The Ultimate Guide to Writing a Powerful Business Plan

Meta Description: Every successful business starts with a business plan. Confused about where to start with yours? Don’t worry. This guide will show you exactly how.

What is a business plan?

A business plan is a detailed roadmap that answers every key question about your company. This includes things like what your small business is, your target customer, your goals, and how you are aiming to achieve those goals. You can run a business without a business plan, but the growth of your business may not go the way you want because there is no plan telling you what to do or where to go. Research shows that start-ups with a business plan are more likely to succeed than those without one.

A business plan is also a guide that holds vital information about the future of your small business. You can, by all means, take out a sheet of paper and write down a rough paragraph about your business and call it your business plan. But in reality that’s just one brick of a solid layer of foundation that you want to build your business on. A well written business plan is the strong foundation that your business needs.

Why do you need a business plan?

A business plan is more than just a roadmap for the founders of the business. It plays an important role in contributing to the other aspects of your business too. Here are a few reasons why having a business plan is an absolute must:

• Helps attract funds- If you need help with financing your business from outside sources, then you need a strong business plan. No, it doesn’t guarantee that you will get funding, but it increases your chances of securing one. Investors and lenders like knowing things like the business model, products offered, scalability potential and financial goals and strategies of a business before deciding to commit funds to them. A business plan gives them that information.
• Adds structure to chaos- A thoughtfully crafted business plan clearly highlights your objectives and gives you the ability to prioritize them based on their importance to your immediate goals. Business owners have so much to do, so a plan ensures that the tasks you are spending time on actually align with your vision. It helps you see the bigger picture clearly, which makes the journey to that destination much less overwhelming. There are certain goals you have to complete to continuing on the path of of building and running a successful business, a business plan makes sure that no such important stepping stones get ignored.
• Gives you more control- Mapping out your business with the help of a business plan puts you at a better position to predict possible road blocks, and be better prepared to face it before it happens. It will also help you clearly see your market that your product will reach and impact, your competition and your financial growth potential.

When should you write your business plan?

The right time to craft your business plan is when you start thinking about your business. When a business idea enters your mind, chances are that you are already making plans on how to bring it to fruition. That’s the right time to sit down and write out a plan.

Don’t worry if you don’t have everything decided yet. A business plan is never complete. It’s constantly evolving with the state of a company.

Your first business plan should be for yourself. Not for anyone else. It should help you breakdown your bigger vision into small, manageable, practical steps. Your business plan should be more than just a boring document for you. After all, it is a place where you collect your goals, ideas, plan of execution in structured way, so that you, and others who are as close to your business as you, can refer back to keep track of your growth and direction.

At the beginning stages, you can start crafting a business plan with just a rough idea of important milestones, target numbers that includes expenses, sales goal and costs. Don’t worry if you don’t have a solid mission statement, information about your team, or a captivating product description. Your initial business plan is just there to give you the key performance metrics and show you something to hold you accountable with.

When you are ready to share this plan with an investor, employee, bank or a vendor, then you should spruce up your business plan with all the other necessary frills that makes it look, complete, cohesive and professional.

More importantly though, dress up your plan specifically for who its viewer. If you are showing it to an investor or financial entity, they’d be much more interested in financial history of your company and your team background.

Anatomy of a successful business plan- How to Write One

A business plan is made of several components. In this guide we will look at each one, so that when you sit down to type up your own plan, you will know exactly what each section needs to have.

The Executive Summary

An executive summary is the first component of a business plan. It is essentially a scannable overview of its key points for the readers. It prepares the readers for the rest of your business plan. There are three things an executive summary should be- clear, concise and enticing. If this section doesn’t attract a person’s attention, or leaves them confused then chances are that they won’t read the rest of your business plan- or worse yet, they’d be put off by your business.

An executive summary for a startup should cover the following:

• The need in a market
• How your business is solving that need
• Your target customer
• Your business model which includes what your products are
• Your strategy to sell your product/service
• Your competition, and what sets you apart from them
• A very brief financial summary including projections for the next few years
• An outline of the execution plan that you will be following to take your company from a business idea to an actual business.

