It’s challenging to keep a vision of the future and determine what your company’s subsequent actions should be without a business plan. A well-thought-out business strategy is essential to a company’s success, so we decided to walk you through how to write a business plan step-by-step in this guide.
You’ll need a solid plan if you want to take out a loan, bring on a company partner, or do anything else. Your pitch should be your strategy.
Writing a business plan isn’t easy, and not everyone knows what it should contain. What’s more perplexing is that no two business strategies should be alike.
What Is A Business Plan?
A business plan is a written framework you present to others, such as investors, who want to join your business. It’s your pitch to your investors, in which you tell them about your startup’s objectives and how you plan to make money.
It serves as a road map for your firm, ensuring that your operations grow and change to accomplish the objectives outlined in your plan. A business plan can act as a living document as circumstances change, but it should always incorporate the fundamental goals of your company.
A business plan will help you better grasp what you need to do to achieve your objectives. The completed company strategy also serves as a reminder of these targets. It’s a valuable tool that you can repeatedly use to keep you focused and on track.
Let’s dive in and look at how to write a business plan step-by-step.
Step 1: Executive Summary
The executive summary provides a high-level overview of your company and its goals. It should be the opening page of your plan and should be no more than one or two pages long. However, most people write it last.
The executive summary should ideally be a stand-alone document that summarises the key points of your thorough strategy. When investors review your company, it’s not uncommon for them to merely want the executive summary.
They’ll usually ask for the entire plan, a pitch presentation, and more specific financials if they like what they see in the executive summary.
Your executive summary should include:
- A recap of the problem you’re solving
- Description of your product or service
- Overview of your target market
- Brief description of your team
- Breakdown of your financials
- Your funding requirements
Always keep in mind that each executive summary is – and should be – unique. The length of the executive summary will differ depending on the size of the business plan or investment proposal you’re delivering.
Step 2: Make a company description.
The business description part of your business plan includes crucial information about your company, such as what it does and what sets it apart. It gives interested parties an outline of the scope of your business idea and can range in length depending on the plan’s scope.
If your business plan is straightforward, you can keep it brief by describing the industry and product in one paragraph and then explaining your business and its components for success in three to four sections.
A longer company description may be essential in some circumstances, but you should always try to explain all critical information as briefly as possible.
Although it is primarily utilized when starting a business, it should be maintained and updated regularly as your company expands.
This data is useful for various reasons, but it is beneficial to potential investors and lenders so they can grasp your concept, the benefits it will bring your customers, and how your brand will be positioned in the market.
Step 3: Research the Market and Competitors
A competitive study can assist you in learning the intricacies of your competition’s operations and identifying potential opportunities to outperform them. It also allows you to remain on top of industry changes and ensure your product meets — and exceeds — industry standards consistently.
- Assists you in identifying your product’s distinctive value proposition and what distinguishes it from competitors’ products. This can be used to guide future marketing initiatives.
- Allows you to determine what your opponent is doing correctly. This data is crucial for being relevant and ensuring that your product and marketing initiatives outperform industry norms.
- It shows you where your competitors are falling short, allowing you to identify areas of opportunity in the sector and test out fresh, unique marketing approaches that they haven’t done.
- Learn what features are missing in a competitor’s product from user reviews, and evaluate how you may add features to your own product to address those demands.
- It gives you a standard against which to assess your progress.
Step 4: Establishing an Operational Structure
The operations plan is an important section of your business plan that describes the physical requirements of your organization’s operation, such as its physical location, buildings, and equipment. It may also include information regarding inventory requirements, suppliers, and a description of the manufacturing process, depending on the type of business you’ll be running.
Keeping the bottom line in mind will help you organize this section of the company plan. Consider the operational plan to explain the capital and spending requirements your company will need to operate daily.
In the operations portion of your business plan, you must demonstrate two things to the reader: What you’ve done thus far to get your company off the ground and comprehend your product’s or service’s manufacturing or delivery method.
Step 5: Describe the product
The product description section of a business plan describes all of the company’s products. Your product description section should also explain how your products differ from similar items on the market or why your product is needed if no market exists. To guarantee that the value of your items is evident, this section should be understandable by anybody who reads your strategy.
Step 6: Describe your funding request
Try to be as realistic as possible when estimating how much money your small business will require. If you don’t want to supply an exact number, you can specify a digits range. Include a best-case and worst-case scenario, though.
Because a new firm lacks a track record of profitability, you’ll likely sell equity to raise funds in the early years of operation. When you sell equity to obtain finance, you sell your company’s share.
Whether or not you include a financing request in your strategy, you should consist of a financial analysis here. Here are two things you should do: Draw a picture of your company’s past performance and how it will improve in the future. To make the experience easier, use charts and visuals.
Demonstrate consistency in your finances if your company has been in operation for a few years. However, if your company is newer and not yet profitable, your estimates should be clear and realistic. For example, if your quarterly sales have been steadily increasing at 5%, you don’t want to suddenly expect a 50% quarterly sales increase for no reason.
Step 8:- Appendix
An appendix to your business plan isn’t needed by any means. Still, it’s an excellent place to put charts, tables, definitions, legal notes, or other critical material that felt too extensive or out of place elsewhere in your business plan.
If you have a patent or a patent application pending, or product illustrations, this is the place to put them.
Hopefully, the above steps explain how to write a business plan step-by-step.
Business plans are effective methods of explaining your company comprehensively. Lenders may decide whether or not to lend to you, depending on your business plan. Investors may determine whether or not to invest in your company depending on your business strategy.
This Guide will teach you all you need to know how to write a business plan step-by-step. After reading this article, you will have the information and tools necessary to report a business plan and make a constructive contribution to the state.