If you plan to start your own business or if you have already started your business, you should write a business plan. A business plan is a document outlining your business goals and strategies for achieving them. It will help you to organize your thoughts, identify the competition, and help you generate more ideas to make your business successful. Your business plan is not static. It will change over time as your business grows.
Why Should You Have a Business Plan?
There are many reasons why you should write a business plan. It will force you to research and think about what is best for your business. It can also help you obtain funding. Most financial institutions will require a business plan before lending money. Writing a plan will also help you focus and establish your objectives. It will also help you prioritize what is most important.
Peter Drucker, a leader in the development of management in education stated, “Unless commitment is made, there are only promises and hopes; but no plans.” Drucker was a believer in the power of ‘purpose’. Your business plan helps you identify and be clear about your purpose.
Below are the steps to write a traditional business plan. There are smaller versions to help you get started, but we will discuss what you need to write a thorough plan.
What Should You Include in Your Business Plan?
Below are the sections you should include such as:
The executive summary should tell your reader about your company and why it will be successful.
- Identify your product. You should begin by pinpointing what service or items you are going to sell and what makes it unique. If you are a service business, include how your service will help your potential clients.
- Identify your target clients or customers. For example, if you are a landscaper, do you want to only market towards businesses, homeowners, or both?
- Discuss your plans for the company. Where do you see your business growing and evolving? Write a small paragraph on your business plan to discuss your future plans. You may not know all the details for growth but describe where you would like to be in the future.
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Your company description should be thorough and detailed. Plan to give details about how your company solves a problem. Describe the type of customers your company wants to serve. Talk about your strengths in your company description. How are you going to make your company a success?
- Write your mission statement. This is where business owners sometimes take a long time to write their mission statement. But don’t feel like this is set in stone. You can change it. Ensure your mission statement is original and it is what you want to do.
- Identify your principal members of the company. You should state their names and titles in this section.
- Identify your legal structure. This is where you state what type of business you will have such as a corporation or partnership. When thinking of your legal structure, consider consulting with an attorney to ensure you know all your legal requirements.
Know your target market and conduct competitive research. Know what other competitive businesses are doing and how you will be different. How can you be better?
- State your industry and your competitors. This is where you will research other companies in your industry and list a few of them and who their target customer is. Then, you will state why your business is different and who your target customer will be. Even if you don’t list all your competitors, know who they are and identify how you can be different.
- Give a detailed description of your customers. Will you be working with other businesses or individuals? Who is your target customer? For example, if you are selling a product, you should describe your customer’s income. Are you targeting wealthy or middle-class consumers?
- What are your company’s advantages? This is where you will list your advantages over other competitors. For example, if you are offering a product, you may describe its long-term durability, how easy it is to assemble, quick delivery, etc. For a service, you may list your employee attributes that a customer would want such as certifications, training, degrees, etc. Consider everything about your business that is an advantage to the customer and list those.
- Write down the regulations your company must follow. In the business plan list all federal, state, and local regulations that you must follow for your company and industry.
Service or Product Line
Describe what you will sell and what services you will offer. How does your service or product line benefit your customers?
- Give detail about your product or services. This is where you will identify and list all products and services in detail which you will offer. Remember this can be changed but this helps you stay focused on what is the most important to you.
- List your products and services with your pricing structure. You will list your products/services along with the prices you will charge.
- Describe your product lifecycle. This is where you describe if your product is ready to sell or are you waiting on manufacturing. If so, when will it be ready? For a service business, you could say, “All services are available, pending contract approval of services.”
- Describe your intellectual property rights. This is where you will list if you are planning to file for patent, trademark, or copyright. Is your company name trademarked? Have you already bought your domain name?
- Identify your research and development. If you’re doing research and development for your service or product, explain it in detail. For example, you should mention in this section if you are researching software solutions for your business such as using a time tracking app. Describe the benefits of any products you are using to make your business better.
Marketing & Sales
Although your marketing strategies will always change, what are your plans to get customers? How will you keep them?
- Describe your growth strategy. This is where you describe what you will do now to attract new customers and retain them. You will also describe what you will do to grow your business. Will you advertise in your industry’s publications? Will you attend your local chamber and networking events? List every way you will network and publicize your business both currently and in the future.
- Identify how you will communicate with your customers. Describe how you will communicate. Describe your social media accounts and how you will use them. Will you conduct email campaigns? Where will you advertise? Will you use flyers, magnets, or any other marketing materials to spread the word about your business?
- Describe how you will sell. Describe your sales techniques and who will be selling your products. Include what you will do as profits increase.
Funding Request and Financial Projections
If you will be requesting a loan, you should include this section to describe exactly what you need to start your business. Specify what terms you will need for the loan. You should clearly explain what type of funding you will need for the next five years and what you will purchase with the money.
For example, do you need the money for employees, equipment, or materials? You should state exact dollar amounts to show how you will use the money and ensure everything is very clear. Also, include any financial projections that you can provide. Your goal is to convince the reader your business is stable and will be successful. If you currently own a business, include all current financial statements.
The appendix should have any support documents or other materials that were requested. For example, you can include your patent application, legal documents, letters of reference, licenses, permits, resumes, credit history, or anything that can support what you have stated.
There are many examples online of different types of business plans. The Small Business Administration (SBA) offers a business plan tool to help you write your plans and they also offer examples of different business plans for a product or service. They also offer an example of a smaller business plan.
Benjamin Franklin once said, “By failing to prepare, you are preparing to fail.” By writing a business plan, you are showing yourself, your financial institution, and your team or partners that you are fully committed to making your business happen.