This complete guide will show you how to write a business plan; topics such as how to create a marketing plan to financial projections will be covered in this extensive guide.
As lockdown measures across the world are being lifted and the economy begins to bounce back, we are seeing unprecedented opportunities arising for new businesses.
Governments across the world are increasing small businesses loans, commercial and retail space is cheaper than it has ever been, and customers are beginning to spend again. There has never been a better time to launch a company.
If you are looking to start your own business then you will need a polished business plan ready to go, long before you launch.
Table of Content
- Why write a business plan?
- A description of products/services
- Summary of your objectives
- Strong understanding of your market
- Potential for growth/ funding overview
- Your competitive advantage
- Company Description
- Details about your company e.g. location
- How large the company is
- What your business actually does
- What you hope to accomplish
- A description
- How the products and services will be priced
- A comparison of the products or services your competitors offer in relation to yours
- Sales literature
- Any intellectual property, such as trademarks, or legal issues you need to address
- Future products or services you plan to offer
- Products and services and your unique selling proposition (USP)
- Pricing strategy
- Sales and distribution plan
- Advertising and promotions plan
- Social media
- The amount of money to set up or maintain the business
- The amount needed for the next few years
- How do you plan to spend funds?
- Ongoing business expenses e.g. salaries
- Balance sheet & Cash flow statement
- Financial Outlook
Why write a business plan?
A business plan is a necessity for any modern business. Whether you are going to be applying for a loan, seeking investors, or even if you are self-funding.
Putting together your business plan will help you to get a complete picture of what your business will look like, what it needs to run, and any complications you could face during launch.
In this article, you will find a step-by-step guide to putting together a business plan. We will cover everything you need to include in your plan. As well as, talking about why these items need to be included and cover some business plan best practices.
Your executive summary should be the opening page of your business plan. It is essential and shouldn’t be missed – any serious investor won’t read a business plan without an executive summary.
You should see an executive summary as the elevator pitch for your business plan. You need to grab the attention of your investors, summarise your business, and show that your plan is viable.
You will want to sell your investors on your story and show that your business has the voice, the products, and the audience to back it up.
You will want to use short sentences throughout your executive summary, and use bullet points where possible. You will have a lot of information to cover and you don’t want to lose your investors’ attention.
Each section in your executive summary will act as a sample for the later chapters of your business report. You will want to capture all the important information without getting too bogged down in the details.
Most investors don’t read the rest of the business plan if they aren’t grabbed by the executive summary.
A description of products/services
You will want to begin by talking about what your business does. You may want to use the P.A.S introduction system – you present the problem, aggravate it, and then provide the solution to it. The solution being your product or service.
Summary of your objectives
Use bullet points for this section. Summarise your business’ main objectives. You can talk about the number of potential sales you are aiming for, market positioning, and your other intentions. Most importantly, make sure the rest of your plan shows that you can achieve these goals with ease.
Strong understanding of your market
This section should act as a taster menu for your market research and marketing plan. You need to show that you understand the market you want to move into, as well as past and current trends.
Briefly cover your advertising and social media plans. You may also want to give an idea of how you want your brand to look online. As well as, detailing some buzzwords you want to associate with your business.
Potential for growth/ funding overview
In this section, you should lay out the amount of funding you are looking for (if you need funding), how you plan to spend it, and what kind of profits you are looking to make.
You should look at including 1 year, 3 year, 5 year, and 10 year profit predictions. You should also keep these figures realistic and make sure that they are backed up throughout the rest of the document.
Your competitive advantage
In this section, you should explain how you are able to offer something your competitors can’t and how you are planning to eat into their market share.
You will want to use this section to introduce your company to the people reading your business plan. By the time they finish reading this section they should understand your company’s mission statement, its structure, what it plans to do, and how it plans to do it.
This section will be more detailed than your executive summary, and it will cover all the essential information about the day-to-day running of your company.
Details about your company e.g. location
Start this section by talking about where the company is going to be based. This will be very important for investors (and you), as it will affect what kind of tax will be paid on profits.
