So you’ve nailed down an idea for your new business, brainstormed the brilliant ways you can make a million, and now it’s time to get to work. What is the first step in creating a successful new business? You’ve probably heard of a business plan, but you may not be sure how to go about creating one, what it should include and who it is for. Here are some basics on drafting a comprehensive and effective business plan:
What is a business plan and do I really need one?
If you are starting a business, you’ve probably started drafting your business plan, even if you’ve simply jotted notes on a napkin, a notebook, or on your laptop. Simply put, a business plan is the description of your business, what you are doing, and how you are going to do it. The business plan will be helpful for you, but it will also be necessary if you are looking for a business loan or to contract with vendors. If you are launching a larger operation, you may need the plan to attract employees or to attract investors.
If you are becoming a part-time freelancer or starting something on the side that doesn’t require significant time, resources, or money, you probably don’t need a business plan. However, anyone who is starting a business that is intended to generate significant profit should draft a business plan.
What do I need to include in a business plan?
A business plan should include your goals, strategies, and any potential problems that you could face. It should also include the organizational structure including job titles and descriptions as well as the necessary capital to finance your operation.
Basically, you will need to outline your industry, your goods or services, and how you plan to be successful. You should also be able to outline how your business will work, who you envision as your target client, a description of your competition, and your plans for success. To complete the finance section, you may need assistance from an accountant to help assess your income and cash flow and how to break-even.
How should I organize my business plan?
The standard for any business plan will have all of the following:
- Executive Summary: This is an overview of your business as a whole and should highlight your strategy, objectives and goals. Here you need to answer one basic question: what is your business and why will it succeed?
- Company Description: This section of your business plan should provide basic information about what your business does, how you can distinguish it from competitors, and your target markets. It is important to articulate what makes your business unique from competitors. It could be a new model of service, a partnership, or a specific product. Make sure you have and highlight any distinguishing features or your business could be lost to competition at any time.
- Market Analysis: A market analysis requires that you thoroughly research your industry, the market, and your competitors. Who are your customers and what are their needs? Consider the scope of your market—local, national or international? How are these markets growing or changing? Are there any particular trends that give you an edge for future success? You should also consider the strengths and weaknesses of your competitors and how you can gain an advantage.
- Organization and Management: How many people will be running your operation? Who is in charge of what? What does the organization and management structure of your business look like? Who is on your current management team and what key hires do you need to make to complete the organization?
- Services or Products: What are you selling? What is the benefit to customers? Telling a story about your product or services and how it will turn a profit is critical to a successful business plan. You should also include specific information about the product lifespan, plans for future products, and any development aspirations.
- Marketing and Sales: Every successful business owner knows the importance of marketing and sales. Will you sell your product online? Have a sales team? What is your budget for marketing? How do you plan on reaching your target customers?
- Financing and Funding: Most business owners will need some sort of assistance to get funding. Your business plan should also include information on how you plan to get funding.
- Financial Projections: This can be one of the most difficult aspects of a business plan and may require professional input from an accountant. Your business plan should include financial projections, including how much you need to make to break even as well as long-term profit goals. What is your goal for the year? For the next five years? What milestones do you need to accomplish and when?
- Appendix: The appendix of your business plan can include any other information and supporting documents, such as permits, resumes, or leases.
How long should it be?
Depending on the nature of your business, the length of a business plan will vary. A lemonade stand won’t need a significant amount of analysis. If you are launching a complex business, a business plan could run upwards of 100 pages. Business owners who are seeking investors or business loans will need to be more thorough and could require more explanation, especially if the business is in a new industry or is a risky venture.
Do I need to hire someone to write my business plan?
Working with someone experienced in writing a business plan could help you create a unique and competitive profile that could give you certain advantages when seeking loans or investors. A business plan consultant could be worth the investment, particularly if you are launching a complex venture or if you need significant funding to get started. Before hiring a writer, make sure you have an expert with proper credentials, skills, and experience in business plans.
Creating a plan that will help your business thrive
Remember that your business plan is not just a tool to show off your brilliance to potential partners, investors, or lenders. As a business owner, you can benefit from exploring questions related to planning, marketing, competition, goals, developments, and future projections. The more time and effort you put into your plan, the more likely you will succeed in meeting your business goals. You can also iron out any potential issues or address pitfalls head-on. The best way to create a thriving business is to make sure you lay the proper foundation, starting with a strategic business plan.