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So you have come up with a business idea that will turn your company into a Forbes 500 enterprise? Sounds great!
However, you are going to need much more than an idea. You will need to do some comprehensive research, create operational standpoints, describe your product, define your goals, and pave out a road map for future growth.
In other words, you are going to need a business plan.
A business plan is a document that precisely explains how you are going to make your startup a success. Without it, your chances of attracting funding and investments significantly decrease.
Do you want to learn how to create a winning business plan that will take your company to the next level? We created a guide that will help you do just that.
Let’s dive in.
A business plan is a comprehensive document that defines how a business will achieve its goals. It is essentially a road map for growth that includes operational standpoints from all the key departments such as marketing, financial, HR, and others.
Startups use business plans to describe who they are, what they plan to do, and how they plan to achieve it. This is an extremely valuable document for attracting investors.
However, they are valuable for the company members as well. A good business plan keeps executive teams on the same page regarding the strategies they should implement to achieve their set objectives.
Related: Reporting to Investors: 6 Best Practices to Help Increase Funding
While business plans are especially useful for startups, each business should include them. In the best-case scenario, this plan will be updated from time to time and reviewed whether the goals of the company have been met.
The main things that investors want to check out in the business plan are:
An organized business plan is essentially a blueprint of your goals and it showcases your abilities as an entrepreneur.
Related: Business Report: What is it & How to Write a Great One? (With Examples)
If you want to persuade venture capitalists and banking institutions to invest in your startup, you won’t be able to do it without a solid business plan. Following a clear business plan format is crucial, as it structures your plan in a way that is easily understandable and demonstrates your business’s potential.
A business plan is helpful in two ways – it allows you to focus on the specific goals you set for the future and it provides external parties with evidence that you have done your research in advance.
But don’t just take our word for it – here are some of the things that researchers from Bplans found out when they were analyzing the benefits of business plans with the University of Oregon.
You should create a business plan before you decide to quit your regular job. It can help you realize whether you are ready or not.
Also, creating a business plan is helpful when:
While creating a business plan is an important step, you first have to know how to differentiate all the different types. This will help you choose the one that is most suitable for your business.
Here are the most common types of business plans and what you should include in each.
The one-pager is a business plan that only includes the most important aspects of your business. It is essentially a simplified version of a traditional business plan.
When creating the one-pager business plan, your primary focus should be on making it easily understandable.
Since this business plan is rather short, you should avoid using lengthy paragraphs. Each section should be around 1-2 sentences long.
The things you should include in a one-pager business plan are:
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Related: Check out our comprehensive guide on writing a marketing plan report.
New businesses use startup business plans to outline their launching ideas and strategies to attract funding and investment opportunities. When creating startup business plans, you should primarily focus on the financial aspect and provide evidence that supports it (e.g. market research).
These are some of the main things that should be included:
An internal business plan is a document that specifically focuses on the activities within your company. While external business plans focus on attracting investors, internal business plans keep your team aligned on achieving goals.
Related: Internal vs. External Reporting: What Are the Differences?
This business plan can differentiate based on how specific you want it to be. For example, you can focus on a specific part of the business (e.g. financial department) or on the overall goals of the whole company.
Nonetheless, here are some things that should universally be included in all internal business plans:
A strategic business plan is the best way to gain a comprehensive outlook of your business. In this document, forecasts are examined even further and growth goals tend to be higher.
By creating a strategic business plan, you will have an easier time aligning your key stakeholders around the company’s priorities.
Here is a quick overview of what a strategic business plan should include:
A feasibility business plan is also known as a feasibility study. It essentially provides a foundation for what would be a full and comprehensive business plan. The primary focus of a feasibility plan is research.
The things you should include in a feasibility plan are:
As we explained in the previous heading, there are a few different types of business plan. Depending on the audience you are referring to, the language you use in the plan should be adjusted accordingly.
Nonetheless, there are certain key elements that should be included in all business plans, the only thing that will vary is how detailed the sections will be.
Include these elements in your business plan.
An executive summary is a quick overview of the document as a whole that allows investors and key stakeholders to quickly understand all the pain points from the report.
It is the best way to layout all the vital information about your business to bank officials and key stakeholders who don’t have the time to go through the whole business plan.
If you summarize the sections well, the potential investors will jump into the sections they are most interested in to acquire more details.
You should write the executive summary last since you will then have a better idea of what should be included.
A good executive summary answers these questions:
This section of the business plan aims to introduce your company as a whole. The things you include in the company description can vary depending on if you are only starting a business or you already have a developed company.
The elements included in this section are:
Market analysis refers to creating your ideal customer persona and explaining why they would be interested in buying your products.
Market opportunities are the gaps that you found in the current industries and creating a way for your product to fill those gaps.
