Do you want to learn how to write a good business plan, but you don’t know where to start looking?Â
You have just found the proper platform; this tutorial will provide you with all of the necessary procedures as well as helpful hints for producing an excellent business plan.
To construct and expand an enterprise in an effective manner, all business ideas needs a written and structured action plan.
What Is a Good Business Plan?
A business plan is a guideline that specifies the measures to take in order to attain a certain business goal. It also defines the objectives of the business.
It serves as a guide for managing a corporation or a business in the future. It’s interesting to note that business plans are utilized at every stage of a company’s development, from the initial stages of startup to later stages of expansion, in order to chart a course toward financial and operational success.
Before a firm can borrow money from a bank or bring on new business partners, the company often needs to have a business plan in place.
The best plans are typically very extensive and include information on all parts of the firm, such as the industry, marketing, finances, employees, and other operating procedures. In other words, a good plan will be very specific.
They are detailed, they are communicated to all of the company’s personnel, and they demand everyone to make a commitment.
When you are learning how to write a good business plan, it is vital to keep in mind that the primary purpose of a plan is to act as a road map for how to organize, manage, and expand your new business.
It is crucial to keep this in mind as you are learning how to write a good business plan. It is a method of thinking through the fundamental aspects of your company.
Your business plan is the tool you should use to convince investors and other people who will be working with you, as investors want to feel certain that they will see a return on their investment. This also applies to other individuals who will be working with you.
Related: What is a business model?
Contents of a Business Plan
A good business plan should include the following information:
- All financial information including details about all loans and when they will be paid off
- Summarize details about capital equipment that will be used and how it will be depreciated
- Conduct a break-even analysis that estimates when your company will likely turn a profit
- Base your break-even analysis on a three-year forecast of sales and profits
- Project your sales and profits each month the first year and every quarter for years two and three, according to the Small Business Administration
- State the industry in which you will be operating in your business plan
- Include the strengths and advantages of the company over competitors
Learning how to write a good business plan will help you navigates your business on the road to success.
Only by setting a plan that outlines where you want to go, along with a plan of action on how you are going to get there, will you as a business owner know if you are heading in the right direction and how far you are from your final destination.
A business owner or prospective business owner writes a business plan to clarify each aspect of his business, describing the objectives that will anticipate and prepare for growth.
Main Purposes of a Business Plan
Before you write your business plan, it’s important to understand the purpose of creating it in the first place.
There are three main reasons why you should learn how to write a good business plan:
Establish a business focus: The primary purpose of a business plan is to establish your plans for the future.
These plans should include goals or milestones alongside detailed steps of how the business will reach each step. The process of creating a roadmap to your goals will help you determine your business focus and pursue growth.
Secure funding: One of the first things private investors, banks, or other lenders look for before investing in your business is a well-researched business plan.
Investors want to know how you operate your business, what your revenue and expense projections are, and, most importantly, how they will receive a return on their investment.
Attract executives: Learning how to write a good business plan will help you attract executives.
As your business grows, you’ll likely need to add executives to your team. A business plan helps you attract executive talent and determine whether or not they are a good fit for your company.
Categories of Business Plan
Most business plans fall into one of two common categories namely traditional business plans or lean startup business plans.
- Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section.
This type of plan is very detailed, takes more time to write, and is comprehensive. Lenders and investors commonly request this plan. They tend to require more work upfront and can be dozens of pages long.
- Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan.
This type of plan is the high-level focus, fast to write, and contains key elements only.
Some lenders and investors may ask for more information. They can take as little as one hour to make and are typically only one page.
Types of Business Plans
Types of business plans include, but are not limited to, start-up, internal, strategic, feasibility, operations, and growth plans.
The aforementioned falls under either traditional or lean start up business plans.
Start-Up Business Plans
If you intend to get a funding or grant, learning how to write a good business plan for your startup will you a winning opportunity.
A start-up plan is a business plan a new company gives to potential investors in the hopes of receiving as the name suggests start-up funding.
