A well-prepared business plan is a major step forward when starting a business. It helps you define your strategy, finances, resources, and most importantly, attract investors.
Creating a business plan is not an easy task, but it's not so difficult that you can't do it on your own. We'll try to help you with that, and in this article, we'll present 9 steps to writing a business plan that will significantly simplify the process.
First of all, let's understand what a business plan is and why we need to write one.
A business plan is a document that summarizes a business's operational and financial goals. It is a roadmap to business success, with detailed plans and budgets showing how the goals will be achieved.
How to write a business plan?
Step 1 – Introduction/Executive Summary
This is the key and most important part of the business plan, where you convince investors why they should read your plan to the end. It is a summary section of your plan, so it's important to highlight key points. The executive summary should not exceed one page and should include the following points:
- Business concept – What is your business about?
- Business goals and vision – What do you want to achieve? (Note that goals should be measurable and time-bound)
- Product description and differentiation – What are you selling, and how is it different?
- Target segment – Who is your customer?
- Marketing strategy – How do you plan to reach your customers?
- Current financial situation – What are your revenues? Do you have any bank loans, debts, etc.?
- Projected financial status – What revenue are you expecting?
- Investment request – How much are you asking for as an investment?
- Involved parties – Who are your partners, shareholders?
Though this is quite a lot of information for an introduction, try to keep it concise and fit it into one page. If you are not seeking investors or funding, you can skip this part.
Step 2 – Describe your business
This section of your business plan should answer two fundamental questions: Who are you, and what do you intend to do? By answering these questions, you should explain why you are in this business, what makes you different, what your future plans are, and why your business is a good investment bet.
Components this section should include:
- Legal structure of the company (Are you a small entrepreneur, LLC, or other?)
- Business model
- Industry
- Your business vision, mission, and value proposition
- General information or history of your business
- Business goals, both short-term and long-term
- Your team, including key personnel and their salaries
Step 3 – Present a market analysis
Market research and analysis is one of the key parts of your business plan. Here, you should review the size of your product's market, what position you have or will have in the market, and provide a competitive analysis. Market analysis is crucial not only for investors but also for validating your own assumptions as you execute your plan.
Step 4 – Outline management and organizational structure
This section should include information about who manages your company, what legal structure your business has, etc.
If you have a team, use an organizational chart to show your company’s internal structure, including roles, responsibilities, and relationships among the people in your chart. Explain how each person contributes to the success of your business.
Step 5 – Present your product or service
Dedicate a special and prominent section to your product or service information. It’s important to include visual material in the form of photos or videos.
If you sell many items, you can provide more general information about each product line. If you sell only a few items, provide additional details for each one—such as information about materials, origins, production techniques, etc.
Step 6 – Define your target audience
Your ideal customer, or target audience, is the foundation of your marketing plan. When making strategic decisions, you need to consider detailed information about the segment:
- Where they live
- Their age range
- Their education level
- Common behavior patterns
- How they spend their free time
- Where they work
- What technology they use
- Their income level
- Their values, beliefs, or opinions
- How they make purchasing decisions
- Where they shop
- Who or what influences them
For example, a student's interests, purchasing behavior, and income differ from those of a 50-year-old. Therefore, it’s critical to evaluate your segment accurately.
Step 7 – Create a marketing plan
Your marketing plan should be based on your target audience and reflect both your current decisions and your future strategy. It should focus on how well your goals, visions, plans, and ideas align with your target segment.
Your marketing plan should include four key elements, and you must clearly define each one. This is the marketing mix, the 4Ps: Product, Price, Place, Promotion:
- Product – What are you selling, and how does it stand out from similar products in the market?
- Price – How much does your product cost, and why should people pay this price?
- Place – Where is this product sold?
- Promotion – How will you reach your target segment with your product?
Promotion is the broader part of the marketing mix that needs to be thought through in depth, while the rest can be briefly outlined.
Step 8 – Outline the logistics and operations plan
This section is an important part of bringing your plans into reality, whether you are seeking funding and investors or not. So, address the following issues:
- Suppliers – Who are your suppliers, and where do you get the necessary raw materials (if applicable)?
- Production – Do you need production? How long does it take to produce? Is production dependent on the season? What is the busiest period for production, and other details?
- Facilities – Where will you or your team members work? Do you need additional facilities (store, factory, etc.), and where are they located?
- Equipment – What tools and technology do you need? (List any details related to this topic)
- Delivery and execution – How well do you and your team manage the tasks? Do you need additional external resources? If so, what type and volume?
Step 9 – Create a financial plan
Your financial plan should include three main points: income, balance sheet, and cash flow. To simplify things, here’s a sample financial report (open the link and view the file. For editing, you can copy the file and use it as needed).
The financial document is of great importance to investors and banks, so we recommend seeking help from competent individuals or organizations. The audit company TMC has extensive experience in this regard.
Going through these 9 steps, as you can see, is not that simple, especially if you need to attract investments. Of course, it's ideal if you can develop the plan independently, but if you're not willing to take the risk, don't shy away from involving competent people. Receiving reliable support at the start of your business is very important, considering that running a business involves many significant tasks, such as accounting, tax matters, finance, legal issues, etc.