Then you should talk about whether your business will have a physical location, or whether it will function in another way.
Talk about the different types of locations your business will need to function – i.e. a physical store, a warehouse, a server farm, etc.
How large the company is
In this section, you will want to talk about two things- what your company is worth and how many people you will need to employ (or already employ) to keep it running.
These two topics go hand in hand, as you will have to prove that your business will be able to make enough money to support its payroll.
You do not need to cover the management structure of your business here.
What your business actually does
In this section, you will want to present your mission statement for your company. This should include why your company exists, what its role is (are you a B2B or a B2C business), and what its overall goal is.
You should share your process in detail here. For example, if you are planning to sell hats, you should briefly talk about the process of getting the materials, making the hats, and how you plan to sell them at a profit.
What you hope to accomplish
Here you should expand on your company’s overall goal. Include any smaller goals, you have as a company – for example if you plan to have stores in multiple cities within 3 years.
In this section, you don’t have to show how you plan to make your dreams possible. But you should make sure that you do cover that in the rest of your business plan – investors will look for these answers and won’t be happy if they’re not there.
Products and Services
In this section, you will want to outline the products and services you are planning to provide when you launch. As well as any products or services you plan to launch in the future. You should present your ideas about prices and profits in this section too.
This section should include a description of the products or services you are offering or plan to offer when your company launches.
By this point you should have made it clear why these products are necessary, so you will not need to waste space by explaining how they solve the problem you presented in your mission statement.
How the products and services will be priced
This is one of the most important parts of this section. Here you will show how your business plans to make money. If this section doesn’t sell your business to investors, nothing else will.
You should cover the price of your product, as well as breaking down the costs and profits of each item or service. Your expenses and markups should be clear to anyone, even if they are just skimming through the document.
A comparison of the products or services your competitors offer in relation to yours
In this section, you will need to explain what makes your business and your products different from your competitors. You should talk about what new things you bring to the market. And how you plan to improve on your competitors’ business plans.
This is particularly important if you are planning to charge more than your competitors. You will need to convince your investors that customers will want to choose your more expensive option.
Here you should include copies of any sales literature you plan to use. If you don’t have any yet then you should include some mockups of the final literature. This is not to be confused with the advertising you are planning to use.
Any intellectual property, such as trademarks, or legal issues you need to address
In this section, you will want to detail any trademarks that you have made in the name of your company as well as any other intellectual property you have a claim to or are planning to trademark.
You should be honest in this section, if you have any legal issues you need to address as a company. It is better for your investors to find out about these things beforehand.
Future products or services you plan to offer
This is the section where you can prove to your investors that you are not just a one-hit-wonder and that you have the knowledge to evolve and keep your company making money even after the market changes.
Here you should display any other products you plan to offer in the future.
We find that many entrepreneurs find this section the hardest to put together. If you feel like you are struggling, we recommend hiring a marketing expert to help you put together a marketing plan – as this will be a section investors pay a lot of attention to.
Products and services and your unique selling proposition (USP)
What makes your product unique? Why should your customers spend their hard earned money on your product? What will keep them coming back for more? What makes your product better than your competitions’ products?
These are the questions that you will need to answer in this section. This should be a customer-focused section that really shows how your customer will benefit from your product and interacting with your business.
Here, you will want to go back over your price point, your costs, profits, margins, and markups.
However, in this section, you will want to compare these figures to your competitors and their products. If you are spending more on materials you will need to justify it – i.e recycled plastic is more expensive with fits in with your mission statement to be environmentally friendly.
If you can include exact details about your suppliers, then do.
Sales and distribution plan
In this section, you will cover how your product (or service) is going to get from the factory and into the customer’s hands.
Will you sell your products online? In your own stores? Will you have it stocked in larger stores? If so, how will you pick out stores that align with your brand values?
You will need to talk about batch numbers and how much that will cost upfront.
Advertising and promotions plan
This should be the longest section in your marketing plan.
Here you will cover how you will build buzz before the launch of your first product. Then how you will keep the excitement and sales going.
