How to write a business plan

How to write a business plan

A business plan is a document that outlines everything about your business. You create it before you start your business, at research stage. It is a working document though so you have to update it every year.

The steps you go through when creating a business plan, force you to think through the different elements of the business carefully and help you define growth opportunities.

Why do you need a business plan?

It doesn’t matter what business you’re going to start, you need to have a business plan. Even if you don’t require funding for it. Here’s why:

1. You will need it if you are applying for finance for your business, to prove it has growth potential.
2. To plan properly, including your resources, costs, marketing and strategy.
3. When you sell your business, it’s one of the first documents the buyer will ask for.
4. It explains your business to any outsider that needs to understand your business in detail, like an accountant or a lawyer.
5. When you think of partnering with other people or companies, your business plan will be very useful.
6. You can draw from your business plan for presentations to staff and stakeholders.
7. It keeps you focused on your core business because you understand it intimately.

Now that you know why a business plan is important, here’s how to write one!

Make your business plan as useful as possible. Write in clear English and professionally so that anyone who reads it in the future gets a good understanding and impression of your business.

These are the different sections of a good business plan and what goes into them:

1. Executive summary: You will update this section each time you send it out to someone. In this section you outline what you want from the other person or company. So if you want funding, you will state that in this section. If you’re looking for a business partner, you’ll outline it here.
2. Business description: Include information about the market and the industry, your products and services and opportunities for growth as well as threats.
3. Market strategies: This covers your target market and product and company positioning.
4. Competitive analysis: What your competitors are doing and how your products and services compare.
5. Design and development plan: This describes your product in detail – what it looks like, what it does, how it works, and its features and benefits.
6. Operations and management plan: This section describes how the business will run, who will manage it, and what resources you need. It will have an organogram showing the different positions in the company.
7. Financial data: This includes your start-up costs, budget, sales forecasts (what you predict your sales will be based on the marketing and sales activities you planned) and profit analysis (shows how far you are from break-even point which is the point at which revenue and costs are equal).

A business plan may seem like a ‘red-tape’ process when all you want to do is get out there and make money but it is really important not to skip this process and to use it.