Every business needs to have a written business plan. Whether it’s to provide direction or attract investors, a business plan is vital for the success for your organization. But, how do you write one?
SBA.gov recommends that a business plan must include the following:
- Executive summary - a snapshot of your business.
- Company description - describes what you do.
- Market analysis - research on your industry, market, and competitors.
- Organization and management - your business and management structure.
- Service or product - the products or services you’re offering.
- Marketing and sales - how you’ll market your business and your sales strategy.
- Funding request - how much money you’ll need for next 3 to 5 years.
- Financial projections - supply information like balance sheets.
- Appendix - an optional section that includes résumés and permits.
However, getting started can be difficult to do. So, here’s seven steps in writing a perfect business plan.
1. Research, research, research.
“Research and analyze your product, your market and your objective expertise,” writes Bill Pirraglia, a former senior financial and management executive. “Consider spending twice as much time researching, evaluating and thinking as you spend actually writing the business plan.”
“To write the perfect plan, you must know your company, your product, your competition and the market intimately.”
In other words, it’s your responsibility to know everything you can about your business and the industry that you’re entering. Read everything you can about your industry and talk to your audience.
2. Determine the purpose of your plan.
A business plan, as defined by Entrepreneur, is a “written document describing the nature of the business, the sales and marketing strategy, and the financial background, and containing a projected profit and loss statement.” However, your business plan can serve several other different purposes.
As Entrepreneur notes, it’s “also a road map that provides directions so a business can plan its future, and helps it avoid bumps in the road.” That’s important to keep in mind if you’re self-funding or bootstrapping your business. But, if you want to attract investors, then your plan will have a different purpose and you’ll have to write your plan that targets them. This means it will have to be as clear and concise as possible. When you define your plan, make sure you have defined these goals personally as well.
3. Create a company profile.
Your company profile includes the history of your organization, what products or services you offer, your target market and audience, your resources, how you’re going to solve a problem, and what makes your business unique. When I crafted my company profile, I put this on our about page.
Company profiles are often found on the company’s official website and are used to attract possible customers and talent. However, your profile can be used to describe your company in your business plan. It’s not only an essential component of your business plan, it’s also one of the first written parts of the plan.
Having your profile in place makes this step a whole lot easier to compose.
4. Document all aspects of your business.
Investors want to make sure that your business is going to make them money. Because of this expectation, investors want to know everything about your business. To help with this process, document everything from your expenses, cash flow and industry projections. Also don’t forget seemingly minor details like your location strategy and licensing agreements.
5. Have a strategic marketing plan in place.
A great business plan will always include a strategic and aggressive marketing plan. This typically includes achieving marketing objectives such as the following:
- Introduce new products
- Extend or regain market for existing product
- Enter new territories for the company
- Boost sales in a particular product, market or price range. Where will this business come from? Be specific.
- Cross-sell (or bundle) one product with another
- Enter into long-term contracts with desirable clients
- Raise prices without cutting into sales figures
- Refine a product
- Have a content marketing strategy
- Enhance manufacturing/product delivery
“Each marketing objective should have several goals (subsets of objectives) and tactics for achieving those goals,” states Entrepreneur.
“In the objectives section of your marketing plan, you focus on the ‘what’ and the ‘why’ of the marketing tasks for the year ahead. In the implementation section, you focus on the practical, sweat-and-calluses areas of who, where, when and how. This is life in the marketing trenches.”
Of course, achieving marketing objectives will have costs. “Your marketing plan needs to have a section in which you allocate budgets for each activity planned.” It would be beneficial for you to create separate budgets for internal hours (staff time) and external costs (out-of-pocket expenses).
6. Make it adaptable based on your audience.
“The potential readers of a business plan are a varied bunch, ranging from bankers and venture capitalists to employees,” states Entrepreneur. “Although this is a diverse group, it is a finite one. And each type of reader does have certain typical interests. If you know these interests up front, you can be sure to take them into account when preparing a plan for that particular audience.”
For example, bankers will be more interested in balance sheets and cash-flow statements, while venture capitalists are looking at the basic business concept and your management team. The manager on your team, however, will be using the plan to “remind themselves of objectives.”
Because of this, make sure that your plan can be modified depending on the audience reading your plan. However, keep these alterations limited from one plan to another. This means when sharing financial projections, keep that data the same across the board.
7. Explain why you care.
Whether you’re sharing your plan with an investor, customer or team member, your plan needs to show that you’re passionate, dedicated and actually care about your business and the plan. You could discuss the mistakes that you've learned, the problems that you’re hoping to solve, listing your values and what makes you stand out from the competition.
When I started my payments company, I set out to conquer the world. I wanted to change the way payments were made and make it easier for anyone, anywhere in the world, to pay anyone with little to no fees. I explained why I wanted to build this. My passion shows through everything I do.
By explaining why you care about your business, you create an emotional connection with others. You then earn support for your organization to move forward.
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This article originally appeared on Entrepreneur.com. Minor edits have been done by Entrepreneur.com.ph.