Most of the time, a written business plan is only important to have on hand when you’re talking to investors or potential partners. However, it’s still helpful to have one that’s updated and ready at any given moment. Whether you already have one or not, you need to know how to write a business plan. Read on for some important things to consider as you craft your business plan.
How to Write a Business Plan: Prepare with Research
A business plan requires lots of descriptions, facts, and data to back up everything. Investors want to see that you’ve done your homework and thought everything through. The more research that you can do before writing your business plan, the more detailed and thorough you’ll be able to be. Once you’ve gathered the necessary documents and completed your preliminary research, it’s time to get to work. Here are nine sections that you should consider including in your business plan:
1. Executive Summary
Start your business plan with your elevator pitch. Can you define your entire business in one sentence? Provide your one-sentence pitch in the executive summary. Use this section to let your investors know how you define your business and what sets you apart from the competition.
Although this is the first section that investors will see, it’s actually a good idea to write the executive summary last. Once you’ve completed each section of the business plan, you’ll be able to write a well-written summary of each section that lets your investors know what you’re going to discuss throughout the business plan.
2. Business Description
After you’ve grabbed your investors’ attention with the executive summary, it’s time to dig a little deeper. Go in-depth for the business description. Talk about the products or services that you offer and how they differ from the competition. Discuss your company’s background, mission statement, and accomplishments. You can also talk about your business model with additional information in regards to the business structure, legal aspects, principal, and more.
3. Possible Obstacles
Not every company goes into detail about the possible pitfalls of their company. However, this can be a great way to show investors that you’ve thought about every aspect of your business. This also shows them that you’re being realistic about your company.
List the weaknesses and challenges that you foresee for your company. Then, talk about how you plan to overcome those problems. How will you keep these weaknesses from stopping you from reaching your goals? What can you do to turn those weaknesses into strengths? Make sure that you cover all of your bases, so the obstacles don’t prevent you from getting the financial backing you hope to receive from investors.
4. Market Analysis
Let your investors know about the market for your products or services. How many customers do you have, and what are your projections for the coming years? Where are the customers located? Who are your key demographics? How will you grow your client base? As you discuss these numbers, consider using graphs and charts to help convey everything to your investors.
Then, you need to show your industry knowledge. Take some time to also discuss your competitors. What are their strengths and weaknesses? How will you differentiate yourself from them? How will you improve upon what they’ve already done?
5. Organization and Team
In this section, present your team. Start by giving the organization chart, showing the various departments in your company and how they work together. Then, highlight some of the important members of your team. This could include owners, board members, accountants, lawyers, and members of management.
Provide background information on key individuals. Let investors know how your human resources add to the profitability and success of your company. Talk about how these individuals have helped other companies succeed, as well as other accomplishments that demonstrate their skills and talents in business.
Describe the day-to-day processes that your company follows. How does the company operate on a daily basis? Talk about some of the best practices that your company follows. Think about it like this: If the investor were to shadow you for the day, what would he or she see? What does the typical day look like for you and other members of your business? Are you waking up at the crack of dawn to bake all of the food to sell that day? Do you hit the pavement to meet with store owners who could benefit from your services? What strategies do you have in place to keep your business thriving from day to day?
7. Marketing Plan
Once you’ve given all of the background for your business, it’s time to discuss the future. How will you expand your business? Make sure that you have a plan in place to market your company and increase your numbers. Think about the costs, promotions, distribution, cross selling of your products, and more.
If you’re unsure about the best plan of action to take in terms of marketing, you should consider hiring a marketing specialist to come in and look at your company. Talk to them about the marketing plan that you could put in place to reach your intended audience and expand your customers.
This is one of the most important parts of your business plan. When looking to bring on investors, they will want to see how much money you’re bringing in, how much money you’re using, and how much money you need to boost sales. More than just telling them this information, you need to support it with statements, graphs, and other documents. Some of the things that you should include are cash flow statements, the proposed budget for the next five years, and revenue projections.
Since you want to prove to investors that you are well worth their investment, it might be helpful to include historical financial data, too. Have you previously owned a business that brought in lots of customers and became very profitable? If so, let your investors know about this. Use documents from the past to build confidence in you for the future.
The final section of your business plan is the summary. Use this space to sell yourself. Why should an investor take a chance on you? Why is your company worth the investment? You can summarize your main points from the business plan and add your own input to let investors know how great your business is, and how it will benefit with their investment.
How to Write a Business Plan: Getting Started
Now that you know how to write a business plan, it’s time to get to work. One of the best ways to create a business plan is to find a layout or format that you can use. Then, add the information your investor will need to make a decision about whether or not to invest in your business.
You may not need all nine of these sections. On the other hand, you may end up needing several more sections to discuss all the aspects of your thriving company. Whatever the case may be, make sure that you provide enough information to paint the whole picture of your business. Potential investors should walk away with very little, if any, questions about your company.
If you’re still unsure about how to write a business plan, check out examples online, as well as our Professional Writing lessons. Look for examples that are similar to your business, so you can get a better idea of what you need to include and what investors will be looking for when they read it. And as always, take the time to have several people look over your business plan before handing it to an investor. Check the document for any spelling, punctuation, or grammar errors that could make your business look unprofessional and leave a negative impression on potential investors.
Do you know how to write a business plan? Have you used all of the sections we’ve listed, or included others?