There is no question that business plans are critical even if your business is unlikely to seek outside funding. A plan spells out what your business is all about, clarifies goals, discusses where to deploy resources, details marketing strategies, and in many cases, is a big part of why investors decide to invest (or not invest) in your business. It is important to keep your business plan current; in other words, once you have written the first draft, you are not technically done. You should revisit it every six months to a year. That said, if you are unsure how to write a business plan, here are three areas to focus on.
Are you writing the business plan mainly for yourself to ensure you have a firm grasp on the business, its needs and its goals? Or will the plan primarily be tailored toward investors, and what type of investors? Audience makes a huge difference; in fact, some folks write different business plans for each audience. If your business is relatively simple, the plan could be only five to 10 pages. After that, it becomes an operating business plan that likely grows in size. Businesses that seek equity funding options such as angel investing should have plans of about 20 to 25 pages that convey excitement, passion and intelligence—no hype necessary. On the other hand, when you seek funding such as bank loans, your plan should focus more on the financial history of the business, its assets and other means available to ensure the bank gets its money back.
2. Required Sections
It’s likely that you are writing your business plan to procure some type of funding. Even if you are not, the sections below are useful. If nothing else, they ensure that you are using your own money wisely.
- Business summary: Give investors a summary that can serve as a reference point/memory point. Briefly explain the purpose for your business and provide a company description.
- Executive summary: Folks often prefer to write this section last. It is a summary of the entire business plan; use already written sections to guide it.
- Management and staffing: Write about each manager and staff member you’ve hired or will hire. Include names and job descriptions if possible. Also include the resumes of each manager. To personalize this section, display pictures of the people involved.
- Products and services: In this section, discuss matters such as whether what you offer or will offer is already on the market and how you are unique or will be unique. Include timelines, points of difference from competitors, and pricing. Discuss how you will acquire your products, for example, from wholesalers or by manufacturing them yourself.
- Market analysis: This section details your market, how saturated it is, your ideal customers, your competitors, their advantages and disadvantages, and so on. It requires that you do market research before writing the business plan.
- Strategies for marketing and sales: Detail ideas such as a mobile website, an app, social media outreach, free promotions or newspaper advertising. Explain the costs and time investment of each strategy.
- Financials: When writing a business plan for investors, go into deep detail with this section. Outline startup costs, expenses, revenues and anything else applicable.
3. Maintaining Focus
When you write a business plan for investors, it sometimes can be difficult to stay on track and focus your effort on the financials section. You may need to seek outside help in writing your plan if you struggle to grasp or to write about financial concepts such as break-even analysis and cash flow projection. In fact, it’s always a good idea to least check out the website of the Small Business Administration to brush up on financial concepts.
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