How to write a business plan?
Do you have an idea for a business? Very good! Now it’s high time to translate it into a business plan. Are you wondering why you should do this? The answer is simple – mainly because the idea itself, without a specific plan for its implementation, will not bring you the expected profit. To learn how to correctly write your business plan, read this article.
As the name suggests, a business plan is simply a plan for your business that is most often written in the form of a document. It contains a forward-looking concept for the company’s development. What should this plan be? Usually, it relates to the short- and long-term goals of the project and includes a detailed description of them – for example, it could be a description of the products or services you want to produce or sell. The business plan should also include an analysis of market opportunities and measures to achieve the goals set in a specific market environment.
When you try to briefly define what a business plan is, it can be said to answer four main questions:
- Who is going to open their enterprise?
- What is the subject of the planned project?
- How will it be implemented?
- How much will it cost?
- Most entrepreneurs create a business plan usually in the planning phase of starting a business or when they intend to broaden the profile of their business.
If you ask yourself a question why you should write a business plan, be sure to read the reasons given below:
Organise information – Writing down your ideas on paper in the right way will help you organize what is in your head. Thanks to this, you will be able to look at your business idea from a different perspective.
Providing information – in fact, the most important task of a business plan is to provide the information necessary to make the right decision, both to start and stop a business. It may turn out that a project that, in your subjective opinion, has a chance of success, according to the analysis conducted for the needs of the business plan, will be unprofitable.
Credits, subsidies – creating a business plan is a requirement in institutions where funding can be obtained, e.g. at a commune office, employment office or bank. So if you want to create your business plan, it is worth checking first what the institution has requirements regarding the structure and content of the business plan.
Help in managing the company – a well-prepared business plan will make it easier for you to run your business, especially in its initial phase. Thanks to clearly defined goals that you want to achieve, as well as strictly defined methods of achieving them, you will not fall out of your chosen path.
Lack of an action plan is a simple path to entrepreneurial failure – many great business ideas have failed because they have not been prepared for a solid action plan that would include all the opportunities, threats, goals and possibilities of implementing such an idea.
There is no one perfect pattern for writing a business plan – what it will look like will depend on its purpose. When creating it for your own needs, you do not have to follow any strict rules, although, of course, it is worth sticking to the proven scheme presented below. If, on the other hand, you want to create your business plan to take out a bank loan or obtain a subsidy, you must first read the requirements of a given institution.
The business plan should be written concisely and reliably. It should have a table of contents and a clear layout that encourages you to read it. It is also advisable to post photos, diagrams and charts. The transparent and logical structure of a business plan significantly improves the process of its creation and implementation.
A typical business plan has several basic parts:
- Summary of the project
- Characteristics of the enterprise
- Description of the offered product/service
- Management and employees
- Market and competition
- Marketing strategy (marketing plan )
- Financial plan
The executive summary is a concise, abbreviated version of the entire business plan and is a separate part of it. It is a kind of showcase of the entire document, which should encourage a potential investor. That is why the summary must be prepared in a particularly careful and precise manner.
The length of the abstract is approx. 1-4 pages. Although it is the first part of a business plan, it is best to make it last, because it must contain the most important information from all the other parts. The content should therefore contain key data and arguments to inform about the venture and convince you that your company will be successful. What you write is simply intended to entice readers to read the rest of the document.
The characteristics of the company should contain basic information about the company. They will differ depending on whether they refer to a description of a new, newly established company or one that has been operating on the market for some time. Either way, the characteristics of the enterprise should be relatively short.
If you have been running your own business for some time, you can describe it in the form of a short history of the company. It is enough to indicate what your company does, in which market it offers its services or products, to what extent the position developed so far on the market has a chance to stand out from the competition and how it will contribute to the success of the undertaking.
In the case of a new enterprise, instead of describing the history of your company, focus on highlighting what you have already achieved in connection with the planned start of business, e.g. obtained permits, preliminary agreements with other entrepreneurs, acquired premises, etc.
As you know, a business is run to earn money by selling products and services. Therefore, the description of the product or service is one of the basic goals of a business plan. In this part, you need to explain what you want to offer and why someone will want to buy it from you.
When preparing a product or service description, you should necessarily include information about:
- type of product/service offered,
- his name,
- size, colour, height, weight, function or principles of operation,
- product/service prices,
- the cost of its production,
- its main features and benefits.
The sphere of company management also has its place in the business plan. Both the management and employees are very important elements of the company’s operation, which will determine the success of our project.
The fragment of the business plan regarding the market and competition aims to present the environment in which our company will operate. Through this part, we characterize the market in which our company will operate. Therefore, it should contain all the most important aspects of market analysis, presented in such a way that both the entrepreneur and the recipient of the business plan have a complete picture of the company’s environment.
In this section, you need to include information about the industry and its trends, as well as the characteristics of competitors and major buyers for your product or service. The closer you get to know your competition and customer needs, the better you will be prepared to run your business. Proper market analysis is the key to success.
The marketing strategy outlines the actions you intend to undertake in terms of marketing. It is complemented by a sales plan, which in turn describes how and to whom your products or services will be sold. A properly written marketing plan should inform you what tools you will use to reach customers and what costs it will entail. Therefore, when planning any activities, you should take into account the budget to be able to calculate what the company can and cannot afford.
Marketing activities and the sale of products are one of the most important elements of the success of the entire undertaking. When planning them, the following factors are primarily taken into account: product, price, place and method of distribution, promotion and advertising – colloquially known as the “marketing mix”.
The financial plan is one of the most important parts of a business plan because, as investors themselves say, it is on it that they focus their most attention. It should include the revenues and costs related to running your own business and define its financial situation with the indication of plans for the formation of the company over time. The financial plan will give you an idea of whether your outlays will pay off and will initially signal whether such a business will simply pay off.