If you have an established business, your executive summary should include:

• Your business’s purpose or its mission statement
• Brief history of the company
• An overview of how your business grew in terms of profitability and number of customers served
• A financial summary, especially necessary if you are seeking to secure finance help.
• The future goals of your business and how the investment will help reach those goals

Company Overview

A company overview maybe the shortest section of your business plan, but it is incredibly important and shouldn’t be glossed over. A company overview gives the reader a brief run through about your company history, its mission statement, management team, where it is located and y our business structure.

While writing this section, think about what the most important highlights are that you would like the readers to take away from your business plan. Here is what this section will entail:

• A company summary and history including its back story and when it was founded
• Your management team
• The legal structure of your business and which key member owns how much percentage of your company
• Where your business is located or if you are planning to acquire a workspace facility. If you currently do have a physical store or office, also note if you rent or own the space
• A mission statement or purpose of your company

Operations Plan

The operations plan section of your business plan should provide information on two things: highlight the efforts you have made to take your business off the ground, and the tasks you still need to complete to continue its growth; show that you understand how to produce and deliver your product or service.

Here are what your Operations plan section should include:

• A step by step description of your production workflow that should demonstrate how the product will be made, and what are the possible risks that could stop or hinder the production flow. Also mention how you’re planning to handle these risks.
• Show how you plan to protect your employees if the production were to expose them to hazardous materials or safety issues.
• Highlights of which organizations pertaining to the industry your business is in you are part of.
• An overview of who your suppliers are, their prices and other details, along with an alternative plan in case your suppliers were to disappear.
• An overview of the quality control measures you have in place to ensure the integrity of your product or service isn’t compromised. Also mention if you hold any quality control certification or plan on getting one.
• An outline of your business’s day to day operation
• If you have a physical plant, mention that here. Include details about its size and location, lease agreements and drawings of the building.
• Mention the equipment you own or would like to own and explain its importance to your business
• List all the assets of your business, including the land, office space, furniture, equipments and vehicles.
• Mention where you will be sourcing your materials from, and how long the production takes.
• Explain how you/or plan to track your inventory
• Mention how much the production will cost

If, while writing, you notice that certain points don’t apply to your business, feel free to skip it.

Market Analysis

This section is imperative if you are sourcing funds from an investor or bank because they want to be able to see that your business has the potential for profits. While researching your market, keep in mind what the key points you are looking for:

• Highlight the current state of your industry and its projected growth in the next five years.
• Be specific about your target market. You can do this by mentioning the characteristics of your projected customer, including their demographics and psychographic information, and their buying habits.
• Mention the market size. How much is your customer spending every year on products or services you want to offer, and how big is the customer base?

There should be a section on competition analysis where you give them a deeper look at your competitors, and their weaknesses. This little section should include the following information:

• Competitors that are selling the same or similar products as yours
• Competitors that are indirectly serving your market with an alternate solution. So, for example, a planner app indirectly competing with a physical planner.
• What are the strength and weaknesses of your competition
• What is the cost of entry in that market?

Last, don’t forget to mention financial forecasts. You don’t have to be accurate with your figures, but just make educated guesses. Here is what this section should include:

• How much market share do you stand to own and explain your efforts that will help you achieve that percent of market
• Give a breakdown of your pricing structure, including the discounts you are thinking about offering. Calculate your gross margin.

Products and Services

In this section of your business plan, mention the specific products or services you will be offering. You will also explain the manufacturing, packaging and distribution of the product, and you will list your suppliers along with their prices. Lastly, you will explain how your product ranks against your competition.

It is important to write this section in an easy to understand manner, even if you are offering a technical product or service. If your reader isn’t familiar with the product or its industry, give them a quick background about it. Avoid using industry jargon that might intimidate the reader.

Here is what this section should include:

• Describe what your product is and how it works
• Describe its salient features and how it stands to benefit its customers
• How will the product be made?
• How is your product unique from the ones already out there? Why would a customer choose your product over other available options?
• Is your product certified? Is it copyrighted, trademarked or patented?
• Do you already have a prototype or is your product still just an idea? Or do you have a full made product that you are now looking to expand?
• How much will your product or service cost? How is it different from your competing product prices?
• How are you going to sell and distribute your product? Do you already have vendors lined up or are you going to solely sell it online?
• How will you distribute and deliver the product? Will you do it on your own or have a third party handle it?
• What technology do you need to deliver your product?
• Can your product be expanded if the launch is successful?

