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 would operate in order for the business to become a success.
In most instances, the business plan is the official inception of a business idea as it shows the nitty-gritty of the proposed venture. If you are planning to start a business with a loan from the bank or with business partners, the business plan determines whether the deal will be closed or not.
But more often than not, writing a business plan is a daunting task dreaded by most entrepreneurs, especially those who have yet to start their business. However, one should not be daunted by the task, since the language of a business plan need not be technical.
Remember that a business plan is basically a list of your business strategies and objectives, assets and resources at hand, and the best methods for your company to become viable and generate your desired profits.A business plan can be as simple or as complex as you want it to be, but for your investors’ sake, do keep it understandable and not too wordy.
It should include the name of and description of your business, a vision statement, business profile, your products and services and key people; a description of the economic environment and how you intend to steer your operations through possible turbulence; a marketing plan and evaluation of competition; and a budget, including a cash flow projection.
Here are seven steps on how to make a business plan without breaking into sweat:
Step 1: Name your business
Most entrepreneurs consider their businesses as their babies; and just like naming babies, choosing a name for your business is not an easy task. The name of the business will be your trademark, and will represent your business in all transactions. Besides the business name, one should also consider coming up with a separate name for the products and services that will be offered.
Be very careful when choosing product names, for very often, this will determine the brand image and brand experience of your product.
After all, the name, as the Department of Trade and Industry would put it, is extremely important because it distinguishes your products and services from those of your competitors, and helps to establish your identity in the marketplace.
Step 2: State your mission
Most people have life goals, and so should your business. Although it may be easy to say that your business’s mission is simply to make money, putting up a business is in fact 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.
Like everything else, keep the business goals and targets realistic, so as not to put off the reader (of the business plan) with fantastic fanciful claims. Always keep in mind that a potential investor or lender will base their decisions on your business plan.
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. You need to state the rationale behind the business’s establishment. Introduce the people – the team – who will run or invest in it. It is however, not enough to say who they are – include a brief look at their background including prior professional and business experience, educational attainment, leadership skills, and personal resources. And convince the reader of the capabilities of your management team.
Include in this part of the business plan an overview of the general economic environment in which the business will operate.
Step 4: Elaborate on your product and marketing plan
In this part of the business plan, discuss how the product or service in detail and how it would generate revenues for your business.
This part will answer questions such as: Does your product have any unique characteristic? How big is its potential market and how much of that potential market can you attract over certain period of time? Enumerate your suppliers, their availability and reliability.
Next, describe your market, and provide a detailed description of your potential customers, such as their demographic profile and recent trends in consumption patterns related to your products and services.
Write down your sales projections as well, 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 of any business. This will attract the most interest from your readers – show the flow of money into and out of the business, coming up with either profit or loss for a particular period of time.
Keep in mind that finance people will be looking at the numbers and analyze your projected performance ratios. If your business has been operating for some time, and you have made a business plan in order to seek additional funding, pay close attention to the cash flow portion of your financial report.
The cash flow analysis shows how efficient the management team has been in making use of the cash that goes into the business. Most new businesses tend to end accounting periods with deficits; this is but normal. How this deficit will be turned around is an important point that the business plan should reflect.Present a detailed budget for your operations, reflecting all your departments’ projected expenditures.
The budget is an important guide when trying to raise revenues or when making capital investments.
Step 6: Write the executive summary
A business plan can be a very long document with hundreds of pages, so for the convenience of the reader, you need to provide a concise brief of the plan’s crucial contents.
This section encapsulates your entire business plan for those who don’t have time to go over the entire document – these are often the decision makers who should be informed about the business. The executive summary is usually written last, after the entire document is completed. The executive summary may appear at the start or at the end of the business plan.
Step 7: Go over the entire document
Whenever it is possible, use charts and graphs to illustrate cash flows and projected return on investment.