Creating a business plan is key to the growth of any business. Writing down your goals and plans of action to achieving your goals will make a big difference. Not only is this helpful for your business but it also forces you to have a greater understanding of your businesses’ financials and competition. A business plan is especially helpful when applying for a loan or when looking for investors. Sometimes they are required by lenders but if they are not then it is still good to have in hand. It may sound daunting to put together a business plan but in this guide, we will go through the steps to creating one.
First Steps to Take
The first place to start is by describing your business and the current condition. Consider how it is doing financially, whether it is growing or not, employee morale, and the place in the market. There is more to consider but it is a good place to start. When analyzing your business make sure you are being honest in your answers.
Once you know where your business stands, find out where you want it to go. Start making a list of your short-term and long-term goals for your business. From one year to five years or more.
Analyzing your industry and customers are also important for your business plan. Be aware of trends in your industry and if there are in shifts you need to make to keep up with demand or your competitors. It is also important to know who your customers are, what they want, and how they are changing. If you do not know the answers to this, take the time to get to know them.
If you do not already understand your competitors make sure to take note of who they are, why they are competitors, and what they do that you do not. Performing a SWOT analysis will help you find a way to gain competitive advantage.
Creating the Business Plan
When going through the first steps above you should now have a better idea and understanding of your business and can use that information to start creating your business plan.
This should be on the first page of your business plan and includes your mission statement, summary of your plans, the products or services you offer, and the main focus of your business.
The business overview contains important information including the business name, physical locations, history of company, the nature of the business, and more in-depth information about the products or services.
Market Analysis/Industry Analysis
This is an explanation of what your marketing strategy is and how you will execute it. This includes how your business will make sales and how you will develop customer loyalty to lead to repeat business. This analysis should also include how to set your business apart from your competition in your industry.
Products and Services
In this section you include the products or services you offer including:
- Explaining how your product or service works
- The pricing model for your product or service
- Your sales and distribution strategy
- Why your product or service is better than your competitors
Business Financial Analysis
Some of the information that should be included in your business financial analysis is income or profit-and-loss statements, a balance sheet that lists your assets and debt, and a cash flow statement.
Here you will provide the monthly or quarterly sales of your business, expenses, and profit estimates over a period of time. Be sure to analyze your past financial statements to guide you in the right direction of future projections.
The last set of information in your business plan should include miscellaneous information that does not fit in any of the categories above such as resumes of employees, licenses, permits, patents, contracts, receipts, and bank statements.
Some final things to remember when writing your business plan is to avoid adding too much fluff. Providing unreasonable information can hurt your chances of approval. Make sure to keep it concise but clear and with relevant information. A 15 to 25-page business plan is a good size. Also, make sure to proofread your business plan especially if showing it to a lender or investor. This will also hurt your chances of approval because it shows lack of detail.
Keep your business plan in a place you will not forget because it is important to regularly check it. You may need to reference the plan before you make an important business decision such as making a major purchase. Also, do not forget that you need to update regularly as well and adjust as any changes occur in your business or your industry.