I’m thankful to my readers that anyway forced me to write this complete guide on a business plan.
In other words, this massive guide is a result of the following queries asked by my readers:
- What is a business plan in the real sense
- Why write a business plan
- What if I don’t have a plan for my business
- How to write a business plan
- How I can prepare a business plan
- How can a business plan help me
- What should I include in a business plan
- Can you provide me with a sample business plan
- Can you help me with a business plan template
I’ve included answers to all of the above queries in this guide. However, my primary focus is on (a) what is a business plan, (b) why a business plan is crucial, (c) how to write a business plan, and (d) component and outline of a business plan.
I’ve used anchor links for all sections and sub-sections so that you can directly jump to the information that you need. You can skip any part that you don’t require to go through.
I hope this guide can help you in creating a very effective business plan for your business. This ultimate guide contains everything about the business plan. An enterprise of any type or size can use this guide for strategic business planning. You can also use the relevant section of the guide as a business plan template.
What is a Business Plan?
A business plan of a company is a concise and comprehensive written document that explains the feasibility of a business and includes a guide for building a successful enterprise focused on achieving the business goals. It bases on detailed research and adequate brainstorming. It’s the roadmap that provides direction to the business towards success.
A formal business plan includes:
- Executive Summary
- Introduction to the business
- Business model
- Business goal
- Market analysis
- Products or services
- Customers’ feature
- Competition analysis
- Business structure
- Financial plans
- Legal aspects
- Marketing approaches
I will discuss all these aspects in detail in a later section. You may either jump to that section or may ask me – Why do I need a business plan?
Importance of a Business Plan
Why write a business plan? A business plan is highly essential because it’s your best friend, philosopher, and guide to help you with each step of your business. Starting from the initial setup to the financing, staffing, partnership, marketing, selling, and growing, etc. – a business plan is helpful throughout the processes. Starting a business without a plan might lead you towards several problems that include failure. Some people think about a business plan while they need finances from a bank or investor. But it shouldn’t be. One-third of the startups fail because they don’t have a business plan. While you are planning to start a business, a well-documented plan should be the priority.
A business plan can help you in many ways, such as,
- checking the feasibility of your idea
- deciding strategies
- identifying challenges
- finalizing marketing methods
- validating growth potentials
- helping you in real success
It’s the anchor that guides you to ship in the right direction at the right time. Presenting it for financial and legal purposes are other crucial aspects.
Before proceeding further for investing money and time, it’s always wise to come out with some homework. Do adequate research, analyze the report, write down the finding, and prepare a feasible business plan that will help you throughout your entrepreneurship journey. Now you have to make the most of your brain thinking about a proper business plan.
Let me summarize.
It’s crucial to write a business plan because a business plan can help you in:
- Defining why you think you need to lunch your business
- Summarizing the sense of your business in a single document
- Encouraging you to be objective
- Identifying the threats, challenges, and other types of blockage
- Understanding business structure and direction
- Guiding you in operating your business
- Helping you understanding your market
- Marketing for maximum return on investment (ROI)
- Creating a map for investors, bankers, and other interested parties to use when you determine how they can best help you and to help them decide whether or not your business is viable
- Modifying your strategies, if required
How to Write a Business Plan?
Drafting or writing a business plan is not an easy task. To achieve success in your new venture, you need to spend adequate time before or during the drafting of a business plan; research in advance is a foremost aspect.
To write an effective business plan, follow the following steps:
- Do Research Adequately
- Set your goal
- Know your audience
- Keep it short and concise
- Keep the tone and style consistent
- Create a company profile
- Document all aspect of your business
Do Adequate Research
Research is the base. Whether you are going to lunch your business or preparing the plan for it, you can no way avoid researching. It will help you in knowing the feasibility of your idea, identifying competitors and buying persona, setting your goal, and putting strategies in place. Knowing the real facts is the ground objective of research work. So do an adequate survey.
Research may be on two levels – informal and formal. On an average level, you can start it from around you. It’s wise to begin by brainstorming with your friends, colleagues, and family. Discuss the idea with them. Just note down what others are telling about your ideas and goals. Though you don’t need to put the finding of this discussion in your business plan, it’ll help you in analyzing your formal research report.
