Writing a business plan is the first and most important step when thinking of starting a business. A business plan is a document that outlines what goals your business aims on achieving and exactly how it intends to accomplish them.
In order to prove the viability of your business idea, you’ll need a convincing business plan that is both objective and logical. It should serve as a blueprint for the business’s operations initially, defining the company’s objectives and prospects for the future. Finally, it provides the foundation for a financing proposal that investors and lenders can use to evaluate and determine whether to invest in your company.
Here are some of the sections that a business plan usually includes:
This section outlines the company’s purpose and objectives. It should include a description of the product or service, give a brief market overview, justify the viability of the business, predict future growth, and summarise a financial evaluation, all in one or two pages.
Essentially, the executive summary serves as a sort of written elevator pitch that briefly introduces all of the sections that will follow, including: business overview, market opportunities and strategies, competitive analysis, operations and management, and financial projections.
Here you will describe the products and/or services you plan to offer, how they will be delivered, what will be required to provide them, and who your end customer will be. In order to answer these questions, you must identify what industry you will be operating in and define the type of business you want to become. Then, identify your customer and determine how you can create value for them. Lastly, explain how your business will be resolving your consumer’s problems. The end product and the development process should be discussed in this section.
Additionally, you must understand how your products or services will differ from those of the competition. Clearly, the length of this section will depend on whether your business is product-focused or not. For example, if you plan on developing a new product, then this section must explain it in detail.
Market Opportunities and Strategies
This is the part that includes all the market research you have done; you must be an expert in the market to be able to identify the inherent opportunities. Some of the items that can be included here are: the customer demographics, their purchasing patterns, and their willingness to adopt new products and services. Furthermore, you should know the size of the market you are trying to serve, the state of the industry, the particular segment of the market you wish to target, the demand for specific products or services, and the price range for these products or services. By the end of this process, you should have a clear idea of how your business will be able to differentiate itself from the competition in an efficient way.
In order to determine the feasibility of your idea, you should also know who your potential customers are, what is the size of the market and segment you are targeting, and how you will be able to increase your market share over the years.
This section is dedicated to your competitors. Analyse the current competitors and predict the ones that might enter the market in the future. It is crucial to understand the strengths and weaknesses of your main competitors as well as their objectives and the marketing strategies they employ.
This will help you understand what you can learn, what you should avoid, and how you can use your competition’s weaknesses to your advantage. You should also have an idea of what you would do in the case that new competitors enter the marketplace or current competitors decide to exit. Most importantly, identify the opportunities and threats you will face when entering the market.
Operations and Management
In this section, you will have to explain how your business will serve its customers while mitigating expenses and guaranteeing profitability. Provide details on how the day-to-day operations will look like, what equipment and staff you will need, what organisational structure you will have, and how you will establish relationships with suppliers. You should be very specific in outlining what needs to be done and how to implement it.
Also, you should address what management team would be suitable to develop your business idea. What skills, experiences, and knowledge will your team be required to possess? Clarify what the responsibilities of each person are and what the salary structure will look like.
You must estimate and project the financial situation of your business. This is the information that investors and lenders will use to evaluate your company’s potential for success. Include the following business reports in your financial analysis: balance sheet, income statement, cash flow statement, operating budget, and break even analysis.
This section should assist you in determining whether it is feasible to make a profit from your business.
Every company’s business plan will be different depending on the nature of the business, nonetheless, drafting one will be fundamental to the success of the business. Overall, the objective of your business plan should be to describe the company’s current needs, goals, and future expectations.