This article was written and contributed by Timur Köklü, SEO Manager of Vectornator as the SEO Manager who operates an eCommerce shop as a side hustle.
Any successful business person will tell you the importance of having a business plan.
A plan helps you to manage your business and achieve goals. If you’re thinking of starting a business or already own one, now is the perfect time to create a business plan.
Studies show that businesses who incorporate a business plan into their company’s groundwork, succeeded 30% more than their counterparts who didn’t.
In this article, we’ll share with you tips on how to write a great business plan to help your business get the financial support it needs to scale up and scale up successfully.
What Is A Business Plan?
A business plan is a comprehensive blueprint for your business’ growth and development. It highlights who you are, your financial and operational objectives, and how you intend to achieve them.
A business plan also gives your stakeholders a timeline when they can expect you to accomplish each of the objectives you’ve included. In turn, they can then decide whether your business or startup is worth investing in.
Why Do You Need A Business Plan?
Having a business plan not only helps to achieve company goals but also develop a growth mindset. But it is also an important factor when it comes to collaboration with other businesses, as you will see below.
Here are 3 other main reasons you need to have a plan.
1. Collaboration And Partnerships With Others
Businesses that have something to look at that tells them what you and your business are all about is vital. Nobody is going to go into business with someone without knowing what their company’s goals and values are.
A business plan is like the first impression that your business makes on others. If you want to form collaborative relationships with other companies, they want to be impressed, and rest assured knowing that their efforts are all in good faith when deciding to collaborate or go into a partnership with you and your company.
Collaboration is important for growing a business and maintaining that growth. You may get new customers from networking with other companies, and the only way to reassure them that you know what path you’re taking is by stating the facts and figures in your business plan.
2. Keeps You On Track
This may seem like an obvious one, but it is often overlooked. A business plan will help keep you and your company on the right track and ensure that all those goals that you stated in the beginning are being adhered to.
What is the point of writing a great business plan if you aren’t going to reach those important milestones? Having a plan of action will ensure that you stay grounded and work according to and for what is best for business, and who is best for business.
3. Gaining Investors
At some point or another, when a business starts to grow, investors are usually the next step in taking that growth further.
An investor will think twice before going into business with a company that does not have a clear idea of where they are or where they want to be. Now, you can have presentations that are state of the art, but that is not going to reassure investors that your company is worth the risk.
Be prepared for scrutiny when it comes to investors, they are going to nit-pick every little thing in your business plan and ask you many questions. This is okay, nobody is perfect, you need to make sure you have answers to those questions and a plan of action of something in your plan is scrutinized.
Managing this sort of situation can be helped by having a backup plan for a,b or c or even trying and testing some of your plan’s objectives and seeing which stick and which do not. This can prepare you for investors’ investigations in the future.
What Can We Learn From Successful Entrepreneurs?
Cooper Harris from Klickly, a consumer data platform, says that an important thing to keep in mind when constructing a business plan is its length. Investors aren’t interested in reading a lengthy document with too many points.
Harris suggests keeping it simple to about 10-15 interesting points that sharpen the areas you want potential investors or partners to see.
He also mentions writing a detailed business plan for yourself and your team to stick to and showing investors a shorter version or presentation of your most important attributes and goals.
Jack Tai from OneClass, a course platform, suggests getting feedback on your business plan from various sources. Doing this will help identify any weak points in your plan and give you the time you need to improve upon them.
Having a fresh set of eyes looking at your plan will enhance the impression it gives to potential clients, partners and investors and make sure that you cover all your bases before going into this new business venture.
Fundamental Parts Of A Business Plan
For a business plan to be effective, it should contain all the following essential components:
- Executive Summary
- Market Analysis
- Financial Plan And Projections
- Company Description
- Sales, Marketing, And Product Plan
- Management And Personnel
This type of business plan is a brief introduction and summary to your business plan. An executive summary should grab the attention of your readers and let them know precisely what it is your business does and/or what your business aims to do.
The summary suggests what the rest of your plan may explain in further detail, and its not uncommon for investors or potential partners to read just the summary and decide from there whether or not to invest their time and money or continue reading the rest of your plan.
This is the first impression of you and your company. It is important to summarize the most important parts of your plan and, depending on the reader, what your plan can possibly do for them.
The market analysis section of a business plan explains or provides evidence that a niche exists in the market that your company can utilize.
