This step-by-step guide will show you how to create a professional business plan. It will help you start your business, get funding and grow.
It doesn’t take much to create a business plan. To create a viable business plan, you do not have to be an accountant or business professional. It’s easy to plan a business.
This step-by-step guide will help you make your plan without any hassle or difficulty. You’ll be more prepared to launch, manage and grow your company by the time you are done. These are the steps you need to follow in order to create a successful business plan:
- Executive summary
- Products and services
- Market analysis
- Marketing & sales
- Management team and organisation
- Financial projections
- Appendix
What Is a Business Strategy?
A business program explains in detail your business, the products or services that you offer, and the customers to whom you sell them to. It describes your business strategy. It explains how you plan to grow your business and what your potential marketing strategy will be.
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Many business plans include financial forecasts for the future. Set sales, goals and budgets. Also, forecast cash flow.
A business plan is more than a simple document you create once and forget about. A business plan is a guide that will help you define and reach your goals. It is a management tool that allows you to analyse results, make strategic decisions and show your business growth. Creating a business plan is a great way to increase your chances of succeeding if you are thinking about starting a company or pitching investors or venture capitalists.
What Are the Benefits of a Business Plan for Your Company?
Most likely, you already have an outline of your business strategy. You may think, “Why should i spend my time creating a business plan?” Here are the best reasons as to why you should make the time to invest in planning:
Companies That Plan, Grow 30 Percent Faster
It is surprising how much research has been done about business planning. It has been shown that businesses who take the time to create and review a plan regularly grow 30% faster than those that do not. These companies not only grow faster but also perform better and are less likely fail over the long-term.
Investors and Lenders Need Business Plans
A business plan is essential if you are looking to grow your business or raise money from investors. Many investors and lenders will request a business plan. However, even if they don’t want to see it, they will still ask questions about your business.
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Risk Reduction Through Business Plans
It is risky to start and run a business. You don’t have to be a flier on the wall. Instead, you can plan ahead and forecast cash flow problems so you don‘t get caught off guard. You can reduce your risk and plan for the future.
Planning for Business Helps You Make Smart Spending Choices
You need to understand the financial implications of any major spending decisions you make for your company before you make that big decision. You can quickly explore the different options and determine what impact a new hire or expansion will have on your company with a business plan.
Step-By-Step Instructions on How to Create a Business Plan
Every business plan must include six essential sections, regardless of whether you are creating a business plan to raise capital and grow your company or if you just want to determine if your idea is viable. Here is a summary of each section;
1. Executive Summary
An executive summary gives a brief overview of your company and your specific plans. The executive summary is the first page of your plan. It should be no more than one to two pages. It is usually written last by most people.
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The executive summary should be able to stand alone and cover the key points of your detailed business plan. Investors will often request the executive summary only when they are evaluating your company. If they are satisfied with the executive summary, they will often ask for a full plan, a pitch presentation and more detailed financials.
An executive summary should contain a description of the problem you are trying to solve, an explanation for your product or service and a brief description about your team. It also should include your financial information and any funding requirements if you are raising funds.
For more advice about hiring a team, take a look at our blog which highlights the: Key Tips to Hiring a Team.
2. Products & Services
Your business plan’s products and services section is the heart of your plan. This chapter includes information about your problem, your solution and how your product/service fits in the existing market.
Begin the products and services chapter by explaining the problem you are solving for your customers. Then, describe your solution. This is your description of the product or service you offer.
Next, outline the competition. What other businesses are offering solutions to your customers’ problems? What are your personal competitive advantages?
This chapter can be a great place for discussing any competitive advantages you may have, such as patents or intellectual property that protect your product.
Review your metrics and milestones. This overview will give you an overview of what next steps you must take to make your product or service available for sale. It also includes target dates. You can also discuss milestones you have already reached, such as a customer landing or pre-orders being placed.
3. Market Analysis
This section will contain all information about potential customers. This section will include information about your market and the growth of your industry.
First, describe your target market. Your target market is the people you intend to sell to. Be as specific as you can. It will be easier for you to develop a marketing and sales plan that will reach your target market if you have a solid target audience.
