A well-written business plan is crucial for the success of any new business. It helps you clarify your strategy, evaluate the viability of your idea, identify potential roadblocks, and decide what you will need in terms of resources. It is important to step back and research your idea to better understand the scope and strategy of your business venture. It also helps you outline your business’s financial goals and how you plan to achieve them. Not only is this an important step for the business owner, but it is also a critical component if you plan to present your business idea to investors for funding. Whether you are starting a new business or seeking additional capital for expansion, a carefully crafted business plan is essential to your success. Here’s a step-by-step strategy for writing a business plan.
1. Write an Executive Summary
The purpose of the executive summary is to provide potential investors and lenders with an overview of your business in a way that will persuade them to continue reading. You want to include a mission statement, a brief description of the products or services being offered, and a broad summary of your financial projections. In many ways, this is your chance to “pitch” your business.
2. Describe Your Company
The goal of this section is to answer the following questions: Who are you and what do you plan to do? You will include basic information about your company such as your name and address of your business location, as well as the names of key people involved in your business. You will also want to define your business structure, such as sole proprietorship, partnership, or corporation, along with the extent of each owner’s involvement in the company. Finally, you will want to include background information on your business as well as long term and short term business objectives.
3. Describe Your Products and Services
Here you will go into detail about the products or services you plan to offer. You should include the following details:
- An explanation of how your products or services work
- The price model for your products or services
- Your customer analysis
- Supply chain and fulfillment strategy
- Sales strategy
- distribution strategy
4. Market Analysis
Investors want to know who you will be marketing to and why they would choose your company over competitors. In the market analysis section you will explain who your target market is and who the current competitors are. Then, you will describe what you plan to offer that sets you apart from your competitors.
5. Outline Your Marketing and Sales Plan
Here you will address your strategy for marketing your business and persuading customers to buy your product or service. You will also describe your plan for developing customer loyalty and repeat business.
6. Provide a SWOT Analysis
A SWOT analysis takes a closer look at your strengths, weaknesses, opportunities, and threats. What are the best things about your company? What market trends can you identify and turn into opportunities? Are there any current threats to your business that might inhibit your ability to succeed? It is important to examine all factors that could affect your business so you can develop proactive strategies right from the start. Investors also want to be able to assess their risk level.
7. Provide a Financial Analysis
In this section, you will want to include information about your profit and loss, a balance sheet of assets and debts, and a cash flow statement. You also need to include a net profit margin, as well as charts and graphs that can further analyze your financial projections.
8. Add Additional Information
This is where you will list any additional information that weren’t mentioned elsewhere in the plan such as resumes for key employees, licenses, equipment leases, permits, patents, bank statements, contracts, and personal credit history.