The hardest part about starting a business is getting funding. A great way to get that is to approach prospective stakeholders and apply for partnership or sponsorship. When you scout for investors and partners, you will need a business plan to convince them that your enterprise is worthwhile. Funding aside, a business plan is also necessary to guide you on how to achieve your organization’s goals. A business plan is not the same as a business proposal, see this article to understand the difference. It is the written form of your planned business’ strategy. It contains your short-term and long-term goals, your budget, and your action plan (how you intend to achieve the set goals). Having a business plan is important for small businesses and large organizations alike. In this article, we will be breaking down the steps to write an effective business plan for you, read till the end.
1. Start with an Executive Summary
An executive summary is a brief overview of what your business plan is about. It should come first in your business plan is about, however, it can also come last. It includes a summary of your business, your product or services, your target audience, and your goals. In clearer terms, it is the “who we are and what we do” section of your business plan. If the business plan will be used to source funds, this is where the budget will be written.
2. Talk about your Products and Services
In the section of the business plan, the goal is to describe your products or services and present them as the best option for your target audience. Describe your competition, what gives them the edge they currently have over you? Outline the traits your business has that could level the field in time, and how you can achieve that within a target period. Conduct a SWOT analysis on your products or services, and draw up an action plan to combat the threats.
3. Identify your target audience
Selling to the wrong audience is the one thing that can make or mar a business. Identify your target audience by evaluating the need that your product or service is meeting, and which of the over 7 billion people in the world have this need. Be as specific as possible, and narrow your audience down to the particular set of people that your product is most suitable to cater to their needs. Describe your target audience in your business plan, and how you can effectively communicate to them.
4. Discuss the results of your market analysis
Before starting a business, you should conduct a market survey and analyze the financial demands of the proposed business. When writing your business plan, you should include the result of the market analysis you have previously conducted. How saturated is the market with a product or service similar to yours? What is your success rate likely to be in your first year? How much will it cost you to start up your business? How much will it cost you to boost your product in the market? What is your budget for the first year? These questions and other related ones should be answered in this section of your business plan.
5. State your marketing strategy
The section of your business plan where you share your marketing strategy is the part that could convince your prospective partners of your success, or turn them off. If a prospect feels like your marketing strategy is not strong enough to bring conversions, they would tag your business as unworthy of their investment. In this section, seek to answer the question: how will you ensure consistent success? Discuss your pricing, marketing campaigns, brand promotion techniques, and idea for collaboration. It is a good idea to include how partnering with you or sponsoring your business will be profitable to prospects as well, in this section.
6. Outline the proposed structure of your organization.
Is your organization going to be a one-man company or a team of 12 men? What professionals would you need their services? What skill sets would be required for your team to succeed? This section aims to answer these questions. If your business is already functional, you should state the job description of each team member, and how they contribute to your organization’s growth. Also, outline the hierarchy in your organization and state your prospect’s role. If you are trying to get a partnership deal, this is the section where you state how much percentage of your organization’s profit partners are entitled to.
7. Discuss your plans for revenue generation
Writing this section can feel daunting, but it is one hundred percent necessary. This should contain:
- A prediction of the estimated sales and revenue for the first year. You may also need to give an annual estimate for the next three or five years, depending on your prospect’s demands.
- A profit and loss or income statement if your business is already thriving.
- A list of the assets and liabilities your organization has.
- The amount of capital you have already, or an estimated value of cash at hand yearly if the company is already up and running.
- A detailed explanation of how you plan to use your prospect’s funds.
8. Create an Appendix to Include any additional documents and citations
This is not a compulsory section. It can be skipped if your business plan is already too bulky. However, it can come in handy to showcase illustrations of your product, graphic representations of statistics, PS notes, and other relevant information that didn’t make it into the rest of the document.
- Your business plan should be concise. It should not contain anything that is not necessary.
- Always proofread your business plan after writing.
- If you do not intend to use your business plan to attract sponsors, a one-page plan to guide you as you build your business will be enough.
- Always write your business plan from the viewpoint of the three parties involved: the client, the investor, and the entrepreneur (you).
- Ensure your business plan describes five basic elements: your business, competition, marketing, team, and financial data.