It is a detailed plan that helps you think deeply about your business and where you see it going long-term. It requires much research and analysis and may be relevant for up to 5 years.
The start-up business plan typically includes sections describing the company, the product or service your business will supply, market evaluations, and your projected management team.
Start-up plans operate as initial plans that businesses can adjust as needed as a company grows. When you read or hear about business plan, this is the business plan most established business owners have in mind.
Considering the research to be undertaken and information regarding the sections listed above, this plan may be from 20 to 75 pages in length. This type of analysis and detail is critical in a startup or major transition business.
Internal Business Plans
Internal business plans target a specific audience within the business, for example, the marketing team who need to evaluate a proposed project.
This document will describe the company’s current state, including operational costs and profitability, then calculate if and how the business will repay any capital needed for the project.
Internal plans provide information about project marketing, hiring and any technical costs. This type of business plan as suggested by its name is used within the company
Strategic Business Plans
Learning how to write a strategic business plan comes in handy when achieving company goals is of the utmost priority.
A strategic business plan provides a high-level view of a company’s goals and how it will achieve them, laying out a foundational plan for the entire company.
While the structure of a strategic plan differs from company to company, the following 5 key components are often included by most business owners: Company vision, Company mission statement, the definition of critical success factors, strategies for achieving objectives and meeting goals, and an implementation schedule.
Strategic plans are usually for internal purposes only as a foundational plan for an entire organization.
When creating this type of plan, management needs to assess the strengths of the company and indicate areas that can improve by using a SWOT analysis.
By performing a SWOT analysis management can determine which strategies are best to implement to leverage its strengths, choose the right opportunities, and overcome potential challenges uncovered by the evaluation.
Feasibility Business Plans
This type of business plan analyzed the possibility, viability and the practicality of a business before it is established.
It is written when a company is seeking a new business venture such as producing a new product in an existing market or selling current products to a new market.
This plan type details what market will want to buy the product or service and if that new venture will result in a profit worthwhile to the company.
For example, if you’re considering starting a rabbit farming business in Nigeria, you may need a feasibility plan.
This type of plan may require market research in the form of crowd-funding or product-testing to determine a product’s viability in the marketplace.
Feasibility business plans include but are not limited to, sections describing the need for the product or service, target demographics, and required capital. A feasibility plan ends with recommendations for going forward.
Operations Business Plans
Operations plans are internal plans that consist of elements related to company operations.
It focuses on mapping out the day-to-day operational activities a business needs to complete to achieve tactical goals and is part of strategic planning.
An operations plan specifies implementation markers and deadlines for the coming year. The operations plan outlines employees’ responsibilities too.
Operations plans are also used to justify an increase in operating budgets, normally requested on an annual basis.
Expansion plan
Sooner or later, you’ll need to learn how to write a good business plan for expansion purposes.
An expansion or growth plan is used when a company is looking to grow and the development requires greater resources like a financial investment, materials for new products, and an increased number of employees.
The plan must provide all company details to satisfy potential investors.
Businesses can create growth plans for external or internal reasons and include different information. External growth plans are written when expansion requires the assistance of outside investors.
They are written with the assumption that a bank or investor has little to no information about the company, so they normally include everything a standard business plan does with more in-depth details like a start-up plan to cover as much as possible.
Internal growth plans are written when company growth is funded from the business’s own revenue. This plan needs to include estimated expenses and projected sales but does not need to go into details regarding the company or product.
How to Write A Good Business Plan In 10 Easy Steps
Start with a cover page that will include the name, address (physical and online), and phone number of your company or establishment. Next is providing a table of content for easy referencing and location.
An all-inclusive start-up plan will include the following major sections:
- Executive Summary
- Business Overview/Company Summary
- Management background
- Products and Services
- Market Analysis and evaluations
- Marketing Strategy and Implementation
- Projected startup costs
- Financial Plan (Cash flow projections and income and profit expectations)
- Overall Summary
- Supporting Documents
The following explain briefly some of the sections
Executive Summary
The executive summary is the summary of the entire business plan. It is preferable to compile it when the business plan is finished.
