How To Come Up With a Business Plan
A great business plan allows you to clarify your business strategies, identify possible potential roadblocks, decide what you will need in terms of resources, and evaluate your idea or plans before starting a business.
Not every business starts with a formal business plan, however, if you are a founder and looking to get investors to invest in your company a business plan will come in handy. The business plan admits the entrepreneur to the investment process. Without a plan furnished in advance, many investor groups won’t even grant an interview. And the plan must be outstanding if it is to win investment funds. A business plan is also important as it helps the founders to take a step back and research their idea and the market they are looking to enter and understand the scope and the strategy behind their tactics
What is a business plan?
A business plan is a document that describes a business, its products, and services, how it earns money, its staffing and leadership, its operation model, and any other essential details that contribute to its success.
7 steps to write a winning business plan
Draft an executive summary
Describe your company
Perform a market analysis
Outline the management and organization
Define a marketing plan
Perform customer segmentation
Make a financial plan
1. Draft an executive summary
A good executive summary is one of the most important section of your plan. Its also the last section you should write.
The purpose of an executive summary is to give the relevant readers an overview of your business that nudges them to read further.
What it contains
Business concept. What does your business do?
Business goals and vision. What does your business want to do?
Product description and differentiation. What do you sell, and why is it different?
Target market. Who do you sell to?
Marketing strategy. How do you plan on reaching your customers?
Current financial state. What do you currently earn in revenue?
Projected financial state. What do you foresee earning in revenue?
The ask. How much money are you asking for?
The team. Who’s involved in the business?
2.Describe your company
This part of the plan answers two questions. Who you are and what you plan to do. Answering these two fundamental questions provides an insight into why you are in business, what you have going for you and why you are a good investment bet.
3. Perform a market analysis
This goes without saying. As a business owner you need to do proper market research. Choose the right market for your product, one with plenty of customers who understand and require the good or services you are providing. If you choose the wrong market then you will find yourself struggling with the sales.
Your plan should include an overview of how big the market is for your product / service, an analysis of your business potion in the market and an overview of your competitors. Research to back your conclusions will persuade investors to accept your assumptions as you work through your plan.
4. Outline the management and organization
This section of the plan should tell your readers who is running the company, detail the legal structure of your business and communicate what type of corporation you will be i.e limited partnership, sole proprietorship etc
If you have a management team, you could use an organization chart to show your company’s internal structure and how each person will contribute to the success of your business.
5.Segmenting your customer
Your ideal customer, also known as your target market, is the foundation of your marketing plan, if not your business plan as a whole. You’ll want to keep this person in mind as you make strategic decisions, which is why an overview of who they are is important to understand and include in your plan.
To give a complete overview of your ideal customer, describe a number of general and specific characteristics. Customer segmentation often includes:
Where they live
Their age range
Their level of education
Some common behavior patterns
How they spend their free time
Where they work
What technology they use
How much they earn
Where they’re commonly employed
Their values, beliefs, or opinions
This information will vary based on what you’re selling, but you should be specific enough that it’s totally clear who you’re trying to reach,and more importantly, why you’ve made the choices you have based on who your customers are and what they value.
6. Define a marketing plan
Your marketing efforts are directly informed by your ideal customer. Your marketing plan should outline your current decisions and your future strategy, with a focus on how your ideas are a fit for that ideal customer.
If you’re planning to invest heavily in Facebook marketing, for example, it might make sense to include whether Facebook is a leading platform for your audience, if it’s not, that might be a sign to rethink your marketing plan.
Most marketing plans include information on four key subjects. How much detail you present on each will depend on both your business and your plan’s audience.
Price. How much do your products cost, and why have you made that decision?
Product. What are you selling and how do you differentiate it in the market?
Promotion. How will you get your products in front of your ideal customer?
Place. Where will you sell your products?
Promotion may be the bulk of your plan since you can more readily dive into tactical details, but the other three areas should be covered at least briefly,each is an important strategic lever in your marketing mix.
7. Come-up with a financial plan
No matter how great your idea is, and regardless of the effort, time, and money you invest, a business lives or dies based on its financial health. At the end of the day, people want to work with a business they expect to be viable for the foreseeable future.
The level of detail required in your financial plan will depend on your audience and goals, but typically you’ll want to include three major views of your financials. An income statement, a balance sheet, and a cash-flow statement. It also may be appropriate to include financial data and projections.
In conclusion, A well-thought-out business plan is essential to the success of the entrepreneur and business as a whole. Whether you are starting a new business, seeking additional capital, or proposing a new activity to a corporate you will need to come up with a good business plan.