Next, share any market research that you have. Explain how your market is changing over time, and how your company is best positioned to profit from expected changes in your industry.
4. Marketing & Sales
Your sales and marketing plan section in your business plan outlines how you intend to reach your target markets. It also explains how you plan to sell to them. It also outlines your pricing strategy and the types of partnerships and activities you will need to make your business succeed.
Businesses that sell their products through retail outlets like Amazon and grocery stores should consider how this aspect of their business operates. This plan should include information about logistics, costs and potential obstacles that may need to be overcome in order for products to reach shelves.
5. Management Team & Company Organisation
Investors are looking for great ideas and great people. This chapter will describe your current team as well as who you should hire. If you are already in operation, this chapter will give you a brief overview of your legal structure and location.
Brief bios should highlight each team member’s relevant experience. This is where you can make the case that the team is the best team to help turn your idea into reality. Are they industry professionals? Are there any members of the team who have had entrepreneurial success?
Also, be sure to include a review of the ownership structure. Is each partner in the business equal in ownership? How is ownership split? Before they consider lending or investing, lenders and investors will need to understand the structure and details of the company.
6. Financial Projections
Your financial chapter is last, but not least. Although this is often the most difficult chapter for entrepreneurs, it does not need to be so daunting. Most startups find business financials easy. A business degree is not necessary to create a solid financial forecast. There are many resources and tools available to assist you in building a solid financial plan.
A typical financial plan will contain;
Statement of Profit and Loss
An income statement is also known as the profit and loss (or P&L) and shows how much you are making or losing.
Statement on Cash Flow
A cashflow statement. The income statement calculates your profits, while the cash flow statement tracks how much cash you have.
Balance Sheet
A Balance Sheet shows the assets, liabilities and equity of your company. It provides a snapshot of the financial health and performance of your company.
When Applying for Funding, You Can Include Optional Sections
A section of your business plan should detail how you intend to use the money you raise from investors if you’re raising capital. This is commonly called “Use of Funds.”
Investors also want to read a section about your exit strategy. Your exit strategy is your initial plan to eventually sell your business to another company, or the public through an IPO. Investors will be interested in your views on this. You can skip the section on exit strategies if you own a business you intend to keep indefinitely and are not looking for angel investment or VC financing.
Discuss any important risks and assumptions that you have about your business. Understanding your assumptions can make all the difference in whether you succeed or fail with your business. Once you recognise your assumptions, it is possible to set out to prove them correctly. Your business’ success is more likely if you reduce your assumptions.
7. Appendix
It is not a mandatory chapter in your business plan. It is however a place where you can stick any charts, tables or definitions that are too lengthy or out of place to be included elsewhere in your business plans.
Writing a Business Plan: Tips
These tips and key questions will help you make your business plan easier and avoid making common mistakes;
Find Out Why You Are Writing a Plan for Your Business
Understanding why you are writing a business plan will help you to approach your planning project. If you’re writing a business plan solely for your business or for personal use, you might skip the section on your team and organisational structure.
You should spend more time on carefully explaining why your goal is to raise money and how you intend to use the funds. Before you begin writing your business plan, consider why you are writing it and what you want to achieve from it.
Keep It Simple
Remember to keep your business plan simple. This is probably the most important tip. Long business plans are not worth the effort. The likelihood of your plan being read is lower if it’s too long.
Focus on the basics that your readers will need. Instead of focusing on the details of your target market, create a plan that is simple to understand.
Get Someone to Review Your Business Plan
It is not a good idea to write a business plan from a void. You can zoom in from time to make sure your plan is clear and logical. It’s also important to ensure that your plan is easy to understand and read. You don’t have to wait for your plan to be “done” before you take another look.
Share your plan early to get feedback from readers about the questions it leaves. You will be able to keep your plan on track by starting a review early. Consider hiring a professional plan writer for a thorough review.
How Can I Create a Simple Business Plan for My Company?
We recommend that you start with a one-page business plan if you are not ready to create an extended and detailed business plan. In 30 minutes, you can put together an initial plan. This is a great way for businesses to get started. This plan may even be sufficient if you don‘t need to raise money from investors.
