How to write a business plan, you ask? Let me explain.
A business plan is a well thought out and carefully planned written document that determines the objectives and strategies of a business. It is also an important tool that can be utilized as a means of pooling funds for capitalization when your business is in need of investors.
The Steps in writing a business plan is divided into 3 parts, as follows:
PART 1 – Preparations in Writing a Business Plan
PART 2 – How to write a Business Plan
ART 3 – Finalizing the Business Plan
Business plans are made with a common objective of defining the:
goals and objectives
market research and analysis
as well as the business cash flow projection
While there are a lot of types that exist such as a: Start-Up Business plan, Feasibility Business Plan, and Growth business plan to name a few and all of them are slightly different from each other.
There are about three (3) different major types that exist.
The Mini Plan This plan is used in determining the value and potential interest in your idea for a business and exploring the possibilities with the use of a 10-page presentation or less in introducing the “idea” to prospective investors, which you can follow up shortly by sending a detailed plan.
The Detailed Plan This detailed plan may also be referred to as the working plan, which is a full version of the mini-plan that you will send after your presentation. Without an emphasis on appearance, this plan outlines how the business will be built and carry its operations and it will also serve as a reference to check the progress of the business in meeting its objectives.
The Presentation plan Is essentially the working plan with emphasis on the presentation for marketing purposes with the use of proper or formal business terminologies. This plan is specifically designed for bankers, potential investors, and the general public.
Understanding Business Plan Structures
Understanding the basic elements of a business plan is an essential part of organizing the structure of your business.
The Business Concept. This first major component of a business plan focuses on the:
description of your business, the organizational structure
and its management
The Market Analysis. Given that your business will be operating within a particular market, this second major element in business planning focuses on:
understanding customer demographics
customer’s buying behavior
customer preferences and needs
as well as your competitors
The Financial Analysis. Financial data and analysis is the third major component of a business plan, especially if you are in the process of starting operations. Analysis of financial data includes:
projected cash flows
as well as the forecast for the return on investment
Keep in mind that it is a piece of good advice to seek the assistance of a professional such as a Certified Public Accountant (CPA) for the financial analysis of the business plan, in case you do not have the proper understanding or background in the financial aspects of the business.
How to write a Business Plan
Formatting Your Document
Make sure to have a standardized format by using Roman Numerals for section titles with the first section entitled as “Executive Summary” marked with Roman Numeral “I” for the purpose of providing an overview of your business.
Add Company Description
Write your company description in the second section by describing your business and identifying the market for your product(s) and/or services.
Include a description of your key customers and detail how your plan would succeed.
Let just say that you are running a small restaurant such as a steakhouse. Your description should say something like, “Joe’s Steakhouse is a small, downtown-based restaurant, that is focused on serving the best steak in town. It has a selection of premium house beer and original mix of flavored water drinks. It is set in a relaxed environment that gives you a feel of how it’s like in the countryside. Joe’s Steakhouse is located a few blocks from local establishments, offices, and universities. It is definitely an ideal place for young urban professionals, students, and professors to meet, socialize, and enjoy the best steak in town.”
This section of your business plan outlines how you will gain market and aims to demonstrate and explore the knowledge of your target market.
You should be able to answer basic questions such as:
Who is your target market?
What are your target market’s needs and preferences?
What are their age range and location?
You would also want to include your research and competitive analysis to provide information of your competitors by placing them in a list that includes their strengths and weaknesses, as well as the risks or impact on your business.
Describe your Business Organizational Structure and Management
A description of your company’s organizational structure and management (organizational chart) has to be included in your business plan.
This section provides information about the owners of the business and the management team.
Make sure to include the expertise of each individual team member and highlight their track record in case they have an extensive background.
It would also be good to add information on the selection process for the members of the management will be carried out.
Provide details of your Products and Services
This section of your business plan should include the details of your products and services to answer questions such as:
What your product or service is about?
What is good about your product or service?
How does your product differ compared to your competitors?
How will I benefit from using your product or service?
The details of this section should also answer questions about your product’s:
and patents or copyright
Write your Sales and Marketing Strategy
This part of your business plan should include details or information on how you plan for:
customer communications management
and product distribution strategies
You should be able to specify your strategy to answer the question of whether or not you would need to have:
distribution of pamphlets
or social media
Request for Funding
In case you intend to utilize your business plan to pool funds, you have to include a funding request, indicating the amount that is required to start and maintain the business
You should also specify an itemized summary on how the funds will be used and provide a timeline for your request
At this stage of business planning, it imperative that you should gather financial statement including all historical statements (if you have an existing business) to support your request for funding
Financial documents including financial data forecasts statements, balance sheets, profit and loss statements (P&L), cash-flow, and expenditure should be placed in the Appendix Section of the business plan
This section should also have a projected cash flows for a minimum of 6 years until growth rates are stable
Write an Executive Summary
The executive summary should serve as an introduction for your business plan to provide an overview of your:
goals, and objectives
including your company’s mission statement
Existing businesses should include information about the company’s history and some notable benchmarks.
Start-Ups, on the other hand, should focus on industry analysis, and funding goal, as well as the company corporate structure, requirements for funding, and details whether equity will be provided.
It would also be good to highlight the contracts, major achievements, current and potential clients and a summary of the company’s growth plans.
Finalizing the Business Plan
Add an Appendix
Potential investors are interested in looking at well researched and organized information prior to making a decision.
Adding all pertinent information in this section is done for the purpose of supporting claims that include:
business licenses or permits
legal documents and contracts
as well as resumes of key personnel
A section that clearly outlines the risk factors that could possibly affect your venture and mitigation plans should also be added to indicate your preparedness for any contingencies.
Revision and Editing
Business Plans must be clear of errors including grammar and spelling before it is finalized.
Rewriting your content in ensuring that it is nothing less than satisfactory to the reader’s perspective must be done the purpose of presentation.
You might also consider reading the document aloud as an error checking mechanism and get feedback.
Cover Page Design
The cover page of a business plan provides aesthetic value, appeal, and professionalism to make sure that your document stands out.
Make sure that the word “Business Plan” is placed at the center in bold font, along with the company logo, company name, and contact details.