That way, you’ll have thought through all the elements of your startup and be prepared to summarize them.
It provides a short overview over the basic contents of the plan. It provides a short, concise, and optimistic overview of your business that captures the reader’s attention and creates a need to learn more.
The executive summary should be no more than two pages long, with brief summaries of other sections of the plan.
Business Overview/Company Summary
Use your company description to provide detailed information about your company. Go into detail about the problems your business solves.
Be specific, and list out the consumers, organizations, or businesses your company plans to serve. List the company’s mission, vision statements, and the goal of the company.
Describe the overall nature of the industry, including sales and other statistics. Include trends and demographics, and economic, cultural, and governmental influences. Describe your business and how it fits into the industry.
Management Background
A good business plan isn’t complete without a management background. Before anyone will invest in your company, they want to know who is running the business.
Tell your reader how your company will be structured and who will run it. Describe the legal structure of your business.
Use an organizational chart to lay out who’s in charge of what in your company and to show and information regarding the owners, key employees, the management team, board members, advisors, etc. Show how each person’s unique experience will contribute to the success of your venture.
Products/services
Since the product or the service is the heart of any company, your business plan should include a detailed description of the products or services you provide.
This section should illustrate how your product benefits your target customers and should be easily understandable.
Market Analysis and Evaluation
You’ll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are.
You will need to demonstrate that you have thoroughly analyzed the target market and that there is enough demand for your product or service to make your business viable.
Describe any helpful barriers to entry that may protect your business from the competition, such as access to capital, technology, regulations, employee skill sets, location, etc.
Marketing Strategy and Implementation
There is no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs. This is one of the most important points of the business plan.
Your goal in this section is to describe how you’ll attract and retain customers. You’ll also describe how a sale will actually happen. Publicity is needed for making your product known. Which strategy is to be pursued and why is also part of the business plan
To make it more effective, explain whether you will primarily be used outside or inside sales representatives. You will consider if the advertising plans will include the use of magazine or newspaper, direct mail campaigns, Internet marketing or radio and television advertising.
Projected Startup Costs
Your goal is to convince the reader that your business is stable and will be a financial success. In this section, you will estimate the cost of starting and running the business.
Financial Plan
It is important that the amount that you provide be indicated in the company plan, as financial institutions value it highly when personal resources are used to fund new business loans. Include some financial estimates in addition to your request for funds.
Give an assessment of the company’s financial situation over the next five years. Include budgets for anticipated capital expenditures, income statements, balance sheets, and cash flow statements.
Be even more exact than usual with your forecasts for the first year by using quarterly or even monthly intervals. Be sure to include a detailed explanation of your estimates and align them with the funding requests you made.
If you include a breakeven analysis in your business plan, you will be able to show potential investors and financiers what amount of sales you need to accomplish in order to turn a profit. The profit and loss statement illustrates how the predicted growth in capital and value can be calculated.
A comparison is made between the turnovers and the expenses. When it comes to conveying the financial story of your company, this is an excellent location to make use of graphs and charts. You have the option of seeking the assistance of a qualified accountant.
Supporting Documents
Use the appendix to provide supporting documents or other materials that were specially requested.
Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, or patents, legal documents, permits, and other contracts.
The appendices and exhibits section contains any detailed information needed to support other sections of the plan.
How to Write A Good Business Plan (Summary)
Written documents known as business plans provide an overview of several aspects of upcoming commercial endeavors. This useful paper is frequently utilized by entrepreneurs in the process of formulating concepts for their businesses.
One of the critical management abilities that every proprietor of a company ought to prioritize developing is the capability of producing a solid business plan.
No matter what it is that you want to accomplish with your company, business plans often include a substantial amount of information concerning the internal and external factors that will form the basis of the small business.
Not only do business plans supply entrepreneurs with a playbook for their companies, but they also have the potential to assist in the process of securing outside funding for the companies.
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