Next, move to the formal research. Do some online research on the internet as well as a systematic survey on the ground to find out some useful answers. Careful surfing on the internet can help you in finding some new ideas and statistical facts behind your existing beliefs. The ground report will help you in knowing the facts related to competition and potential customers.
Finally, start analyzing the findings of the research and prepare the systematized report. Make the report as comprehensive as possible. It will help in starting with a strong foundation with lots of wisdom. However, don’t include the full research report in your business plan. Prepare a concise summary and put it in the right place of your project.
Set Your Goal
In a business, goals help in:
- Understanding the direction of your business
- Achieving objectives
- Measuring growth
- Deciding the next big step
The goal is everything. Whatever it may be, without an objective, you can’t decide where to start and how to proceed. You must have a set of defined goals before you starting your business. You need to set new goals at each milestone of your business. Your goals should be SMART (Specific, measurable, achievable, relevant, and timely).
In your business plan, you should define your goal more specifically. Include the most necessary aspects, such as –
- What and how much you wish to gain from your business?
- What’s the time frame within which you are going to achieve your objectives?
Know Your Audience
While drafting a business plan, be careful about those for whom you are writing. Definitely, you are the first person to read it again and again and implement it; but, there are other prominent people for whom you are also writing. Besides your partners and other insiders, bankers, investors, and government officials will need your business plan before helping you. No financier will go to finance your business before reading your projects. Hence, your planning should be by their requirement and test.
Keep it Short
No one has time to read 100 pages, even 50. Why should you think that your financier will read a long document? And hence, keep your plan as to short as possible. But how many pages? There is no definite answer; It maybe five, ten, twenty, or thirty. It depends upon the goal, size, and nature of business.
While making your plan concise, ensure that you have scope to put everything within the limit. Less than five pages may not be suitable, but more than 50 pages are not preferable.
Keep the Tone and Style Consistent
While you are writing, your voice has a crucial role. From start to end, keep a similar tone and style. Uniformity of language enhances readability. Good writing skill is essential. If you don’t possess the same, assign someone who has a mastery of official writing.
Create a Company Profile
A company profile is all about your business in one or two pages that include:
- A brief introduction to your company
- Your vision, mission, and objectives
- History of your organization
- Products/services you offer
- Your target market
- Your resources
- Unique aspects of your business
Your profile will describe your company in your business plan. You may put your business profile at the beginning of your plan document or put different components at different suitable sections following your convenience. Having your profile in place makes your business plan easier to compose.
Document All Aspects of Your Business
Even the minor details of your business, such as your business site, can make a difference for your investors. To be ensured that your venture is a profitable one, they want to know each aspect of your business. Hence document everything in your business plan. What you need to include in your strategy is discussed in the next section with detailed elaboration.
What should be Included in a Business Plan?
Now you know the importance of a business plan. You might wonder – how can I prepare a business plan, or what should I include in it, or how to create a business plan outline? Here is a blueprint – a business plan format or typical structure of a business plan for a startup.
A business plan should consist of:
- Table of Content
- Executive Summary
- Introduction to your company and business model
- Brief history, if any
- Operating area
- Your business goal
- Your vision and mission statements
- Market research report
- Strengths, weaknesses, opportunities, and challenges (SWOC) analysis
- Your products/services
- What are your products/services
- Features of your products/services
- Pricing structure
- Your buying persona
- Who are your potential customers
- Their demographic, cultural, and behavioral aspects
- What would they pay for your product
- Why would they pay for your product/services over your competitors
- Your competitors
- Comparative analysis to find out your key competitors
- Who is doing something similar to you
- How have they been successful
- Did anyone fail and why
- How you can compete with them
- Operational and management structure
- Operational plan
- Product/service creation
- Other requirements
- Organizational Structure
- Location and Space
- Location of the registered/head office
- Online eCommerce
- Marketing and sales strategy
- Types of marketing you are adopting
- Marketing message
- Sales strategies
- Sales structure
- Pricing model
- Special Discount/Offer/promotion
- Coping with competition
- Details of financial plans
- Startup cost
- Reserve fund
- The requirement of loan and third party investment
- Expected annual turnover
- Return on investment (ROI)
- Growth graph
- Major milestones
- Social responsibilities
- Conclusion and Appendix
Above outline of an ideal business plan is effectively capable of giving you a complete picture of what you need to include in your plan and what you have to do at the next steps till lunching your business. However, I’m further expanding and explaining it to not let you to be confused.
