What should be in your business plan?
How you should develop your business plan can vary depending on who you ask. Some entrepreneurs may encourage you to seek advice or write your business plan as professionally as possible. In contrast, others will insist that you write it yourself as an intimate and personal document.
How to Develop a Business Plan
To assist you, we have put together a list of the top 10 steps to help you develop your business plan in a way that will suit your unique business idea.
Business Plans for Dummies -
Understanding your business plan
Before you develop any business plan, there will be some preparation you should do first. You will want to establish your purpose and the purpose of your business plan. Who is your audience? What problem will your business solve? What are the risks and rewards? These are just some of the questions you will need to ask yourself at the commencement of your business plan or idea.
Ensuring that you set yourself up with a good team will be paramount to your business plan's success. As one Forbes contributor notes, 60 percent of new ventures fail because of the team framework's problems.
Knowing when to write your business plan will also be imperative. Harvard Business Review (HBR) states that the most successful entrepreneurs wrote their business plans between 6-12 months after deciding to start a business.
It is also important to bear in mind that your business plan should be a living, breathing document, subject to change and flexibility as your business develops. As HBR has previously said, “the real key to succeeding in business is flexible and responsive to opportunities.”
Business Plans for Dummies
The executive summary will be crucial for your business plan. In fact, some entrepreneurs remain steadfast that the success of your business plan could turn on the executive summary alone.
The executive summary is a brief, 1-3 page document that explains to any potential investor or interested party what your company does and how it will become profitable. The document will include your mission statement, describe your product or service, introduce your team, and outline some of the key financial information.
Please check out the article on How to Write an Executive Summary here.
Further to step one above, you will need to describe in some detail your company, who the founders are, the age and stage of the business, your target audience, and the main objectives of the business. Be clear about whether your business is one that serves other businesses (B2B) or one that serves consumers only (B2C). It would also benefit you to document any noteworthy accomplishments that your company has attained so far.
Completing a realistic assessment of the market in your target area will be integral to developing your business plan. Important factors to include in your research are an analysis of the current competition; an analysis of the strengths, weaknesses, opportunities, and threats; target market research; results of any testing done so far; as well as understanding your marketing budget going forward.
This is a good opportunity to demonstrate how you will first attract customers and how you will retain them. Not only will this information be important to you as the project lead, but this will be some of the key data that any financier or investor will want to see from the outset.
Product Or Service
It might go without saying, but your business plan should outline the product and/or service that your company will be providing to the market. This is where understanding your business solves, and the target audience you propose to serve is crucial.
In this stage, you will also want to include the stage that your company is at, past results, anticipated future products and services, any copyright or patents you hold, and the cost considerations.
You must not undermine the importance of this step when developing your business plan. This step will help financiers understand why you are the company best suited to implement this project. To demonstrate your experience in the industry, including who the founders of your team are, the shareholders and directors, consultants and advisors, and any other key team members or leaders within the framework. Provide bios where appropriate and explain the value each team member adds in their own unique way.
Hierarchical Organization Structure
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This step is essentially what your business plan has been slowly building up to thus far. This is where you will make the request for financing to various investors, and you will want to ensure that your projections are accurate to enable you to get through the most crucial phase: the startup. Make sure you build enough cushion to weather the various storms you can expect to encounter on your journey.
You will need to be as honest as possible at this stage, outlining where you are currently and where you want to be. In this step, you should include a balance sheet, the company's previous financials, the projections for the next 12 months, the next 5 years, income and expenses, and an analysis of what it will take to break even.
When developing and formulating a watertight business plan, this step naturally follows on from the previous step. You will want to shore up your request for funding with projections that demonstrate you can pay back loans at interest. In this section, it may pay for you to include a repayment schedule as well as the milestones you expect to have accomplished within that time frame.
Developing your business plan will involve bits and pieces of leftover information, references, and documentation that has not been covered in steps 1 to 8 above, including articles of incorporation, resumes/CVs, licenses, trademarks, and sales contracts.
You may also have charts, graphs, and product images that you want to show potential investors and other interested parties. You can include these here.
Ask For Help
Last but certainly not least, if you are unsure about any of the documentation you should include in your business plan or any of the finer detail to consider when developing your business plan by the steps above, then ask.