As the saying goes, “Failing to plan is planning to fail.” Research indicates that entrepreneurs who write a business plan when they start a new venture have a significantly greater chance of success. A business plan isn’t just a document to convince a bank or investor to back you with investment, it’s a roadmap to guide you. Effective planning can keep you on track and help you steer your business from a start-up to a large corporation.
Effective business plans are short, concise and realistic. Fifty pages of vague content won’t impress investors. Numbers and data must be accurate, and you must be able to justify any projections or assumptions. A business plan should be something to refer to on a regular basis, and it’s not a document you produce and lock away in a filing cabinet. Over time the contents will need reviewing and updating, and it can help you to make important decisions about the future strategy of your business.
The following headings will guide you to write an effective business plan.
- Executive summary
- Company description
- Market analysis
- Sales and marketing plan
- Operational plan
- Financial plan
This is a one page summary giving a concise summary of the business plan document. Anyone reading this should be able to understand what your business is about within a matter of minutes. Although the executive summary is at first section of the plan, it’s generally best to write it once you’ve completed the other sections.
This section is a more detailed overview of your company. It should include your experience and qualifications, the background of the business and the products and services you offer. Describing what’s unique or different about your business can be useful for convincing potential investors and making future decisions. For example, a business manufacturing office furniture could describe its policy of using environmentally friendly materials.
Stepping back to consider the market your business operates in can be very revealing. Consider the age, sex and income of your customers as a starting point. What issues are affecting your potential customers, and what are their needs? It helps if you can divide your customers into segments, as this enables you to target them specifically. The market analysis section of your business plan should also consider competitors and the products and services they offer.
Many small business owners shy away from sales and marketing activity, but you won’t have many customers if you don’t have plan for this. Even if you have an established and loyal customer base, it’s important to undertake some activity to keep in touch. Effective marketing methods for a small business include having a website and use of email and social media.
This section should describe the resources your business has and how the business will operate. Include brief details of your staff, and list their skills and experience. Writing this should help to focus your mind on how you will produce and deliver the goods and services your business offers. Consider contingency and growth plans and how you’ll adapt to changes in the future.
If you’re writing a business plan to attract investment, some detail around numbers and financial projections is essential. Investors may be happy to take a long term view, but they’ll need to be convinced that you have realistic and achievable financial plans. If your business plan is for your own purposes, including key numbers can help you to understand if you’re on track to meet your goals.
Having a written plan for your business is a great way to stay focused on what you want to achieve. It can also help you to make decisions about the future in line with your strategy.