to monitor your progress and growth. You should review your business plan monthly to compare the difference between your planned results and your actual results for sales, profits and cash flow. You should also thoroughly update your business plan annually.
A business plan analyzes three main areas of your business: the business concept, marketplace, and financials. The business concept section discusses the industry, your business structure, your products or services, and how you plan to make your business a success. The marketplace section describes and analyzes potential customers, describes your competition, and describes how you plan to beat your competition. The financial section discusses all your important financial information, including income and cash flow statements, balance sheets, and other financial ratios – like a break-even analysis.
The executive summary is the very first part of your business plan, right after the cover sheet. It should include the most important information discussed in the rest of the plan.
If you’re using a business plan to attract potential investors, the executive summary tells investors what you want from them.
In the business description section, describe and analyze your business’s industry.
What does the industry look like now?
What do you expect the industry to look like in the future?
You’ll also want to include information on various markets within your industry, including new products or developments that could help or harm your business.
Your market strategies section is the result of meticulous and painstaking market research.
Use this section to define your target market, in detail.
Who is your target market?
What do they do?
Where will you find them?
How much money do they make a year?
What makes them decide to buy?
Answer as many questions about your target market as you can because then you can begin to truly understand them and can craft a plan to attract them to your business.
Another key piece of your market strategies section is your products or services. You’ll want to discuss what you’re offering to customers and describe what sets you apart from your competitors. You will also want to discuss the pricing structure for your products or services.
Use the competitive analysis section to do just what it says – analyze your competition. Determine your competitors’ strengths and weaknesses. Discuss strategies that will provide you with a distinct advantage over your competition. Discuss any barriers you can development to keep your competition from entering your market share.
Design & Development Plan
Use this section to include a more detailed description of your products’ design.
Discuss the product’s life cycle and chart the product’s development within the context of production and marketing. Make sure to create a development budget that will enable your business to reach its goals.
Operations & Management Plan
How will the business function on a continuing basis? This section highlights the logistics, including the various responsibilities of your management team and tasks assigned to each division. You’ll also want to detail the capital and expense requirements related to business operations in this section.
The last section of your business plan may be the most important section for investors. You will want to include your financial projections, income statements, cash flow statements, balance sheets, and other ratios, such as a debt-equity ratio and a break-even analysis.
When you’ve completed your business plan, you’ll have a clear map to help you achieve success in your business.