What is a Business Plan?
A business plan is a written document that contains information about the business. It provides a systematic overview of the company, its products or services, its markets and competitors, and its financial projections.
It lays out the goals, strategy, and action plan of a company. A business plan can be used to help entrepreneurs in several ways. Like secure investment or loans, to provide a framework for management decisions, and to encourage employees.
What is included in a business plan?
The main goal of a business plan is to create an overview of the company’s mission and vision. It also includes information about its products or service, financial history, marketing strategy, competition analysis, and any other pertinent information. All these details are looked up by a person or the investors whom you’ll be pitching.
A business plan should not be too long because it will likely not be read by anyone other than the person who requested it in the first place. Therefore it must be an appropriate one.
There are five main sections in a typical business plan.
⦁ The first section is the executive summary which summarizes the company’s mission, products, services, and markets.
⦁ The second section is the market analysis which analyzes the market opportunity for this company’s products and services.
⦁ The third section is the company overview which provides an overview of this company’s management team, and how it operates.
⦁ The fourth section includes a financial forecast for the next 3 to 5 years.
⦁ The fifth section shows the marketing plan, and strategies to overcome the challenges and make a successful venture.
The importance of a Business plan
A business plan is essential when it comes to running your own business. It guides you in the decisions you make and is there when you need to execute your ideas.
If crafted and executed skillfully a business plan can take you to newer heights. Some of the common advantages that you can gain with the help of a business plan are mentioned below.
⦁ To approach the right investors and attract them to your investment plans.
⦁ To analyze the competitors in your industry.
⦁ Critically analyze the competence of your business itself.
⦁ Estimating the financial viability of your business.
⦁ To segment your customers and identify the challenges in the market.
How to Write an Executive Summary for Your Business Plan
An executive summary is a brief overview of the most important points in a business plan. It is a one-page document that conveys the basic premise of the company and its goals.
The executive summary should be written as concisely as possible, highlighting only those aspects of the plan that are most relevant to investors. This includes information on what sets your company apart from competitors in the marketplace. And the vision for the future, like how it will maximize revenue streams.
It should also include some background of your team, their mission, and how they will execute their plan, which must be explained briefly.
Key Points to Write an Effective and Thorough Business Plan for Your Startup
The following tips will help you write an effective business plan:
Writing a concise business plan
A business plan should explain how you intend to use your resources in order to reach these goals, The most important thing while writing is – it should be concise and simple, instead of writing a big story.
Include the vision and mission statement of your company in the business plan.
A vision statement is a short, memorable phrase that describes what the company wants to be in the future. It should be written in the present tense and should sum up in one sentence what the company wants to do or be. This will surely create a good impression on readers.
A mission statement is more specific than a vision statement and it tells you how the company intends to achieve its goals. It defines what the company does for its customers and why it does it.
List the objectives that you want to achieve in both the short and long timeframe.
Try to answer all the WH questions like “What, When, Why, Which, and how.” This shows the clarity in your thoughts behind the sequential operations that you are planning to do.
Describe the business structure of your company. Mention the registration status, whether your company is
a. Private Limited Company
b. Partnership Firm
c. Sole proprietorship
d. Limited Liability Company (LLC).
Provide a detailed description of your product or service
Having a detailed description of your product or service in a business plan is important. When you describe about your product clearly specify the end product, its variants, price, features, etc…
Describe your target market
Including Market research is a crucial thing for a business plan. It helps you to determine the target audience and classify them in a pictographic. The market research process begins with the product and service, its specifications, as well as the target audience. Then it is needed to find out the size of the market, which includes how many people are looking for a product or service and who those people are.
Other than these, figuring out the following questions:
What is your Unique Selling Proposition (USP)?
How you will reach out to your target market?
Therefore the readers/ investors would be satisfied and appreciate your groundwork.
Marketing Plan with Cost estimation
The marketing plan with a strategy for a business is a key factor in its success. The company has to know what marketing channels to use, when to use them and how much to spend on them. Cost-benefit analysis and approach would suffice, on how the company spends money wisely for marketing activities, and how it will see a rise in sales.
A financial projection is a forecast of future financial performance. It may be created by a company’s management to assist in decision-making or by an independent analyst to advise investors.
The purpose of including a financial projection in the document is – to estimate what the company will earn and spend over the coming years, and how these figures translate into cash flows.
A typical projection includes
- Income statements
- Profit and loss statements
- Cash flow statements
- Balance sheets
- Future sales,
- Capital expenditures,
- Working capital requirements and
- Investments in new equipment.
The projections are then compared with current assets and liabilities to assess the company’s ability to finance its operations.
Management and team
Management is the backbone of any company. Management is the process of getting people to work together to achieve specific goals. The purpose of management is to maximize efficiency and productivity by using available resources most effectively.
It is your responsibility for leading and managing a team of employees.
Showcasing the strength of your management while writing the business plan document adds a huge value. Explain your management stuff in hiring, training, coaching, and developing strong team members.
Investors are a key part of deciding whether to invest in your company or not. But the question is – how can you get investors interested in your startup company?
To do this, you need to list the factors/purposes you need to fund
- Paying Bills
- Product Designing
- Designing Prototype, MVP
- Buying Equipment etc…
While you mention these factors, try to add some performance indicators and sum it up by soliciting them to invest in. They might consider investing in your company to a feasible extent.
Let us know if we missed out on anything in this article How to write a business plan for startup and share your thoughts in the comment section