Whether you’re planning to become the next young apprentice and face the dragons in the den (on the TV show, that is), or you’re starting your very own business and need some sponsors, the first step you need to take is write a business plan.
But where do you begin?
The good news is that you don’t need to spend days creating your strategy if you hire a professional business plan consultant that can help you put pen to paper and create your ideal business plan.
But if you want to take a DIY approach, we’ve got you covered.
Here’s how to write a business plan.
To actualize any vision, you need to have an action plan. Your business plan is essentially that: a roadmap comprising the goals you want to achieve, the methods you plan on implementing to smash your objectives, and the timeframes you aim to be moving in.
As business plans guide company operations and growth, they’re vital for businesses of any size — from the freshest of startups to the most long-established organizations.
A lot of the time, startup companies create business plans to share their vision with potential investors, in hopes of securing funding. Other reasons include onboarding prospective collaborators, or reaching a clear, strategic course of action to be shared within the team.
Depending on the desirable outcomes, business plans can vary in tone, structure and length, as described below:
- The one-page business plan is a brief overview of key priorities and direction. It can be used when mapping things out in the early stages of a startup or as a short pitching document.
- The “lean” business plan is typically a few pages long. Unlike traditional plans, it skips long summaries and details, and instead highlights specific deadlines, budgets and milestones.
- The traditional business plan is usually around 30 pages long and typically includes detailed sections such as an executive summary, descriptions of the products and services, target market, and financial forecasting.
Writing your business plan should be a high priority, as it can help you attract new investors and business partners. Providing them with an outline of the strategic steps you intend to follow will build that necessary level of trust in your new partnership.
Aside from persuading investors to take up an interest in your products or services, your business plan will help you navigate growth and management in the early stages of your venture. Future you will be grateful to have a step-by-step plan to fall back on and help you stay on track — and so too will any team members you recruit on the way.
Now that you know just how valuable a business plan is, let’s look at the best way to structure it. The step-by-step guide below refers to writing a traditional business plan, which is the most detailed out of the three types of plans you can have, complete with analyses and thorough descriptions.
Step 1: Start with an executive summary
This is the introduction to your business plan, which summarizes everything you will say in greater detail in the following pages. It should be captivating like a story, and set the tone accordingly; if the first chapter isn’t great, people might not want to keep reading.
You should spell out the content goals of your developed plan, hitting all the highlights. If you’re using your proposal to get investors, this section is vital for you.
Be sure to include background information about your business, the market opportunity, your capital requirements, a mission statement, an overview of management, competitors, your firm’s competitive advantages, and a summary of your financial projections over the next three years.
Make sure that your executive summary doesn’t exceed three to four pages; you don’t want to bore the reader, after all. Many business professionals write their executive statement last to ensure it summarizes everything that has been included in the plan.
Step 2: Write up a business description and overview
This section is designed for you to provide more information about your business.
You’ll need to inform your readers about the purpose of your business. Are you a new fashion brand focusing solely on sportswear for tennis players? Why did you decide to develop this company?
You’ll need to prepare a mission statement, business model strategy and any existing strategic relationships. You must also include present outlook with future possibilities. Think about other markets within the industry; will these new products and developments benefit or adversely affect your corporation?
Step 3: Describe your products or services
Here’s where you talk about the sole reason for your business: the go-to product or service.
You need to clearly discuss what you’re selling and why your products or services are better than competitors’.
If you sell products, state whether you’re the manufacturer, distributor and retailer, and give examples of your manufacturing process, availability of materials, and how you handle inventory and fulfilment. It’s also important to include any patent, copyright or trademark information here. If you plan to feature new products or services in the future, include that here as well.
Step 4: Outline your marketing strategy
In this section, you spell out your marketing strategy, addressing details of your market analysis, sales, customer service, advertising and public relations.
Many businesses use this space to showcase their vision of why their business will be successful, backing that up with market research that identifies their target market, industry and customer trends. Include information on both your planned and historical marketing strategies.
