Business plans help you run your business more smoothly. The work of a good business plan is to guide you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business operations.
There are other many benefits of having a Business Plan. Business plans can help you get funding or bring on new business partners for your business. Investors want to feel confident they’ll see a return on their investment and this your business plan captures. Your business plan is the tool you’ll use to convince your investors about the viability of your business.
Again, the main goal of every business plan should be address a number of fundamental issues without which it would not be relevant. These issues can be grouped under six major areas that are the pillars of every business activity whether large or small. These include what makes for a good business plan:
Sales and Marketing
Information & Communication Technologies (ICT)
Picking a business plan format that works for you.
How to write a good business plan? There is no particular way to write a business plan. What is important is that your business plan meets the very purpose it is drafted. There are however two common categories of a business plan: traditional and lean startup.
Traditional business plans are more common. They use a standard structure, and encourage a reader to go into details in each section. They tend to require more work upfront and can be dozens of pages long.
Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.
This type of business plan is very detailed, takes more time to write, and is comprehensive. Lenders and investors commonly request this plan.
Since this business plan isn't as comprehensive like the traditional business plan, some lenders and investors may ask for more information. This type of business plan is high-level focus, fast to write, and contains only key elements.
Are you planning to request financing from traditional sources or you’re very detail oriented and want a comprehensive plan, then you might prefer a traditional business plan format.
Basically, when we think of a traditional business plan we think of a hefty document, about 30 to 40 pages, written over a period of time that outlines every detail that can contribute to the success of your business.
When you write this business plan, you don’t have to stick to the exact business plan outline. Instead, use the following sections below to make the plan most relevant for your business and needs. There are nine key sections you need for a good business plan:
Here you should explain, in no more than two pages, who you and your business are, what your company does, what industry it’s in, where you’re located (or will be located), when you will begin to conduct your business if you haven’t started already, how the business will make money, and why consumers will want the goods and/or services your business offers. Include your mission statement and basic information about your company’s leadership team, employees, and financial information as well as high-level growth plans if you plan to ask for financing.
In this section provide detailed information about your company. This section contains more information about your products and/or services, including what they do, what makes them unique and distinctive, where the idea for your business came from, what level of the business you are at, and overall goals and strategies for the business, along with its projected timeline. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.
Explain the competitive advantages that will make your business stand out from others. Who are your team? Are there experts on there? Have you found the perfect location for your business? Your company description is the place to boast about your company strengths.
How much do you already understand your industry? Because only when you understand your industry very well you will be able to ascertain who your target market is. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do differently? Why does it work for them? Can you do it better? Now's the time to answer these questions.
This stage should tell how your company will be structured and who will run it.
Here you describe the legal structure of your business. State whether you have or intend to incorporate your business as a LTD or an sole proprietorship corporation or LLC.
Use organograms and organizational charts to lay out who's in charge of what in your company. Show how each person's unique experience will contribute to the success of your venture. Consider including resumes and profiles of key members of your team.
In this section of the Business Plan to describe what you sell or what service you offer. Explain how it benefits your customers and what your product lifecycle looks like. Share your plans for intellectual property or patenting. If you're doing research and development for your service or product, explain it in details here.
This is the section where you capture how you attend to make the money for the business. How you hope to execute your plans in projecting your products and services. There's not a single approach to this. Your strategy should be dynamic and should fit your unique needs.
Here is where you describe how you'll attract and retain your customers. You'll also describe how a sale will actually happen, ensure to thoroughly describe your complete marketing and sales strategies.
In this section your goal is to convince the reader that your business is stable and will be a financial success.
If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list them here.
Provide a prospective financial projection for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.
If you're asking for funding, this is where you'll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you'll use it for. Remember you’ll need this to make a good business plan funding pitch.
Specify whether you want debt or equity, the terms you'd want applied, and the length of time your request will cover. Give a detailed description of how you'll use your funds. Specify if you need funds to buy equipment or materials, other recurrent expenditures like pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like acquiring an asset or paying off loans.
In this section you will provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, or patents, legal documents, permits, and other contracts. Here you also include every other reason why you will a loan and your promises to meet return on investments.