Did you know that 71% of fast-growing businesses have a business plan? A business plan outlines your business strategy and allows you to map out your goals and expectations for your business. It can also help you to identify potential problems, measure your progress and plan marketing and sales strategies.
Why Write a Business Plan?
A business plan will typically consider the next one to five years, examining your objectives and how you aim to accomplish them over a set period of time. It is designed to help not just the business owner, but also others within the business, and perhaps loan companies or investors, to understand the business.
A business hoping to secure funding from a loan company or an investor needs a business plan; a bank is unlikely to entertain the idea of a loan without one. Even if you’re not looking to secure funding, the plan can help you to identify your strengths and weaknesses; oversee marketing, financial and operational plans and also to measure your progress over time.
What Should a Business Plan Include?
Your business plan does not need to be pages and pages long- keep it concise and easy to refer back to. Business plans should generally always include an executive summary, an overview of what your business does, market research, your marketing and sales strategies, details of operations and management and your financial analysis. However, you should include anything that you think is relevant to your business. As long as the plan conveys your goals and strategies, it will be effective. Here are the key sections usually included in more detail:
The executive summary should be kept short and concise, and highlight what it is that you, as a business owner, wants. It is essentially a summary of your business plan and should include an overview of your business, your goals and expectations, details about your products or services and your financial strategy. It’s important that your executive summary is easy to read so that investors or loan companies can quickly understand the general idea of your business and what its goals are. I would recommend writing this part last so you can include the key parts from the other sections.
Business and Products:
This section should include a fairly in-depth description of your business, the history of the company, the products or services you sell and your business goals.
- Where does your business currently stand, and where do you plan to take it?
- Provide an overview of the history of the business: when and why did it start? How has it evolved over time?
- Describe your products: what do they do? What is their unique selling point?
- How do you plan to develop your products over time?
- Provide details of any rights you own. This includes the registration of your business name, domain name, trademarks, permits, licenses or designs. Perhaps you have exclusive technology or branding- are these protected?
Market and Competitor Analysis:
Your market analysis should enable you to establish how your company will succeed in a competitive environment. You should have a clear understanding of the current market situation, and where you will fit into it. I would suggest carrying out extensive market research in order to develop a good understanding.
- You need to have a strong understanding of your target market. Who are they (age, gender, interests, income etc)? Why would they buy your product?
- If you are selling to another business, what kind of business are you targeting?
- It is important to consider your competition. Who are your competitors? How are you different from them? What can you offer that they can’t?
- What is the current market situation? Are there gaps in the market, or is it quite saturated? Where will you fit into the market?
Sales and Marketing Strategies:
After extensive market research, you should be ready to outline how you’re going to sell to your target market.
- What marketing channels do you plan to use? Magazine advertising? Content marketing? Social media? Outline your plan.
- What is the pricing of your products or services? Why have you priced them the way you have?
- Are you currently offering any promotions or discounts? How will you use them in sales or marketing strategies? What discounts and promotions do you hope to implement in the future?
Operations and Management:
This section should outline the logistics of how the business will run, such as the responsibilities of the separate divisions within the company and any equipment needed for the business.
- Where is your business based? How much does it cost to rent? Why did you choose it?
- Provide details of the equipment or facilities needed in the running of your business. This could be anything from computers to cement mixers.
- Think about who works at your company. What do they do? How much time do they spend working for you? What are their salaries? What do they bring to the company?
- Don’t forget to mention any external employees, such as accountants or graphic designers.
- Do you have any plans for recruitment? What job roles do you hope to open up in the future as your business grows?
This section is often regarded as the most important in any business plan, and should ideally cover the next three to five years. It is especially important if you are hoping to secure funding, as it highlights to investors or loan companies exactly how you will manage your finances, and what your financial forecast is. Your financial analysis should be based on research and statistics such as market trends and your current cash flow. It’s imperative to ensure your financial forecast is realistic. Too often, businesses are optimistic about how much revenue they will make, which is a reason as to why many businesses fail.
- Provide details of your current cash flow, your profits and losses.
- When do you predict the business will start profiting if it isn’t already?
- Provide details of all sources of outgoings, including loans; essentially a breakdown of how much money is required to run the business.
- What are your sales forecasts? How do you expect your revenue to grow? What is your reasoning behind this? Use statistics and research to support this.
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