How to Write a Practical Business Plan for Start Ups?
An entrepreneur without a business plan is like a voyager without a map, both bound to being lost and having no idea where to go. Therefore, planning provides a clear direction to businesspeople, reduces risk by predicting obstacles, and builds effective decision-making.
Whether you are planning to start a business or already have an operational company, a business plan is a necessity. For start-ups, it is required to approach and convince venture capital firms and investors. As for established businesses, it narrows down growth objectives.
According to Harvard Business Review, 28% of companies with a business plan are more likely to secure investment capital. On the contrary, just 12% of firms without a plan succeed in securing investment.
This statistic shows just how important a business plan is. With the following tips and tricks up your sleeve, you too can write a winning business plan that is applicable in the long term.
Before Writing Your Business Plan, Get Clear On Your Business Idea
Before you jump to write business plan, you should know the difference between a business plan and a business idea.
A b-plan is a detailed document that outlines a company’s objectives and how it will achieve them. A business idea, on the other hand, refers to the concept of identifying a gap, need, or opportunity in the marketplace along with its solution.
To know whether your idea is good enough, ask yourself questions like: Is it solving a problem? Are people willing to pay for it? Are you passionate enough about your idea? How is the feedback on your idea? And are your goals realistic?
If the answer to all these questions is positive, then that is the signal to get going and start crafting your business plan ASAP.
Business Plan 101: What to Include and Why?
If you are writing your b-plan for the first time or want to rewrite it for better flow, the following steps will help you understand what to write.
- Executive Summary: The Big Picture
Although this is the first section of your plan, it is recommended to write it in the end. That is because your executive summary is bound to evolve as you add more information to it.
This section includes a complete overview of your company, its vision, mission, products or services, and your unique value propositions.
It also serves as a pitch for your brand, as most investors or venture capitalists focus on this section more than any other. So, ensure that you make a lasting first impression and sound compelling and confident.
- Company Description: Tell Us Who, Where, And What You Are
Next, elaborate on essential details like your company name, who the founders are, where you are located, and your mission statement in this section.
Additionally, briefly describe your key services or products, but avoid going into detail as you will discuss this later in the products/services section. Make sure to also include your legal structure and what type of business, like B2B, B2C, you selected.
Lastly, stress your long-term vision about how you plan to enter and stay in the marketplace. Make sure you sound clear and impactful in your description. Ensure that your goals are SMART, which simply means specific, measurable, achievable, relevant, and time-bound.
- Market Analysis: Who Would People Buy from You
Moving forward to one of the most complicated sections, market analysis. This section will extensively demonstrate in which industry your firm fits in and who your target audience is.
Further, it will highlight the barriers you may face in your operations and how you plan to overcome them. It will then discuss who your competitors are and how you plan to capture potential customers from them.
Lastly, your market analysis will also include the findings you derived from tools like the SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis or PESTLE (Political, Economic, Social, Technological, Legal, Environmental) Analysis. This will add a valuable insight into your plan.
- Products/Services: What Do You Have to Offer?
Another crucial part of your plan is the stars of your business, also known as your offerings to your potential customers. This section will shed light on how and why our products or services are beneficial to your target customers.
It will also discuss what problem they are solving or what need is being filled. Along with these details, you should also include your product life cycle and your development and design plans. If you are offering multiple products, then it is better to break them down into different categories for better understanding.
- Marketing and Sales Strategy
Now that you know what you are offering in the marketplace, it is time to nail down how you are going to sell it. In this section, you must talk about your price point, sales strategies, and what advertising channel you will be using.
These channels may include direct sales or digital marketing, depending on whether you plan to open a physical store or operate online. Another important thing is to pick the colors, symbols, and logos for your brand, which will form an impactful brand identity.
Make sure you pick a color scheme that is both eye-catching and aligns with your business. If you are new to business and feel stuck writing this section, then you can seek assistance from professional startup business plan writers for a more refined business plan.
- Operational Plans: How Everything Comes Together
This is the part where you lay out the hierarchy within your company. You will let the venture capitalists know who is in charge, which individuals are included in various teams, who your board members are, the names of key shareholders, and your employees.
If you feel like it, you can also include an organizational chart that clearly shows the hierarchy to readers.
- Financial Projections Made Less Overwhelming
In the final section, you will explain why you need funding and how the money will be used. If you have already secured funding, discuss how you plan to use the investment to drive business growth.
Additionally, including financial statements is very common in business plans. It is encouraged to include cash flow statements, balance sheets, profit-and-loss statements, and break-even analysis.
These statements show the financial projections of your company for years to come. Make sure that your predictions are realistic. To make these statements easily understandable for readers, we recommend using charts and graphs.
Common Business Plan Mistakes
Now that you are aware of what parts to include in your almost-perfect business plan, here are some areas to watch out for:
- Crafting a Business Plan Without an Actual Plan
Do not just write a B-plan for the sake of writing it. Your writing should reflect your drive and passion to grow your venture. You are not just writing that plan to impress investors.
You are writing it to remind yourself why you started in the first place and what goals you want to achieve with your business.
- Badly Written Executive Summary
Let us be clear, most of the investors do not have the time to read the plan thoroughly. They will dive straight into your executive summary to get an overview of what you are all about.
If your summary fits into all 5 Cs of effective communication (Clarity, Concise, Coherence, Correctness, and Completeness), then it will surely grab their attention and keep them reading. But if it is written poorly without a thought, then you are bound to lose their interest within 7 seconds.
- Lack of Enough Research
A business plan that is not well-researched indicates that you are taking things for granted. If you are not ready to take your plan seriously, then why would the person reading it be interested in it?
So to capture your investors, it is mandatory to do your research and come prepared. If you truly love what you are doing, then this should not be that hard for you.
- Poor Writing and Formatting
You may assume that spelling mistakes, grammatical errors, or poor formatting are not a big deal, because who is going to read the whole plan anyway? However, in reality, if your potential investors struggle to read your plan due to poor writing, that forms a bad image about you, and you would lose your investors right there.
Therefore, to show the dedication, hard work, and planning that went into writing your plan, you need to ensure that it is easily understandable to the person reading it.
Plan Smart, Move Forward
It does not matter whether you are an emerging start-up or a well-established firm. You should craft a business plan as it helps you list your organizational goals, growth plans, and strategies, and how you would profit from your company.
As the marketplace, consumers’ tastes, and organizational dynamics change, so must your B-plan. You must update your business plan to keep it up-to-date and relevant in the long run.
Hence, this is your sign to get started and show your love for entrepreneurship.