This outline of an ideal business plan is effectively capable of giving you a complete guideline, including what you need to put in your plan and what you have to do at the next steps till launching your business. However, I’m further expanding and explaining it not to let you be confused.
Table of Content
While reading a business plan, the intended person may not give an interest in reading the full document. She/he may look for a particular section or sub-section for some information useful for her/him. Since a business plan consists of several pages, maybe up to 50, it’s highly suggestive that you should insert a ‘Table of Content’ page after the cover. It’ll help the reader to find the page where the intended information is available.
The executive summary will be the first part of your business plan. However, you can write it only after the completion of the same. It should be 5% to 10% of the complete document. A concise but clear summary of your plan, justification of your idea and goal, the best aspect of your business within one or two-paragraph, crucial data in numbers, Rationale of the business proposal, and few concluding statements and contact details are typical components of the executive summary. The structure of the brief should be as it is in the main document. There shouldn’t be any mismatch. justification
The main objective of the executive summary is to present a concise summary of your business plan that can be read and understood separately. It means for the investors, bankers, concerned government officials, and any other one who has direct/indirect interest in your business. Make your executive so brief but clear that the concerned person can read it within typically half an hour without missing any point you want to highlight. While everyone in an organization is busy with many work responsibilities, he/she generally prefer to read short and snappy summary while presented to them. Only after reading the executive summary, the concerned person decides whether he/she needs to go through the complete document or not.
Note that along with the typed copy of the executive summary, you should also prepare a PPT of the same.
Introduction to Your Company and Business Model
Name, Logo, and Trade Mark:
It is the starting point of your business plan. Start with the working name and logo of your company. The name of the company should be short, easily memorable, and indicative of the specific nature of your business. Avoid duplicity while choosing the name, or otherwise, you’ll face problems in brand reputation and the processes of registration of your company. You can use the complete name of your company or part of it as a registered trade name and trademark of your business. You may change the name of your business at any time before launching it.
While designing your company logo, try to make it as simple as possible. Take your best efforts so that people can easily remember your logo and identify your company through it. Use such a color pattern for your logo that you can use the same uniformly in your advertising and marketing material, product packages, website, etc.
Put your company name and logo on the cover page of your business plan as well in the footer or header section of each page.
Provide the complete address of the place where your business will start operating. Along with the location, provide contact details.
Short Introduction or Brief Business Profile:
Provide a short introduction of your business with a brief history (if any), model and philosophy/concept of your company along with category (such as software or electronics or apparel, etc.), type (service or product, online or offline or both) and size (micro, small or medium).
Limit this section to two printed pages or within approximately a thousand words or less.
Clearly define your goals with a bulleted or numbered list. Limit the list to as little as possible.
In the previous sections, I’ve already discussed how to set the goals. Please refer to those sections, if required.
Vision and Mission Statements
Make clear statements of your vision through which you aim to achieve your goals and objectives and can able to grow your business. Also, make it clear which mission you’re going to fulfill through your goals and objectives. While the goals are specific to your business, the missions should be broader, such as generating employability opportunities or helping customers to save their hard-earned money.
Market Analysis Report
Including a few excerptions of relevant research-based data, final analysis, and a report of the research that you have conducted will strengthen the validity of your idea/concept, goal, and vision. You don’t need to include a complete research document in your plan. Show how the research findings are supportive of your idea but don’t make any biased statement. Instead, you should prepare a separate document for the research report for your future reference.
Include complete SWOC analysis that you conducted after the market survey. Highlight your strength and opportunities, along with your weaknesses and challenges (threats). Clarify how you’re prepared to overcome your weaknesses and face challenges. Which efforts you will take, and how can you transfer your challenges into strengths.
What are the products or services you’re introducing? Explain it exactly. Add the features of your products/services in a bulleted or numbered list. Describe how your products/services are helpful for potential customers. What are the benefits of your stuff?
Clearly define your buying persona or potential customers with their detailed features. Include – who they are, i.e., their demographic, geographic, cultural, and psycho-graphic details. What is their purchasing habit, and why they will be willing to purchase from you?
Highlight the pain-point of your potential customers, i.e.,
- Whether there is a vacuum of unavailability of certain products/services so that they are suffering to some extent;
- or they are suffering due to the pricing structure;
- or quality or availability or accessibility of a product or service.