This is also where your sales and marketing plan will fit in. Some vital components of a marketing analysis include:
- Industry analysis
- Target market analysis
- Competitive analysis
An industry analysis focuses on the industry or environment in which you want to work in. A target market analysis is important for identifying the potential customers you would like your company to focus on and sell to.
The competitive analysis aims to identify your competition in the same industry and where your strengths and weaknesses lie.
Financial Plan And Projections
This is often one of the hardest and most important parts when writing a business plan. Having a detailed financial plan is going to set your business up for success. Investors will be more interested in looking at your facts and figures to see the possible trajectory of your business.
A financial plan is a simple overview of your businesses’ current financial situation and includes long and short-term financial goals that your business aims to achieve. It is a starting point that helps to determine the strategy your business will use to gain profit.
To write this information, you need as it sounds, a description of your business.
- Who are you?
- What is your product?
- Where are you located?
- When do you plan on getting started?
- Why did you start this business?
- How are you planning on being successful?
These are all important questions to consider and mention in your business plan.
This is your opportunity to talk about your business like never before, mention details and an inspirational origin story, this will help potential partners or investors feel connected to your business and want a part in it.
Sales, Marketing, And Product Plan
This part of your business plan helps to outline how you plan on marketing to your target audience and the expected sales goals you want to achieve.
You are going to outline the best strategies for gaining new clientele and how you are going to afford your marketing strategies in the process. This also provides an opportunity for you to see where you need more resources dedicated to certain areas.
This part of the plan is also going to help you get financing for your sales and marketing ventures.
Management And Personnel
This section of the plan is all about introducing the team and what their roles are, the resources available, and the structure of business ownership.
This is where each of your team members’ skills are mentioned and how those skills are going to contribute to the growth of the business. The ownership section is meant to describe who and how much of the business you or you and a partner/s own.
You are also going to write about your internal management team and each of their duties and responsibilities. This is also a nice way to see if you need more employees for a certain team or less, and their contribution to the company in the short and long run.
Tips For A Great Business Plan
1. Keep It Simple
While it’s essential to have a detailed plan, investors prefer to read business plans that are short and straight to the point.
It’s also important that there’s no room for misinterpretation. So, choose simple words and write straightforward sentences. You don’t want to come up with a whole 500-paged book in the name of a business plan.
A simple language will get your message to potential stakeholders and investors in the shortest time possible. You won’t need to go deep and explain the same idea in a couple of words.
Better yet, prepare two versions of your business plan.
Furthermore, when you’re straightforward with your communication, you’ll have considered everyone, whether learned or not.
Your business plan should contain clearly outlined goals and objectives. You should also conduct a SWOT analysis and present the results in your business plan. This will provide a clear view of your business and make it easier for investors to understand your business motives and structure.
2. Invest In Good Writing
A professionally written business plan increases the chances of funding and partnership. Unfortunately, not everyone has the knowledge and skills to craft a professional business plan.
This is why you need to look for a competent writer to help you write your plan.
The writer should understand your target audience well before writing the business plan. Although you’ll have to pay for the services, getting a talented and certified writer will ensure your business plan is well-composed.
The writer will even help you conduct research and provide ideas on how to package and improve the plan.
Furthermore, a skilled writer will help you create your business plan in the shortest time possible. This will allow you some time to handle other aspects of the business. Their keen eye for details will ensure all gaps are filled and that no element is left out of the plan.
However, you can still create the plan yourself if you possess some writing knowledge and skills.
3. Market Analysis
Market analysis is a crucial part of writing a business plan. The term refers to a qualitative and quantitative assessment of a market. A market analysis looks into:
- Various customer segments and buying patterns
- Market size (in terms of value and volume)
- Barriers to entry
It is important to conduct market analysis when writing a business plan to show potential investors that the market can build a sustainable business and that you understand it well.
Furthermore, a market analysis is beneficial to your business in many ways. First, it enables you to identify opportunities in your target market. It also helps measure your business reputation, which can help you adjust to improve your image.
A market analysis enables you to determine your customer’s preferred products in the market. This way, you can either improve your product market fit or focus on what makes more economic sense. Again, the analysis gives you a clear insight into your competitors and how to make your business competitive.