You should discuss how other companies have done this and show that you know the best way to advertise your target audience.
You should talk about promotions, what response you expect to see from them, and how you will make up any money lost.
Long gone are the days when a company can get away with pitching without a social media plan.
The power of social media is strong right now, that with the right selection of pictures on Instagram companies can gain thousands of followers before anyone knows that they are selling.
While poor social media presence won’t destroy a business. A good social media presence can make one a success.
When putting this plan together, you will want to make sure you show that you understand how your target audience uses social media, what social media they use, and when they use it.
For example, if you are planning to offer a B2B (business to business) service, then you should be present, posting, and advertising on Linkedin. If your social media plan focused on Instagram, your investors might be concerned that you hadn’t really researched your market.
However, if you were looking at selling products to moms with teenagers – then Facebook would be the right place for you. Its average user is a female between 35-45.
If you do not feel like you understand the field of social media well enough then you may want to hire someone to help you put this plan together and implement it.
This will be the least glamorous section of your business plan (and probably the most boring section to write). But that doesn’t make it any less important.
In this section, you will show your investors that you understand how your business will run on a day-to-day basis and that you are prepared for that. Here you will show your strategy and implementation plans.
This is the place to discuss the fundamental goals of your business.
For example, you want to be turning a profit after 6 months. You want to have 100 employees by the end of the first year. You would like to open a second store before the business turns 5.
Here, you should step out these goals with a point-by-point plan underneath them. Depending on the type of goal you might want to put a timeframe on the goals or use some other tangible measure of success.
These goals should be related to keeping the business profitable – for example, talking about social media based goals in this section is irrelevant.
There are two different types of timelines you need to consider in this section.
Firstly, you should be looking at production timelines. These should include the timeline that covers you putting in an order for your product to the time when it arrives on the shelf. This will give you an idea of how far in advance you will have to plan launches and how long restocking products might take.
Secondly, if you are planning to expand or have set yourself tangible goals – you should have a timeline for achieving these goals set out.
In this section, you will want to break down the day-to-day operations of your business. Talk about opening hours, holidays, seasonal variables. Cover any of the assets that the business has or will acquire. Cover the equipment the business will be using.
You will want to talk about your plans for product testing, for acquiring materials, and for meeting health and safety standards.
You will need to outline how any physical premises will be run. Talk about whether they will need power, water, drainage, etc.
You should provide a detailed cost analysis of everything that you have covered in this section.
This is the area of your business plan that you will have to update most frequently, particularly at the beginning of your journey when you are seeking funding.
When you first write this business plan, this section may be a proposal to possible lenders. With you offering them stakes in your company, rather than sharing concrete facts about who owns what.
As you are gathering investors, you should make sure to update your management plan between meetings. You don’t want to bring people into a team with accidental false promises or with an incorrect idea about their position in the company.
This is the section where you will outline who owns what parts of your business.
If the company is very new then it may just be owned by you and your fellow founders. If you have put money into the business then you may want to list yourself as a stakeholder.
How you list yourself will affect the tax you pay on the company’s profits.
If you are looking to draw investors into your business then you can use this section to show what percentage of the business is up for sale and the predicted profits for the future owner.
In this section, you will be detailing the experience and the roles of the management team you have in place to run the business.
The idea behind this section is that you want to reassure possible investors that the business is being run by experts in the field who know what they are doing.
An experienced management team is less of a risk for your investors.
If you don’t have a team put together yet then you can just discuss the structure of the team you hope to build. Your investors may want to have a say in who you hire or how the team is structured.
If that is something you are open to, you can mention that in this section.
The final part of your management plan should be about the board of directors at your company.
Company’s that are in the early stages of fundraising will not have a board in place. This is nothing to worry about. Take a similar approach with this section to your ownership section.
Talk about the kind of board you would like to set up and how someone would earn their place on this board. Talk about the kind of people you want talking up those spots -you can talk about both experience and attitude.
If you do have a board then you want to talk about their roles and experience in this section. Show possible investors that your board members will look after their money.
