A business plan is a written document that seeks to outline the nature of your business, the path it has followed and the steps that it will take to get to where it is supposed to be. Using specific terms, a business plan will outline the financial objectives of your business and the steps that you will take to achieve your goals while at the same time factoring in the current market situation. On top of all this, a business plan is an indispensable tool in attracting business capital. In this article, we are going to list all the steps on how to make a business plan.
Preparation for writing a business plan
1 Establish the type of business plan that you will use
While all business plans may appear to utilize the same structure, there are some differences that allow us to have three main types of business plans.
Mini plan- this is a short business plan usually 10 pages or less. It is usually used when exploring the potential of a business, exploring a concept or simply a starting point for the complete business plan.
Working plan- this is the full version of the mini plan. Without a great emphasis on appearance, the working plan seeks to outline the process of building and operating the business. As a business owner, you will find that you will be referring to the working plan as the business moves along towards accomplishing the objectives.
The presentation plan- this is meant for other individuals other than those owning the business. The other people could be bankers or investors. It uses better business terminology and language.
2 Understand the structure of a business plan
Whether it is a mini plan or a comprehensive plan, it is imperative that you understand the structure of a business plan.
- The first broad element in the business plan is the business concept. This is the section where you describe your business, its market, the products, organizational structure and management.
- Market analysis is the second broad section of the business plan. It is important to understand that your business will operate in a certain market place. It is therefore important to understand the demographics, preferences, buying behaviors, needs, competition and so on.
- Financial analysis is the third section of a good business plan. In the case of a new business, this section will include proforma balance sheet, income statement and cash flow. It should also consist of a forecast regarding when you expect the business to break even.
3 Obtain appropriate help
In the event that you do not have enough knowledge in financial matters, it would be a good idea to enlist the help of a financial accountant in the financial analysis section of the business plan.
As you may have observed, the above section tried to explain the broad sections that you need to understand when writing a business plan. These sections will further be broken down into seven sections which make up a business plan. These sections include; company description, market analysis, organization structure and management, products and services, sales and marketing and request for funding.
The actual writing of the business plan
- Use the correct format to write your business plan
You will realize that the first section of a business plan is the executive summary. This is the section that gives a professional overview of the business. This section is usually written since the materials for writing this section will be derived from the entire business plan.
- Company description
This is the section where you describe your business and the marketplace where you intend to take your goods and services. Also describe the type of customers that you expect to capture as well as the steps that you intend to take to succeed in your business.
- Market analysis
This section seeks to establish your knowledge regarding the market that you are intending to take your goods or services. In the market analysis, you should be able to ask questions such as; what is the target market, what products and services your target market expects from you, what is their age, where are they located. Also include a competitive analysis with regard to your immediate competitors. Remember to list your competitor’s weaknesses and strengths and how these factors are likely to impact your business. This is a crucial step in that it shows how you will gain your market share by capitalizing on the weaknesses of your competitors.
- Description of company’s organizations structure and management
This is the section that focuses on the business personnel. In this section, you should provide details of the owners of the business establishment as well as the management team. Don’t forget to list the expertise level of all those who will be working in your team.
- Describe your products or services
Describe what you will be selling. What are the unique features of your products or services? Do you have plans to develop a prototype or to copyright your products or services?
- Marketing and sales strategy
This is the section where you describe the steps that you plan to take in order to penetrate the market, how you will manage growth, how you will communicate with customers, how you will distribute the services or products and so on. Your strategy should be very clear for example; will you use billboards, social media marketing, word of mouth, pamphlet distribution or what method of advertisement to reach your potential clients?
- Request for funding
If you are planning to use your business plan to seek funding, then you must include this final section. In this section, you must explain the amount of money that you need to start and run your business. Provide an itemized summary on how the capital money will be used and don’t forget to include a timeline for the funding request.