The business plan, together with solid market research, is the foundation of any business. It outlines your company’s direction, brand values, identity, and how it has to operate to become successful. It also helps in keeping you focused on your goals and targets as your business grows.
Moreover, a business plan makes will make your start up company more attractive to investors and lenders. They can look at this document to see how viable your business would be in the long run, before investing into your venture. The language of a business plan does not need to be technical. It basically lists your strategies and objectives, assets and resources at hand, and the best methods for your company to become viable and generate desired profits.
Here are 7 steps to make your very own business plan:
Step 1: Name your business
Just like naming babies, choosing a name for your business is not an easy task, but it is important. This is the name you will use as you piece together your business plan. The business name reflects the character of your venture so be very deliberate when selecting one.
You can also come up with a separate name for your product or service. This could then serve as your trademark. Be very careful when picking product names because they determine brand image and experience.
Keep in mind the legal requirements when choosing names: you cannot use a name that has been registered with the Department of Trade and Industry or other government agencies, such as the Securities and Exchange Commission, and the Department of Labor and Employment. The law also prohibits naming a business or its products using words that are illegal, scandalous and purely generic. Names and styles used by the government in its governmental functions are also not allowed.
Step 2: State your mission
It’s easy to say that you want your venture to make money, but putting up a business is more complex than that. In the mission statement, spell out the purpose of your business and its goals, including the product or service concept you plan to adopt.
Keep the business goals and targets realistic, so as not to put off the reader (read: investors) with fantastic or fanciful claims.
Step 3: Introduce the business and its management team
Make a clear and complete description of the business and how you plan to start and operate it. State the rationale behind the business’s establishment. Introduce the people who will run or invest in it. Add pertinent details about their background, including prior professional experience, educational attainment, leadership skills, and personal resources.
You need to convince the reader that your management team is capable of achieving its goals. State specific strategies that you plan to adopt, along with identifiable results.
You should also add an overview of the general economic environment in which the business will operate, together with an explanation of how the team will perform under these conditions.
Step 4: Elaborate on your product and marketing plan
Discuss your product or service in detail, and how it would generate revenues for your business. Include here the following information: unique characteristics of your products, size of the potential market, suppliers, etc.
Next, describe your market, and provide a detailed description of your potential customers (demographic profile and recent consumption trends). Write down your sales projections, but do not make overly optimistic forecasts.
Step 5: Illustrate your financial strategy
This is where you will need to focus on the bottom-line. This will attract the most interest from your readers—show the flow of money into and out of the business, coming up with either a profit or loss for a particular period of time. Keep in mind that finance people will look at the numbers and analyze your projected performance ratios.
This is the part of a business plan that is usually daunting to aspiring entrepreneurs. Don’t be afraid to ask for help. Consult an accountant or a financial planner in preparing this section of the proposal.
Step 6: Write the executive summary
A business plan can be a very long document with hundreds of pages. For your readers’ convenience, provide a brief on the plan’s crucial contents. This will help readers who don’t have time to go over the entire document, and they’re often the decision-makers who should be informed about the business. The executive summary is usually written last, after the entire document is completed, and it may appear at the start or at the end of the business plan.
Step 7: Go over the entire document
Whenever possible, use charts and graphs to illustrate cash flows and projected return on investment.