What is a business plan?
Why should I put my business plan in writing?
What needs to go into my business plan?
Let’s say you and a friend need to travel across the country to attend a wedding. You have a great idea: Drive there, save money, and have fun.
Your friend isn’t so sure. She reminds you that you’re both in the wedding itself so can’t be late for it. And she mentions that neither of you know which roads to take to get there.
You believe your plan is the best way to go. Now it’s just a matter of winning your friend over.
What’s the best way to convince her?
Having a detailed plan isn’t just for driving from point A to Point B. It’s also an essential part of starting or growing a business and guiding it toward success.
A business plan maps out how your business will run for a particular period of time (usually around a year or a few years), and how these operations will help you achieve your business goals.
Putting your business plan in writing helps establish:
AN OVERARCHING VISION
It will give you and your team a greater sense of your business goals and why it’s a good idea.
It will help you figure out what steps need to be taken for your business to succeed.
It helps investors, partners, and other stakeholders see how your business will successfully operate.
To create a business plan, start by writing a high-level overview of your business, and then start creating a list of company details.
For your high-level overview, write down your business’ name, what product or service you sell or will sell, who your target audience is, and what your goals are (AKA what success would look like for your business).
For example: An Italian restaurant in India is named Mumbai Mozzarella. They sell upscale Italian food, their target audience is urban foodies in their 30’s and 40’s, and their goal is to be the most popular Italian restaurant in the city.
The rundown of your company should list all of your team members and/or employees (CEO, Marketer, Designer, Chef, etc.), where your company is located, what industry you serve, and how your product or service works.
Add short bios for the most important people in your company (board of directors, management teams, heads of departments, etc.). You can also list out what roles still need to be filled.
If you’re a new business, your overview should also outline the skills and background of you and your key team members.
Then describe how this expertise and experience will benefit your business.
After you’ve listed the general details of your business, write down an analysis of your industry and your main competitors.
Quickly summarize your industry: Is it growing or shrinking? Why do you believe there is opportunity in this industry? Are there any trends affecting the industry, like evolving audience tastes or changing technology?
Now consider your competitors. Who are the major players you will be competing against? What share of the market does each hold? What share of the market are you looking to gain?
Describe your target audience. For example: Mumbai Mozzarella’s target audience is urban foodies and Italian food lovers who live within 10 miles of the restaurant.
List your target audience’s demographic, psychographic (values, personality, opinions, attitudes, hobbies, etc.), and geographic info. Also write down how big this target market is and why it’s ripe for potential sales.
Explain how you’ll meet your audience’s needs. What are your key differentiators? What problem can you solve that your competitors don’t? What technique will you use to do this (innovative thinking, quality, data, etc.)?
It’s also a good idea to write down the barriers to entering your industry, like needing licenses, regulations, lack of qualified potential staff, finding a physical location, overwhelming mozzarella phobia, and so forth.
Now, write an organizational overview of your business. This is where you show who does what and show manages whom.
Include an organizational chart that shows who covers which duties, even if you haven’t hired a person to fill the role yet. Basically, you’re making sure that every task and responsibility is accounted for, and that there isn’t any overlap.
Finally, show how the ownership of your business is structured. What is the legal structure of your company? Who owns what percentage of your business?
Your business plan should give as much attention to the details of your product and/ or service as it does to the company details.
Write down the important details that you want people to understand about your product or service. What stage is it at? Does it use special technology? Is the design worth mentioning?
Make note of any research and development you’ve done (or plan to do) that will bring your product or service to life. Don’t forget to also mention any patents that you hold or that you’re still waiting for.
Next, lay out your marketing and sales strategies. How are you going to promote and advertise your business, and how will you be making sales?
For your marketing strategy, describe your brand’s identity and how it will help you reach your target audience. For example, what tone of voice will your marketing have? What colors, imagery, and visuals will be used in your assets?
Explain how your marketing will introduce your product or service to your product or service to your audience, and which marketing channels you’ll use (social media, search and display ads, email marketing, and so on). What’s ‘your strategy for each of these channels?
For your sales strategy, describe how you’ll make your sales. Will you rely on partnerships, distributors, an online store, physical storefronts, and/or salespeople?
Detail the sales steps you’ve already taken and what still needs to happen. For example, have you already started to get sales leads and will soon be creating a way for people to pre-order your products?
Further, show how your sales strategy will work in tandem with your marketing strategy.
Now you’re ready to figure out the money part of your plan – AKA lay out what funding you need.
State what funding you need now, how long that funding can maintain your business and what funding you’ll need in the future.
Give a breakdown of what the funding will go toward, like start up costs (renting a storefront, etc), operational cost, research and design, salaries, hiring, growth, and so forth.
Lastly, include your real and projected financial information. This isn’t just for potential investors, but also for you to get a good grasp of your finances.
Include your projected monthly and yearly sales numbers. If you have multiple products or services, break the numbers down by revenue source.
Write your projected income statements, balance sheets, and capital expenditure budgets. Also supply your monthly or quarterly projections for the first year. If you’re an established business, show the past 5 years of these statements.
List what milestones your business must hit to be financially stable. Do you need a certain amount of sales, for example? Identify when you might take a loss, and when you expect to break even or gain a profit.
Also, everyone loves a good graph, so try and use simple, easy-to-understand pie charts, bar graphs, and other imagery to present your financial information.
You’ve probably realized that creating a business plan takes a lot of research.