Starting a business and becoming an entrepreneur might at first sound huge. But you find yourself on a rollercoaster trip once you dip your hands into entrepreneurship. The process involves several steps, from coming up with a concept of pitching it to investors. It is important for both of them to prepare a successful business plan. Before we discuss how to write a business plan, though, let us understand why it’s necessary to have one.
- To Raise Funds
Your business might need investors, and before they agree to invest, they’ll need to see a business plan. A shareholder will never involve himself or herself in it with a mere explanation of your plans.
- Attracting representatives of teams
To recruit the right team members, a business plan may also be used. To inform them about the potential your company has, you can share your proposal with an executive candidate or preferred partners. In the case of a startup with no track record to share, this is extremely important.
- Identifying the pitfalls of your business
A strategic plan allows you to identify your business weaknesses. They could suggest some worthy advice when you share your proposal with other experienced individuals from the same industry. Before investing a single rupee, this will help you identify and remedy the weak points of your strategy.
SEVEN SECTIONS TO INCLUDE IN YOUR BUSINESS PLAN
Here are the 7 sections that lenders and partners will expect to see in a standard business plan.
- Executive summary.
- Company description.
- Products and services.
- Competitive analysis.
- Marketing strategies.
- Operations and management plan.
Now let us explore each section in-depth.
- EXECUTIVE SUMMARY
A succinct outline of your business plan is an executive summary. The overview can communicate as much as possible about your organisation to readers quickly.
This section should include:
- Business name and its location.
- Offered products or services.
- The primary purpose of the plan (raising funds, defining goals, etc.)
- Mission statement and vision for the business.
While the first part of your business plan should be the executive summary, you will write it last.
2. COMPANY DESCRIPTION
From who you are to what your goals are, this section covers everything. Start with your industry’s brief summary. Consider mentioning the current scenario and possible possibilities when explaining it.
The company description should feature:
- The legal framework of the business – whether it is a sole proprietorship or limited to the public or whatever, for example.
- A brief history of your business and what needs it will meet that are not currently being met by another company.
- Your short- and long-term business goals.
3. PRODUCTS AND SERVICES
Without a segment about what you are selling, no business plan is complete. Describe it simply, whether it is a product or a service, with an emphasis on the advantages it can bring to consumers.
- A detailed description of the products or services you are selling.
- The market position of your product or service. In other words, how does the market perform better than comparable products?
- Any copyright, patent, or trade secret data information.
- Expected research and development programmes that could lead to new products or services.
Please ensure that information of vendors, service or product costs, and estimated net sales from each sale are included.
4. COMPETITIVE ANALYSIS
It is important to understand the industry before continuing with a business idea. Typically, the competitive analysis includes:
- Detailed overview, including gender, age, and other features, of your target clients.
- Overview of the market, including facts and statistics.
- Historical, actual, and predicted marketing knowledge for the goods or services.
- A detailed analysis of what your competitors are doing, along with their strengths and weaknesses.
This is your chance to show your knowledge of the industry, as well as conclusions based on your market research.
5. MARKETING STRATEGIES
These are essentially the particular strategies that you plan to use to get your product or service in front of potential customers. Summarize the sales and marketing plan in this segment, along with how it can be applied.
Here is what should be covered in this section:
- Details on how you intend to market the goods and/or services to your clients.
- The logistics and expense for each marketing campaign.
- A description of the whole operation, from receiving the supplies to providing the promotion.
- Details about the team, including the personnel involved, the tasks needed, and how they would assess their performance.
- Data for operating hours and necessary equipment.
6. OPERATIONS AND MANAGEMENT PLAN
This section explains how the business functions daily. It also includes details of the founders, team members, and the board of advisors.
Put simply, the operations plan outlines the physical necessities of your business’s operations:
- The physical location of your business.
- Facilities rented or owned.
- Equipment required.
This section can be divided into two parts – stages of development and production process.
Stages of Development: Here you explain what the business has done “to date” to make the business operational. Explain after that what else still needs to be done.
Production process: Try to demonstrate your understanding of the whole process in this section, from production to delivery of your product or service. Please note that details about the equipment used, technical specifications, materials, inventory, and approximate price of your goods or services should be added.
The last portion of a business plan is often dominated by financials. The section aims to encourage readers to invest in your business.
With the support of a competent accountant, consider having this section created.
Historical financial data: This section should include, for approximately three to five years (for an established business), income statements, balance sheets, and profit and loss statements.
Sales forecast: Be it small or huge, the growth of an organisation depends on its sales. Include a spreadsheet for the next few years with a sales estimate.
Cash-flow statements: In a nutshell, the sales and cost of the organisation are illustrated by cash-flow statements. Include claims from previous years in the case of an existing company. A startup could break down cash flow into forecasts for 12 months.
Break-even analysis: A break-even analysis calculates the amount of sales it would take to begin making a profit for your company. Using fixed and variable costs, it can be estimated and is an important inclusion in the financial forecasts.
You must have a business strategy to start a business that thrives in the long run. To apply for a loan or grant, you will probably need it.
‘A goal without a plan is just a wish. It’s the same with a business.’
To build an effective business plan, all the above sections are necessary. They will direct your decisions together, taking your company ever closer to success. And that is how a business flourishes.