What is a Business Plan and How to Write a Business Plan
A business plan is a document that is designed to serve as an overview of how a company will operate and grow its business. A typical business contains and executive summary, product or services description, the makeup of the company’s management team, market and competition breakdown, marketing and sales strategy and financial planning and forecasting.
The executive summary serves to create interest for people such as potential lenders and investors. It should contain an overview of the products or services the business is going to offer, what value these will have for potential customers, an overview of what target market the business is going after, describe any business experience the members of the company have, list what the companies financing needs are and how much the business expects to make per year. Lenders and potential investors will look at the executive summary first to get a good overview of where the company is at and where it is heading. Keep this section short and to the point so it will be able to be understood by someone who doesn't know anything about your business and can read through it in about ten to fifteen minutes time.
The product and services section of your business plan is where you get to tell the reader what sets your company apart from its competitors. A lender or investor will want to understand what makes your business is better than any of its competitors so make sure to list all the benefits of your products or service so the lender will understand what sets your company apart from its competitors. This is where statements from current customers would go to show that there is already an interest in your business or service.
The management section is an important section as this is the section where you get to put your best foot forward for the individuals that will be involved in the company. Even a company that has the best product or service will not succeed unless there are some capable people behind them so make sure to highlight why the people running the company are trained, experienced and capable of running this business in the long-term. List any relevant education of the people in the company and any relevant work experience to maintaining and running the business. List any hands on experience and business successes achieved by the people running the business as this will carry a lot of weight when people read about the company.
The target market and competitors section will show anyone that reads your business plan that you understand the market you are entering and that you also understand the needs of your customers and what it will take to sell your products or services to them. Customers will only buy from your business if they think they are getting greater value then they could elsewhere so it is imperative that you understand your customer’s needs. You will also need to comment on market size and market growth potential as this will show that you not entering into a field that is declining and won't be around much longer as can happen if you’re trying to sell a product that could be viewed as a dying fad.
Once you have described your products and services you then need to describe how you plan on selling your products or services to your potential clients or customers. Make sure to cover your product and service and describe what makes it unique and attractive to a potential buyer. State what price the item will be and what the costs are behind the product or service that you would have to outlay in order to offer your product or service as any potential lender or investor will want to know if your product or service is going to be profitable and by what margin. Next list how you are planning on selling and marketing your product and service to your potential customers.
The final section will be your finance section where you will list all your expenses and money that you have already been able to source from other investors or loans. You will need to state the timeline of the funding you will require and forecast into the future what income you expect to be bringing in and finally when you see the business being profitable and operating under its own steam without any outside financial assistance.
This is the basics of what go into a business plan that you will be able to shop around to various investors and lenders and anyone else that might be curious what your business is doing such as any future executives that want to join your company or you are planning to hire.