This is another section that many entrepreneurs struggle with.
It is very important to get the numbers in this section right, as you do not want your investors to think that you are trying to mislead them. If you don’t feel like you can put together a financial plan on your own you should hire someone to help you do it.
In this section, you are going to cover all the financial elements of your business. Including what kind of investment you are looking for, how much the day-to-day running of the business costs, and any new investment you think you will need over the next 5 years.
The amount of money to set up or maintain the business
This section will be different for every business, but you should have a clear figure at the top of the page that shows how much it will cost you to set up your business (or to maintain it in its current state).
Underneath that, you should have a breakdown of all the different costs that make up that final number. Try to keep this section to a page. If needed you can put more detailed notes in an appendix and refer the reader to that page for more complicated sums.
You want to keep this section as clear as possible.
The amount needed for the next few years
Next, you will want to take a deep dive into how you think the day-to-day running costs of the business will change over the next few years.
You should also discuss any big expense that you can foresee. For example, if your bakery business picks up, you might need to buy a second over to meet demand and hire an extra baker.
You may want to do a couple of sets of calculations showing how different rates of growth would affect the costs of running your business. For example, slower than expected growth, expected rate of growth, 5% faster growth.
How do you plan to spend funds?
This section is about mapping out what you will do with the money you are requesting and any money you make as a business. This will include loans, investments, grants, sales, and profits.
You should talk about how you will be spending your money and how it will benefit the company or why it is essential you spend the money in that way.
For example, you may want to invest in electric vehicles for the company’s fleet. While the initial outgoings will be higher than buying petrol cars, the fule costs will quickly make up for this.
Ongoing business expenses e.g. salaries
Finally, you are going to want to break down the ongoing costs of running your business.
These are costs that are unavoidable and shouldn’t be ignored when you are working out how much it costs to run your business.
Three key examples of ongoing costs are salaries (the wages you pay your employees), taxes (the money you pay to the government), and rent on your buildings.
You should explain what the tax rules are in your state in this part of the document, as business taxes vary wildly across the country. This will be especially important for any international investors.
The role of your projections section is to convince the people reading your business plan that your business is built to make money. You want to show possible investors that your company and ideas aren’t a risky investment. Instead, they are a great opportunity.
In this section, you will want to be optimistic but not unrealistic. Again, you do not want to bring investors in with false promises, as this could get you in legal trouble in the future.
Balance sheet & Cash flow statement
This section is only for businesses that are already established and are looking for further investments.
In this section, you will want to include as much financial information about your company as possible. This is in order to give investors the opportunity to see that your business is already making money and is not a sinkhole for cash.
You should include these documents for the last 5 years or however long your business has been open if less than that:
- A complete set of balance sheets
- All your cash flow statements
- List of company expenses
- Income statements
- Payroll details
In your financial outlook, you want to paint a similar picture of success. You want to use this section to show how your investor’s money could be put to work and make them even more money in return.
You should prepare your predictions for the next 5 years. You should devote more space to the first year, covering it with quarterly reports, rather than annual ones. We would also recommend that you put two 6 month reports in for the 2nd year.
You should include the following information in your financial outlook.
- capital expenditure budgets
- A complete set of balance sheets
- All your cash flow statements
- List of company expenses
Appendices – Prototypes, statements, contracts, legal documents, etc
In this final section, you should include anything that is relevant to your business proposal as well as anything you refer to throughout the document.
You should not expect your investors to go online and find an article for themselves, instead include it in your appendix.
To make your appendix easier to follow, we would include a contents page and clearly label and the appendices. You could even use a color-coding system – i.e. all the appendices related to your financial plan have a green bar across the top of the page.
Your business plan will help you to gain investors for your business, help you win grants, and get a loan from the bank. However, they don’t stop being useful after you have got the money. Your business plan will continue to be a document you refer to as your company grows.
When you are pitching your business to investors you need to be prepared for anything they could ask. If you put in the time now and follow the guide above, you will be prepared.
Spending time on it now will pay off exponentially in the future.
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