Next Steps in Writing Your Business Plan…
A solid business plan can help you get there, whether you are writing a plan to explore new business ideas, setting up steps to start your business, looking for investors, seeking loans, or simply trying to manage your business better.
Business planning is an ongoing process that will help you validate your idea and set goals. It can also help you manage your business and pitch it successfully. Jump in and get planning. This is one of the best things you can do for your business.
Business Plans and Popular Questions
What Are the Advantages of a Business Plan for You?
The business plan will help you to understand your goals and the steps you need to reach them. This plan reduces your risk, helps you identify your potential and attracts investors, and allows you to identify opportunities for growth. A business plan will make you more confident and help you to be a successful business owner for a longer time.
What Are the 7 Essential Steps to a Business Plan?
These are the seven steps required to create a business plan:
1. Write a short executive summary.
2. Description of your products and services
3. Do market research and compile the data into a coherent market analysis.
4. Please describe your sales and marketing strategy.
5. Describe your organisation’s structure and management team.
6. Make financial projections of sales, revenue and cash flow.
7. Include any additional documents in your appendix.
These Are the Top 5 Business Plan Errors That Most People Make
Writing a business plan can lead to many mistakes. These are the five most common mistakes that you need to avoid:
1. It is important to not take the planning process too seriously.
2. Financial projections that are unrealistic or lacking financial information.
3. Simple mistakes or inconsistency of information.
4. Failure to create a solid business model.
5. You don’t need a business plan with a clear purpose.
What Are the Most Important Questions to Ask in a Business Plan
A business plan is all about answering questions about your business whilst going through the planning process. For each section of your business plan, you will probably ask dozens to hundreds of questions. These are the most important questions to ask and answer when creating your business plan.
- How can your business make any money?
- Do you have a customer who needs your product/service?
- Who are your customers
- What makes you stand out from your competition?
- How can you reach your target customers?
- How do you measure your company’s success?
What Length Should a Business Plan Take?
Your purpose for writing your business plan will determine how long it is. You don’t need to have a 25-50 page business plan if you are only using it for internal management. You can instead start with a 1-page plan or a 3-10 page Lean Plan. This will give you all the information that you need.
What Are the Various Types of Business Plans Available?
Although all business plans are similar, the specific style and function will vary depending on your intended use of the plan. These are some common types of business plans that you might want to consider when creating one;
The Traditional Business Plan: This is the tried-and-trued traditional business plan. It can be used to apply for funding or pitch to investors. This particular type of business plan is similar to the one above, but can range from 10-50 pages, depending on how detailed you include, how complex your business is, and what you add in your appendix.
The Business Model Canvas: This template is one-page and helps to simplify the business planning process. This template eliminates the need to create a lengthy, complicated business plan. Instead, it provides a simple outline that will help you and others better understand your business idea.
One Page Business Plan: This format is a simplified version the traditional plan and focuses on the key aspects of your business. You will stick to bullet points and simple sentences. This is useful for people who are looking to explore ideas or need to validate their business model.
Lean Plan: The Lean Plan is less a document type than a method. The Lean Plan takes the simplicity of a one-page business plan and makes it a process that allows you to plan, test and review your work, then refine and take action based upon performance. It is faster, makes your plan more concise, and keeps it current.
What Is the Main Difference Between a Strategic Plan and a Business Plan?
The “who” and the “what” of your company are covered by a business plan. It describes what your business does right now and how it operates. The strategic plan outlines the long-term goals of your business and “how” it will achieve them. It will encourage you to be more focused on the future and help you achieve your vision.
If done correctly, your business plan can also function as a strategy plan. You can outline your business and plan for ongoing operations with one plan.
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ActionCOACH can help you develop and grow your business through a wide variety of services, from business coaching and mentoring to sales training and marketing assistance. No matter what stage your business is in, our team of experienced coaches can help you take it to the next level.
If you’re serious about creating a successful business plan, ActionCOACH is the perfect partner to help you get there.
Contact us today at 01305 566150 or email westdorset@actioncoach.co.uk for a FREE business coaching session.