The most important step in this section is to create a target market (persona) through demographic factors such as location, income, gender, education, age, profession, and hobbies.
Make sure that your target market isn’t too broad since it can put off potential investors.
A good idea is to also include a detailed analysis of your competitors – talk about their products, strengths, and weaknesses.
Related: 12 Best Tools Marketers Use for Market Research
Although you may include a competitive analysis in the market analysis section, this segment should provide a more detailed overview.
Identify other companies that sell similar products to yours and create a list of their advantages and disadvantages. Learning about your competitors may seem overwhelming, but it’s an indispensable part of a good business plan.
Include a comparison landscape as well that defines the things that set you apart from the competitors. Describe the strengths of your product and show which problems it could solve.
Related: How to Do an SEO Competitive Analysis: A Step-by-Step Guide
Use the target audience section to fully describe the details of your ideal customer persona. Include both demographic and psychographic factors.
Ask yourself:
Make sure to answer all of these questions to get in the mindset of your customers.
If you need more details on how to identify your target audience, check our full expert guide.
When talking about your products and services, be as precise as possible. Mention your target audience and the marketing channels you use for targeting this audience.
This section should reveal the benefits, life cycle, and production process of your products/services. Also, it is a good idea to include some pictures of your products if possible.
When describing your products, you should highlight:
Marketing is the blood flow to your business’s body. Without a good marketing and sales strategy, the chances of your product succeeding are very slim.
It’s always best to already have a marketing plan in place before launching your business. By identifying the best marketing channels, you will show your investors that you researched this topic in detail.
Some of the things you should include are:
Related: 14 Reasons Sales And Marketing Alignment Is Crucial for Skyrocketing Company Growth
This section should explain the details of how exactly your company is going to operate.
These are the things you should include:
The financial projections section is one of the most important parts of your business plan. It includes a detailed overview of expected sales, revenue, profit, expenses, and all the other important financial metrics.
You should show your investors that your business will be profitable, stable, and that it has huge potential for cash generation.
Monthly numbers for the first year are crucial since this will be the most critical year of your company.
At the very least, you should provide:
Related: How to Write a Great Financial Report? Tips and Best Practices
When providing the funding request, be realistic. Explain why you need that exact amount of money and where it will be allocated.
Also, create both a best-case and worst-case scenario. New companies don’t have a history of generating profits which is why you will probably have to sell equity in the early years to raise enough capital.
This will be the final section of your business plan. Include any material or piece of information that investors can use to analyze the data in your report.
Things that could be helpful are:
After reading the previous heading, you should have a clear idea of how to write a compelling business plan.
But, just to be sure, we prepared some additional information that can be very helpful.
Here are some of the best practices you should implement in your business plan according to the most successful companies.
Generally, business plans will be around 10-20 pages long. Your main focus should be to cover the essentials that we talked about, but you don’t want to overdo it by including unnecessary and overwhelming information.
In business plan, less is more.
Create a good organizational outline of your sections. This will allow investors to easily navigate to the parts they are most interested in reading.
Avoid using jargon – everyone should be able to easily understand your business plan without having to Google certain terms.
Make a list of all the expenses your business incurs. Financial information should be maximally precise since it will directly impact the investor’s decision to fund your business idea.
After you wrap up your business plan, take a day off and read it again. Fix any typos or grammatical errors that you overlooked the first time.
Make sure to use a professional layout, printing, and branding of your business plan. This is an important first impression for the readers of the document.
Now you know what a business plan is, how you can write it, and some of the best practices you can use to make it even better.
But, if you are still having certain difficulties coming up with a great business plan, here are a few examples that may be helpful.
This One-Page Business Plan was created by HubSpot and it can be a great way to start off your business plan journey on the right foot.
You already have fields such as Implementation Timeline, Required Funding, and Company Description created so you will just need to provide your specific information.
This free business plan template highlights the financial points of the startup. If your primary focus will be your business’ financial plan and financial statements, you can use this template to save up some time.
It can also be useful for making sure everyone in your company understands the current financial health and what they can do to improve it.
If you need additional inspiration to kick start your own business plan, you can check out this free template by small business administration.
You just have to decide which type of plan you want to create and then review the format of how it should look like.
Tracking your company’s performance is an indispensable part of quality decision-making. It is crucial that you know how your business strategy is performing and whether it needs to be optimized in certain areas.
However, doing this manually will undoubtedly take a hefty amount of your valuable time. You will have to log into all of the different tools, copy-paste the data into your reports, and then analyze it. And this isn’t a one-time thing – you have to do it at least once a month.
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Filip Stojanovic is a content writer who studies Business and Political Sciences. Also, I am a huge tennis enthusiast. Although my dream is to win a Grand Slam, working as a content writer is also interesting.
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