How to write a business plan for your startupstartuplauncher
How to Write Business Plan for your startup or existing business. If you’ve known what is the business plan and why is it important to create one while starting or growing a business. To grasp the complete process, a startup or business must know the purpose of writing a business plan. Business plans are a roadmap to success. It describes the organizational structure, operational activities, and marketing strategies of a company.
In this blog, I’ll take you through each stage of creating a business plan. At every stage, a comprehensive description is added to learn about the key elements of your business.
As you already know, a business plan can help you to pitch investors or lenders for financing your business. The funding institutions or investors want to feel confident while looking through your plan. It’s the only tool to convince them for investing a large amount of money on your business idea. As a matter of fact, a strategic plan clarifies the amount of capital a startup or business need to expand in the right direction.
Four Steps for How to Write Business Plan
1. An Aim behind the business plan
What is the main objective behind creating a business plan? Is it for seeking fund or changing the direction of the business? Are you a startup or existing business?
Startups use a business plan to raise money for expanding the business concept further. Established businesses generally need a strategic plan to revise the goal or taking the business in a new direction. So think about what purpose you want to Write Business Plan.
2. Choose the right type of business plan
A plan can be either described in a single page or multiple pages. The business plan should be concise and clear to the recipients (investors or corporate partners). The aim behind choosing the right type of plan is to crystal clear the picture of your business idea. Hence, it is not guaranteed that a lengthy plan can attract the right investors.
3. Know Your Target Audience
Before jumping into startup mode, every startup must know about the target customers and whom they want to serve. Whatever the product or services you offer will be beneficial for your potential customers. So whenever you wonder what your customers really want, that time just asks them. Before sitting down to write a business plan, a business owner should know who are your audiences, what are their problems and how will solve that problem
4. Keep it clear
Last but important step to Write Business Plan; just keep it short and comprehensible. Try to note down mission and vision in your business plan. Some of the valid points should also be cleared. This includes three main points such as
- What business are you doing?
- How are you running or growing your business?
- Why are you working on that business idea?
10 Key Components of Business Plan
Every business plan starts with an executive summary, although business experts suggest including this section at the end. Brief highlights of your business will be mentioned here such as the introduction of business, goals, and mission as well as vision.
A compelling executive summary reveals the business purpose and why you started your company. It gives an impression like a trailer of the great movie. This further entices people to watch the complete movie. Or you can take a summary of a great novel where “the good parts” which intrigue your reader to dig more into it.
The following good parts to be mentioned are:
The “big idea” statement that reveals what you do and why you do.
A clear picture of where your company wants to be or how big this company is going to be. This shows why an investor/corporate partner should be part of it.
An organization structure describes the profile of directors, managers, and staff along with individual responsibilities they have.
The business description explains the revolutionary product or services you offer. It articulates why your product exists in the market place and how it helps your customers.
Here you should spend the majority of time than on any part of the business plan. The thing to consider while writing is: what is the biggest problem your customers facing? What solution you are offering and how your solution works better than anything else?
And don’t forget to mention the legal structure of your business and strategic relationships, intellectual property you may own.
Product or Services
This section demonstrates how your product works and why it creates value to the target customers. It may sound the same as you mentioned in the company description. Considerably, it shows how your audiences can choose the product or services you offer, set the delivery right time and gain 24/7 support from the team of industry experts.
Some other points include considering are the key features of products/services, how can customers use products/services in a day to day life and what social impact can happen.
The market overview clearly defines your market size which allows you to put attention on the latest trends and market conditions. This demonstrates why it’s the right time to launch your products/services in the market.
To succeed your company needs to know the market statistics and opportunities to show the business plan readers.
While to Write Business Plan, it’s mandatory for any startup or business to illustrate some market points:
- The market size where your company gets addressed.
- The estimated growth in your market.
- Spell out the trends which demand your product/services
- Link the success stories to promote your business.
In a business plan, it’s necessary to describe the marketing plan along with market analysis you have. The important points to consider in your marketing plan:
- How do you intend to attract potential customers for your products/services?
- What are the estimate target sales of your business?
- How much budget do you need for advertising and promotion purposes?
- What is the market strategy to stack up against your potential competitors?
Operational Plan and Management Tasks
The business operational plan describes how you intend to run the business, including general logistics, location, equipment, and operational value chain. While running the business, you must have permission and license to operate at that particular location.
The things to consider in the operational plan:
- From where you will get the necessary resources?
- How to use those resources efficiently?
- What is the operating model to manage investment costs?
You have already mentioned the profiles of the key management or the founders. This includes expertise, skills, and accomplishments. To maintain the quality of your company’s team, you need to monitor and proper learning or training session should conduct in-house.
While writing a business plan, it’s necessary to research on your potential competitors. There are two types of competitors in the same space:
Businesses that offer products or services that are virtually the same as yours.
Businesses that offer slightly different products or services but that could satisfy the same consumer need
So when you go out to identify the potential competitors, just consider this information about them: Company description, revenue generated in the last years, strengths and weakness along with similarities & differences between you and them.
The foremost question an investor asks the business owner: How does your company make money? If you’re a startup, you need to clearly define a model for generated revenue. It might seem like a shot in the dark. This works like a magic wand while convincing investors.
Revenue model shows investors or partners that you have the idea that how you will convert your product or services into sales. Hence, this is absolutely fundamental in lending credibility to your business plan.
The points covered by Revenue Model are Revenue Channels, pricing for each product/services, Cost of goods sold and gross margin(in percentage).
Financial plan includes the projection of balance sheet, income statement and cash flow statement. If your business is looking for a startup, you should make a list of key startup expenses. Remember lenders’ first concern is cash, not profit. You should also clearly show your sources and uses of cash.
Every part of the business plan is important but nothing will come if you have major cash flow issues. This section should also include the key financial assumptions, financial indicators, breakeven analysis, business ratios, scenario analysis and possibly your long-term financing plan.
Many investors see hundreds of deals every year. If you want to stand a chance of making any sort of meaningful impression, it’s important to show them that your business is more than just an idea. Traction can help your business to gain momentum. When you write business plan, just remember to keep all the section comprehensive for readers.
Here are some common questions of traction:
- How your product is working and gaining customers in the market?
- Do you have any unique manufacturing/distribution channels?
- How many customers you have gained till now?
- Have you generated revenue?
- Has your product/service been endorsed by any industry experts?
- Have you been featured by any media outlets?
I think now that you’re ready to roll up my sleeves and finally launch into the writing process; you can refer back to this. If you find yourself difficult to Write Business Plan, take help of our business consultants to tackle this project.