If you have any visual images of your product or service, refer to it in this section and include it in your business plan’s appendix.

Sales and Marketing

Sales and marketing plan helps people get to know you, your business and your offer. It shows your investors what strategies you will use to sell your product to the customer. You need to be able to convey the features and benefits to your customers to convince them to do business with you; this section shows your readers how you plan on doing that. Your sales and marketing plan should include:

• Describe your market segment
• Explain your marketing tactics and the reasoning behind using them
• Include your tag line, selling points of your product or service and your value proposition.
• What advertising media will you be using, like television, social media or content marketing? Also discuss your advertising budget
• Which channels will you use to distribute your product- website or a physical store?
• Mentioned the estimated expenses like administration costs, stocking fees, etc related to the handling and distribution of your products.

Management Team

The management section of your business plan gives a face to your company, and is an essentially component of any plan. It tells the team what your objectives and goals of your business are and what strategies the employees need to enforce to reach those goals.

This section should include:

• The names of the management team members, and/or owners
• Details of the team members.
• Legal structure of your company along with and short professional bio of the company owner(S)
• Percentage of ownership in regards to the owners and a description of how they are involved in the company.
• A description of the members in your company’s board of directors, along with their contact information, and contribution to the company’s growth.
• A breakdown of the different departments in your company and a brief description of the responsibilities held by the management of these departments.
• Include their skills, professional and educational experience.
• Mention the salary scale, benefits and perks, along with onboarding expense for each of the employee

Financial Plan

This may be the last section of your business plan but it really proves the worth of your company in the eyes of an investor. Financial plan is compromised of three statements: income statement, cash flow projection and balance sheet.

First, figure out your business expenses, which is the total of your start-up expense and operating expense. This can be different for every business but some of the most common expenses include business registration fee, licensing fees, rent, inventory costs, equipment and property costs, utility expense, staff salaries, distribution, promotion, maintenance, and loan payments.

The Income Statement

Include an income statement in your financial plan. This document will show your expense, revenue and profits for a fiscal quarter. It shows the investor if your business has generated profits or not.

The Cash Flow Projection

This statement will show the projected movement of cash in and out of your business. It tells you when you expenses might be too high so that you have enough time to arrange for an investment. Cash flow projection is different from cash flow statement because the latter shows the movement of cash that happened in the past for a specific period of time.

The Balance Sheet

This is the last statement you need to include in your financial plan. This shows the investors your company’s net worth at a specific period in time. It provides a summary of all the financial information and breaks it down into assets, liabilities and equity.

Once you have these three statements ready, write a short analysis of each of them. No need to go in depth, just highlight the main points.

Conclusion

The guide above mentions all the essential components of a powerful business plan, but know that depending on where you are with your business, and who your business plan is meant to be read by, some sections may not be necessary to include. If you are just a start-up, are aren’t making a plan to sought investments but just to clear your head and strategize your way to get it off the ground, a simple one page plan will do.

Also, keep updating your plan every three, six or twelve months, to keep the plan fresh and evolving with your business. If creating a business plan feels intimidating, don’t worry. Just take it section by section. Keep it simple, clear and concise, and don’t be afraid to use tables, charts and graphs to illustrate your point. Your business plan is an ever evolving story that gives everyone a glimpse of how your business is where it is now, and where it will be going in the near future. And for some, a business plan is all the extra confidence boost they need to actually see how to bring their vision of owning a business to life- so have fun with it!

Sources

• https://hbr.org/2017/07/research-writing-a-business-plan-makes-your-startup-more-likely-to-succeed
• https://www.inc.com/jeff-haden/how-to-write-a-great-business-plan-the-executive-summary.html
• https://articles.bplans.com/write-company-overview
• https://www.thebalancesmb.com/operating-section-of-business-plan-2947031
• https://articles.bplans.com/how-to-write-a-market-analysis
• https://us.accion.org/resource/business-plan-section-4-products-and-services
• https://articles.bplans.com/write-sales-marketing-section-business-plan
• https://www.thebalancesmb.com/writing-the-business-plan-section-8-2947026
• https://smallbusiness.chron.com/write-management-team-section-business-plan-10792.html