Step 5: Include a competitor analysis
Competitor analysis goes hand in hand with market research; in order to be successful, you must have a clear understanding of what opposing companies are providing.
Once you have done that, you need to explain why and how you plan to achieve greater success than them. Who are your competitors and what are each of their key strengths and weaknesses? In what areas will you have or gain competitive advantage, and how?
Step 6: Get into design and development
This is the meaty part of your plan. Here you should provide details of your sales strategy. What is your action plan? How do you think you’ll reach your target audience and dominate the market?
The design and development should outline how you plan to operate the business throughout the entire cycle to reach its goals. Provide investors with a description of the product’s design, chart development and budget.
Step 7: Provide details about operation and management
If your business plan is designed to attract investors, you’ll need to include information on current executives and managers working for the company, along with examples of how they have reached your business goals.
“For investors, it’s an important element to include who these people are and what their experience is,” says Tim Berry, president and founder of Palo Alto Software. The operations and management plan aims to describe just how the business functions on a continuing basis.
It will highlight the logistics of the organization, such as the various responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.
If you’re a small business, you should also include information on employees. If you’re planning on hiring people, this section should also outline the organizational structure and responsibilities of each team.
Step 8: End on financial factors
In the financial section, you provide the measurable income, payouts and profit of everything you stated in the previous seven sections. This is where you include your projected profit-and-loss statements, balance sheets and cash flow for the next three years.
It’s a good idea to consult a certified accountant when putting this section together. The numbers here should back up everything else that you’ve claimed in your proposal.
Write this section once you’ve completed everything else in the plan to double-check that your numbers add up correctly.
Your business plan is the foundation of your company. Devoting enough time to planning, drafting and carefully editing it is vital, as this can make all the difference in closing or losing the deal.
To increase your chances of bringing your product or service idea to life, try to avoid the five most common business plan mistakes mentioned below.
1. Rushing through your executive summary
Think of your executive summary as the opening act to your plan. Being the most crucial section of your business plan, it not only needs to attract attention but also function as a sort of page-turner mechanism. Make sure it’s concise and well-written, and keep its length to less than 10% of your entire plan’s span.
2. Making it too long
You want your business plan to be as engaging as possible so that you don’t lose your audience before they’ve reached the end. To avoid making it too dense with information, use bold visuals like graphs and charts in place of lengthy sentences. To ensure that your writing flows at a good pace, you can also use appendices for any supporting data or information.
3. Setting unrealistic goals
When writing a business plan, being honest with yourself and your audience is one of the best approaches you can adopt. Don’t include unrealistic earnings projections or underestimate your competitors; otherwise, you’ll risk sounding uncredible or unknowledgeable. Instead, do your research and focus on presenting facts.
4. Using poor formatting and grammar
Make sure you’ve read over your business plan multiple times. When editing, take regular breaks, and ask a friend or business partner to go over it too. The more meticulously you go through it, the more eye-catching it will look, which will entice potential investors to linger over it longer.
5. Not creating a business plan at all
Young entrepreneurs are often so eager to start a business that they might consider writing things down a poor allocation of time. But as writers start with plot outlines and architects with blueprints, you too should treat this initial phase as a vital part of the process. It will certainly prove beneficial in the long term!
We hope this guide has prepared you for writing your very first business plan. Before you switch to a new window and start typing away, let’s summarize the important bits:
- Do lots of research. Include your findings as supporting information.
- Be as concise as you can. Use graphs and appendices to make it a lighter read.
- Tailor your plan to your audience. Are you addressing new investors, prospective collaborators or current shareholders?
- Be authentic. Let your audience know just how enthusiastic you are about what you do.
Enjoy laying down the groundwork for your new beginning!
In the meantime, if you have any questions or want to share your own pointers about writing a business plan, just let us know in the comments section below.
Originally published on November 28, 2017. Updated by Electra Michaelidou.