Before we explain how to write a business plan, let us first explain what a business plan is and why you need to have one in the first place. A business plan is a strategy where you explain the business idea, what your goal is, how to implement and develop it, who your customers will be, etc.
Maybe this looks like a lot of work, but to develop your idea into an actual running business, you need to understand your potential market reach, can your idea actually “make money,” where to find funding, how to reach your customers etc.
Among the main reasons to write a business plan is to have a form you can present to potential investors or financial institutions. When you ask for a loan to fund your business, a well-written business plan will show how you intend to return the loan and to have a profitable business.
Here are six categories, or types, of Business plans:
- Start-Up Business Plan
- Internal Business Plan
- Strategic Business Plan
- Feasibility Business Plan
- Operations Business Plan
- Growth Business Plan
We will explain and show how to write a business plan and what that plan is consists of. First, you need to research your potential market and see if there is a need for your business idea and listen to the community feel about your products. The recommended length of a business plan is 15-25 pages, including the cover page and the appendix list. When you recognize your idea as a potentially successful one, write your business plan that needs to include these 8 components.
1. Executive summary
In a word, the “summary” point is a short but clear and complete explanation of your business idea, your product, your customers, and why you consider this to be a good business overall. Most people write this executive summary at the end, and that way, they have the right information to include. This part is 1-2 pages long and is the first thing that all parties interested will read, so write it carefully.
2. Company description
In this section, you’ll have to write the company name, address, location, ownership structure, etc.
- Mission statement
A mission statement in your business plan is a short description of your business and its end goal. It needs to be a “your business in one sentence” kind of statement. This statement needs to be inspirational to others and with the right “emotions.”
3. Organization and management
In this section, write down your organization chart use the one you have or plan to have. The number of employees and how many now jobs your business will create. This shows your investors that the business will enable the growth of a community, opening new and profitable jobs.
4. Market research, potential and competitive analysis
If you did your research properly at the beginning of your preparation, you would have all the information about the market or industry you enter. So write it down, and explain a possibility for the new business to grow and succeed.
Write about the potential in the area and if there is competition. Is it a threatening one, or do you see your competitors as a driving force for your success?
5. Product or service description
Describe your product, its purpose, and what materials or services you will need to make your product. That will show if your product is safe for the environment, are there enough suppliers that are easily reachable, etc. This serves to show that your supply chain is well organized. The main thing is to show that there is a need for your end product or service.
6. Marketing and sales strategy
An important part of your business plan is explaining your marketing and sales strategy. You can include an explanation of the type of sales channels you will use (store or online sales). Include marketing tools you will use to manage your marketing campaign, your insight into the demographic structure of your product and service users, etc.
7. Financial Projections
This is important when you are looking for investors or asking for a loan. Here you must include a repayment plan and your budget plan during the initial phase of your business. It needs to be written and calculated truthfully, predicting all possible scenarios, mainly of the first years when you don’t expect to have any profit, and how you plan to finish that phase with a positive “0”. In this part, you need to show how your business will become profitable and that it is a worthy investment.
8. Appendix for official documents
This is the part where you write a list of all documents attached to the business plan. Legal and research documentation, and all approvals or letters of intent that you have.
Business analyses show that most businesses write business plans only if they must. This is the wrong approach. Once the business plan is written, you will see a clear picture of your idea. A good business plan will ensure your funding and gain your community and investors’ trust.