Clarify how your product/service will able to heal the pain point.
Outline your main competitors with the full features of their business model, financial strength, years of experience, and products/services, ad how they’ve succeeded in the market. What are the plans you’ve ahead to compete with them? In case anyone has failed in a similar business, provide full reasons for their failure.
Operational and Management Structure
Write a complete note of how you will operate your business. Outline how you will create products or services. Make the structure of production and distribution that starts with outsourcing raw materials, assembling, testing, packaging, warehousing, shipping, etc. Define each process and involved phenomenon. Think over any type of complexities
How many people do you require for your business? Clearly define your team. Make a list of the qualifications and experiences your team members should have. Select everyone through in-depth interviews. Find the real talent beyond certificates, degrees, or lack thereof. Define your organizational structure that starts from the receptionist up to the CEO. Include details in your business plan.
Do you need any partners? If yes, do it right now. Choose someone who has similar interests but able to compliment you so that you can provide better leadership to your business. Consider your weaker sides and how your partner can complement it. If he/she is one of your best friends, it will better.
Where will you operate your business? How much space do you require for different operations? Do you need branches or outlets at a different location? Are you planning for any franchise-type? What’s about the online presence of your business? Write a detailed plan of your operational location ideas.
Marketing and Sales Strategy
How you make your product/services known to your potential customers? How will you sell your product? Depending on the size of your market, you need to choose your marketing strategies. Whatever may be the size of your business, it’s always advisable that you should adopt both online (digital) and offline marketing methods.
You also need to define your marketing message. In other words, what will you say to convince customers to choose your product? Here, you want to focus on your Unique Selling Point (also known as USP). It is the unique advantage your product has to solve your customers’ problems. For example, it may be a lower price and higher quality or extended warranty, etc.
Sales Strategies and Structure
Along with marketing strategies, finalize sales strategies, and structures for your products/services. You can use the data available in your market research report to plan sales strategies.
Check out the pricing of similar products and services from your competitors. Consider – whether you can sell your products at the exciting price level or you need to add some values to the pricing structure. Such as some freebee or extended services.
Consider how you can make a difference to attract more customers.
It is the most dynamic aspect of your plan. Financial statements translate operational and marketing projects into numbers. Many times under-capitalization leads to failure. Therefore, make sure how much money you need and how much money you will make. Be realistic. Make a complete road make of your finances. Cover your startup cost, your running cost, reserve fund, other unforeseen expenditure, expected annual turnover, expected ROI and growth chart, and funding sources in your plan. Write down details about the expected funding sources and how much you can refund to the investors. Spell out what benefit you can give to those who’ll finance your business.
The financial plan identifies how much money you will need and how much you might make. Since this is the most functional part of your project and perhaps the most crucial aspect of long-term stability, you should update this regularly. I suggest you update your financial plan monthly for the first year, quarterly for the second year, and then annually from the third year onward.
Cover your startup costs smartly. How are you going to finance your business initially? The bank, venture capitalists, angel investors, your savings: are all viable options. When you start a business, be realistic. It is not an easy task to get 100% of that you project. Therefore, you need to have enough ready reserve to fund things until you are up and running. One of the surest roads to failure is under-capitalization.
What price do you intend to sell your product or service? How much will it cost you to produce? Work out a rough estimate for net profit – factoring in fixed costs like rent, energy, employees, etc.
If your company already exists with some years of history, you probably have some achievements. Note down all milestones and include them in your business plan in reverse chronological order. Your successful milestones will inspire investors to invest in your venture. If you are just going to start a business, you don’t need to bother.
Social credibility is not a less important aspect of any business. Make a clear social responsibility plan that will helpful for your public relations (PR), general acceptance, and brand reputation. A few of the priority areas should be employee welfare, environmental protection, and community services.
Conclusion and Appendix
Make brief concluding statements and add an appendix to your business plan for additional information. Don’t conclude longer than two pages. In the appendix, only include those aspects that can add supporting information for the main body section with proper reference. You can add some useful documents, licenses, certificates in the appendix.
I hope that this post will be adequately helpful to you. However, it’s not uncommon that you have some other doubts. Please don’t hesitate to ask me anything in the comment and give constructive suggestions or feedback, if any. If you love this article, please share it.