For various reasons, your business plan is critical to your success. First and foremost, your business plan provides a firm foundation on which to develop while you figure out what to do next. Second, you must have a well-written business plan when pitching your company to potential investors.
Don't let the prospect of writing deter you. You can start with an informal strategy and clean it up later by fitting it into a business strategy template if you need to get a loan. Your startup strategy does not need to be perfect or in good form to present to investors later. The most important thing is that you act!
We'll walk you through the steps of creating a business plan, including 9 essential parts that every business plan should include.
Before you start, look through some sample business plans and templates from Wise Business Plans, which provide business plan samples for a variety of organizations and businesses.
The Executive Summary of your business plan outlines your company's aims and mission. It's simply a description of your business and the problems you'll be attempting to solve for your clients. Discuss your motivations and company goals. It's preferable to write the Executive Summary last after you've finished everything else.
Describe your company in your own words and discuss your expansion goals. Explain how you intend to make money. Describe the kind of customers you'll be targeting and how your products or services will specifically benefit them.
Demonstrate that you've properly researched the market you're targeting and that the service or product you're delivering is in high demand. Include details on the size of your market, how many clients you anticipate, and how many will be repeat customers. Discuss your competitors and how your company will differentiate itself.
Here you describe the product or service that your business is built around. Remember to write it as if you're presenting it to someone who has never heard of your notion before (it's easy to forget and write it as if you're talking to someone who already knows).
In this section, explain how you'll get reach the market you want. Will you create a website and accounts on social media? Do you plan on attending trade shows? How about paid advertising? Don't just think about what you'll do right now; if you want to put off paying for ads until later, write it down.
This section discusses how you'll staff and administer your business, as well as who the owners are (if there are more than just you) and the types of personnel you'll require. Include team members who you aim to hire as well as those who are already on your payroll. Each member of your existing significant team, including yourself, should have their own profile.
This is essential for your own planning as well as, more crucially, if you intend to seek investors. Make a cash flow projection that shows your expected monthly income and expenditure, a break-even analysis that shows how many sales you'll need to cover your initial costs and turn a profit, a sample profit-and-loss statement that uses expected values, and a balance sheet that shows your company's current assets, liabilities, and equity. These are the types of financial data you'll need to collect every year around tax time when you'll have actual numbers to work with rather than predictions.
What will your cash flow yield to your investors? This isn't simply for future outside investors you may contact (and with a more formal business plan). It should also provide forecasts for everyone who has invested money into the company's foundations, such as yourself and anyone with whom you are actively working.
The appendices are a compilation of any supporting materials you may have, such as testimonials, research excerpts, charts, and other business-related information.
Your informal business plan should be about ten pages long, excluding appendices if required. The informal plan doesn't have to be perfect, but it should be suitably professional - you may have a trusted friend or editor proofread it, for example.
Your formal business plan, on the other hand, can be up to 40 pages in length and should be written to the best standards possible, as it will be used to secure a business loan or attract investors. The appendices will help persuade them of the importance of investment in your business. Keep in mind that your official business plan should be appealing while also being honest.