4. Thorough Financial Planning
A financial plan represents the current state of your business. Financial planning is the process of identifying your current capital status and its competition. It involves framing financial policies concerning investment, procurement, and administration of funds.
The primary objectives of financial planning include:
- Determining capital requirements
- Framing financial policies
- Determining capital structure
- Avoiding excess generation of funds
- Coming up with counter strategies for risks
A financial plan should be included in your business plan, as it is a vital aspect of a business. Financial planning ensures there is a balance between the money coming in and going out to maintain the stability of the business.
It also helps businesses come up with growth and expansion programs for survival. Financial planning also minimizes uncertainties resulting from changing market trends by ensuring enough funds to deal with the situations.
A sound financial plan should contain the following characteristics:
- Based on clear-cut objectives
- Less dependant on outside sources
- Solvency and liquidity
Since the whole process is tedious and quite complicated, you may want to outsource help from a professional. Some options include a financial planner, a registered investment advisor, an insurance agent, or an accountant.
5. Competitive Analysis
Competitive analysis refers to the process of identifying your major competitors and researching their sales, products, and marketing strategies.
The analysis helps you identify the strengths and weaknesses of your competitors and to develop strategies to outperform them, improving your overall marketing efficiency.
Image Source: Alexa
Competitive analysis enables you to find a market gap and understand how to fill the gap.
In your business plan, you should describe how you’re going to study your competitors. You should also explain how you’ll maximize your strength to deal with stiff competition in the market.
The competitive analysis gives businesses a competitive edge over their competitors, which is why it should feature in your business plan.
Competitive analysis revolves around factors like marketing, technology, customers, product, and brand. It helps you identify what’s missing in competitor products and how you will add the missing feature to your products.
6. Detailed Target Market
Detailing a target market is one of the most crucial parts of a business. Your business plan should define your target market. A target market refers to a group of individuals to whom you plan to sell your products.
A target market can influence the product’s packaging, specification, and distribution. Many businesses spend a lot of money and time trying to identify their target market.
On the other hand, market segmentation refers to placing different potential buyers into groups measurable by certain characteristics.
To segment your customers, you need to gather some data about the customer’s characteristics and interests. Some of the aspects used in market segmentation include gender, age, marital status, geographic location, race, and education.
A target market statement should appear in your business plan detailing your potential buyers. If you have a potentially large customer base, investors will be more than willing to fund your business.
7. Package It Beautifully
Your business plan should be beautifully packaged to make it more effective and enticing to potential investors. The document should be easy to read through so that the message goes home quickly.
In addition to hiring a skilled writer to help craft your business plan, you may want to get a professional designer to help package it beautifully.
Remember, you’re not the only person seeking funds from investors. There are many business owners with well-thought-out plans seeking help from the same investors as you.
Therefore, any uniqueness you add to your business plan will be of great help.
Take time to pick an appealing design. The plan should be easy to read through. If you’re typing, make sure you use clear and readable font styles and sizes. Beautiful typography design will play a big role here.
8. Edit And Refine
Proofread and edit your business plan to ensure it has no grammatical or spelling errors. Make sure all the figures and data included here are accurate.
Source: PDF Reader
Examples Of Effective Business Plans
Now that you understand how to create a great business plan, let’s show you some examples, and tell you why they are great. Here is a sample of a video production business plan.
The plan starts with an executive summary explaining the nature of the business. Why is this plan a good one? The strategies and implementation tactics are well summarized. The planner lays out a financial plan to enable the business to secure funding.
This business plan is simple and cuts straight to the point. It covers three action plans: In-store, Online, and Wholesale, allowing the reader to quickly gauge and take stock of the entire proposal. While it’s fairly simple, the main driving point here are the numbers, and for many reasons, this is plenty.
The business proposal from above is also quite simple, relying on graphs and visuals to convey the important details. The quick breakdown of all the important aspects and points shows the potential investors all the necessary information, making it quick and easy to scan.
A business plan is integral to the success of your business.
It enables you to evaluate and explore ideas, research your market, and get the necessary funding from investors. A lot of good things can be thought out by hosting an interactive meeting.
When writing a business plan, make it clear and straightforward for easier understanding. Hire a professional writer/editor to proofread, edit and refine the plan. Invest in writing and editing tools to make your plan effective and error-free.
Remember, a business plan should showcase your company’s strengths and its goals and how you plan to overcome obstacles that will present themselves in the future.