Every successful entrepreneur knows how important a professional business plan is for their success. A business plan gives a direction to take the business forward. It creates an effective strategy for business growth, documents future needs, manages possible bumps, and attracts investors for fundraising.
However, owners face the most significant struggles in crafting a comprehensive business plan, including the trouble of conducting intensive and thorough research on their business needs.
Here we will discuss the following points:
- What is a business plan?
- How to prepare your business plan in 5 steps?
- Tips for writing a business plan
What is a business plan?
A business plan is a strategic representation of your business goals and strategy to achieve them. It includes the business objectives, strategies, competitor analysis, market size, operational, marketing and financial plans and SWOT analysis.
It helps communicate your business idea to potential investors, lenders or other stakeholders. Using a business plan, an owner can spot potential problems, plan new goals and measure business performance.
A business plan should include the following elements as a minimum:
- An executive summary
- A business description
- Competitor and SWOT analysis
- Design and development plan for your business products and services
- A detailed plan of your operations and management tasks
- Financial forecasts
- Detailed market strategies
- Funding requirements
- Organisational chart
- Key team members’ profiles
Business plans must be customisable according to the business needs and industry type.
Common types of business plans are:
- Startup business plan
- Business acquisition plan
- Business repositioning plan
- Business expansion plan
What is the purpose of a business plan?
The purpose of a business plan is:
- to prove that you are serious with business
- to establish business milestones
- to understand the competition
- to recognise customers
- to assess the business feasibility
- to enable you to make a revenue model
- to identify funding requirements
- to attract investors and lenders
- a good business plan reduces the risk of following wrong opportunities
- it forces you to know your market and do proper research
- to understand the chance of success
- to understand your staffing needs, new opportunities, marketing, etc.
Therefore, a business plan is to guide your business doings.
How to prepare your business plan in 5 steps?
If you feel you can improve your business performance, you need to develop a good business plan.
1. State your goals
The executive summary is the essential part of a business plan that describes your business and its purpose. It also needs to explain your goals. For example, if you are writing a plan to raise capital, you need to specify how much money you expect to raise and how you will repay the loan.
Additionally, you need to establish clear short and long-term goals to know where your business will be in the future. Without proper planning, all your business activities may look successful but not in reality.
2. Prepare SWOT analysis
Business SWOT stands for your business’s Strengths, Weaknesses, Opportunities, and Threats. Identify the financial insights to change your route for achieving goals. Compare to industrial benchmarks regularly and know if you are performing well compared to your competitors.
Listing down your business strengths, weaknesses, opportunities, and threats can help you make a strong business plan to deal with each of them in the current year.
3. Make budget
If the previous year wasn’t as successful as you wanted, it could be because you didn’t have a proper budget. To meet business goals, maximise your strengths, and find greater opportunities, all of them need funds. However, unnecessary expenses may affect your profit margin.
Therefore, having a budget is necessary that helps you review your expenses and make better financial decisions.
4. Supporting documentation
Preparing a successful business plan requires supporting documents. Therefore, enable your team members to provide you with essential documents during business planning.
For example, you may ask your bookkeeper or an accountant to consistently generate monthly financial metrics to help you understand the cash flow in your business and take necessary actions.
5. Use the right tools
If you are not using the right tools, you may affect business performance. For example, accounting may require cost-effective software tools to automate your manual tasks or cloud-based software to help you manage your general ledger regularly.
Ask your professionals to recommend some latest tools and technologies to your business operations and create a better business scenario next year.
Tips for writing a business plan
● It shouldn’t be lengthy.
Business plans need to be precise and understandable to stakeholders, investors, and lenders. Therefore, use clear and concise language and avoid complicated jargon.
● Show your intention
Your business plan must show your true passion for your business to employees, stakeholders, and investors.
● Provide supporting documents
Don’t be afraid to provide your supporting documents for the business strategy. It may include an extensive list of appendices like team members’ resumes, product demonstrations, examples of internal messaging, etc.
● Produce reference data
While making a business plan, you make market analysis, SWOT analysis, competitors and customer surveys, etc. You must produce all these authoritative and relevant data.
Do good research on your business needs, goals, missions, and strategies, and go through financial statements to understand your financial situation, etc., before writing a business plan.
● Demonstrate your unique vibe
When looking for how to write a business plan, you must understand how unique your business is compared to your competitors. It includes how your products are different, how you solve client problems, how efficient your technologies are, etc.
● Be objective
You must showcase all your good and bad points regarding market research and your financial health. It will help your investors and shareholders to understand your thoughts and business future.
● Understand the purpose
Before you start doing market research or writing a business plan, you need to understand the purpose of your plan. For example, are you making a business plan for fundraising? Be clear about the purpose while making the business plan.
● Know your audience
You must recognise the audience, whether you are writing to attract a new investor, looking for a potential collaboration, or presenting your business plan to existing shareholders.
● Avoid jargons
Do not use industry-specific jargon in your business plan unless you need them. Avoiding these words makes your business plan understandable to potential stakeholders and investors.
● Evolve with company growth
You cannot have a static business plan throughout your business life cycle. That means you must evolve your plan according to the company’s growth, revise all the essential factors from the beginning, and see if you need to change anything.
Whether starting a business or running an existing operation, writing a professional business plan is vital for future success. It is a foundational document that helps your business grow and thrive.
No matter your business type, size or stage, you must know what a business plan is? And how it can help your business to survive the competition. Ask a professional to help you make a successful business plan and involve all other team members like an accountant.