Perhaps you believe you neither need a step-by-step guide to create a business plan nor do you require a template to write one.
Some entrepreneurs are successful without a business plan.
Some founders can build successful businesses with their great timing, business skills, entrepreneurial drive, and a bit of luck. However, the chances of those entrepreneurs failing are much higher.
A business plan is much more than just a document. It is a guide that will help you define and reach your goals. You can use it as a management tool to help you analyze results, make strategic choices, and show how your business will grow.
Writing a business plan is a great way to increase your chances of succeeding – if you are about starting a company or pitching a business idea to investors.
Why should you write a business plan for your company?
- Your business will grow faster
- Get funding by pitching
- Make confident decisions
Your Business Will Grow Faster
A business plan is about creating a foundation for your company. While you are not planning for the future, your core strategy will guide you in building your business.
The initial document is not meant to be complete, but it can be revised and modified to help you reach your goals.
It will be more difficult to keep track of your progress and make adjustments. You also will not have access to historical information to help you make difficult decisions. A business plan will give you a map that not only shows where you want to go but also where you’ve been.
Get Funding By Pitching
Investors and loan lenders need to see that you can clearly understand the trajectory of your business.
It is beneficial to show that your solution can be realized and sustained, that your business strategy works, and that your business is financially sound.
Potential investors will need to see your financial statements, forecasts, as well as a clear explanation of your business model.
Write your business plan to help you connect all the pieces and tell a coherent story about your company.
Make Confident Decisions
Important decisions for your business are made during volatile periods of growth, decrease, or even extreme crises.
You will need to make decisions much faster than you might like. These decisions can be less sure or more strategic if they are not based on current forecast and planning information.
The Key Components Of A Business Strategy
You might be wondering how to build a business plan. Well, we have the answer for you. Every business plan must include 6 key sections, regardless of whether you are creating a business plan to raise capital and grow your company or if you just want to determine the viability of your business idea.
The 6 key sections of a business plan are as follows:
- Executive summary
- Summary of company and management
- Financial plan
- Financial plan
An executive summary gives a brief overview of your company and its plans.
The executive summary is the first page of your business plan. It should be no more than one to two pages. It is usually written last by most people.
Questions such as-
- What are your products?
- How do you solve a problem or need for your market?
- Which market are you targeting?
- Who is your competition?
-are answered in the opportunity section bringing your products/business to the limelight.
The execution section of your business plan will answer questions like,
- How are you going to take this opportunity and make it a business?
This section covers your marketing and sales plan as well as operations and milestones.
Summary Of Company And Management
Investors are looking for great ideas and great people. You can use the company and management chapters to describe your current team members and to help in hiring.
If you are already in operation, this section will give you a brief overview of your legal structure and location.
A financial forecast is essential for any business plan. While we will tell you what to include, you should start with a sales forecast and cash flow statement.
Use the appendix section to add additional information or product images.
3 Tips For Creating A Business Plan
- Keep it brief
- Try your business idea
- Don’t get intimidated
Keep It Brief
It is important to be concise and clear in business plans.
This is due to two reasons:
Your business plan should be readable. A business plan that is 100 pages or over 40 pages long will not be read by anyone. You may require supporting documentation for certain sections, but these elements can be included in your appendix section.
Your business plan should also be something you use to manage and grow your company. You will continue to refine it over time. A business plan that is too long can be difficult to review. It’s almost certain that your plan will end up in a drawer and never be seen again.
Try Your Business Idea
You can test whether your business idea is viable by working through your business plan. Start with a 1-page pitch. You can get feedback from others and try different aspects of your business as you review your branding, mission statement, and execution.
This could be as simple as having your mentor or partner review your plan or market research to speak directly with your potential customers.
Your plan and your business will improve if you review and test each element. This will save you time and prevent you from spending hours creating a strategy that isn’t possible.
Don’t Get Intimidated
Did you know that most business owners and entrepreneurs don’t have business expertise? They don’t hold accounting or MBA degrees. They are constantly learning and looking for resources and tools to assist them.
Although writing a business plan can seem daunting, it is not impossible. Your business is your expertise. Writing a business plan, and then leveraging it for growth won’t take as much effort as you might think.
You don’t need to start with the detailed business plan I will describe. It can be easier to start with a one-page business plan (what we call a Lean Plan) and then return later to build a longer, more detailed plan.
Your company’s foundation is your business plan. You can set your business goals, track your progress by creating a business plan, clearly state your marketing strategies, sales, marketing plans, and financial forecasts.
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Make sure you stay tuned to our blog to get more amazing resources to help you navigate the market as a small business. Good luck!