Whether you’re planning to open a coffee shop or you want to create apps, you’ll need a business plan for this. You may be wondering why you need a plan at all – you have a clear idea in your mind about what you want to achieve, you know the market, you have the necessary skills and so on. So why do you need a plan?
Here are a few good reasons:
- Writing something down gives it structure and clarifies the idea.
- To get prepared for problems that will arise.
- The business idea may have some holes. This will become much more visible and understandable when you write it down.
- A properly written business plan can be shared with trusted people to get their advice.
- Banks, investors, and lawyers will want proof that you’re serious about your business.
- A good business plan will keep you focused, even when the day-to-day work becomes a distraction.
And now the question is: what does the business plan involve?
- Executive Summary
Your executive summary should be the first thing in your business plan. It should summarise what you expect your business to achieve.
You have to describe your company and the product or service that it will sell. It has to be brief, to catch and hold people’s attention. Try to describe the goal and mission of your business in just a couple of sentences. You can also include details about your experience in this industry.
- Product detail
Describe what your company will do and how will it benefit customers? What kind of research and development have you put into your company, and what results are you getting – and expecting?
If you are selling a product, sell the general idea and its benefits in this section, but don’t get too technical.
- Customers and target audience
Do you know what type of people (or businesses) will buy your product/service? If not, think about this, until you know. This is one of the first questions any investor will ask you.
Try to answer these questions:
- Know whether your customers will be consumers or businesses. If they are businesses, who will you target within those companies?
- Determine whether you’ll have regular clients or one-off buyers.
- Make sure you’ve spoken to some of your potential customers.
It’s also a good idea to identify the people who will buy from you. Think about the following things:
- Demographics – age, gender, and social status.
- Location – a specific area, town, or country.
- Profession – maybe you’re targeting programmers, or teachers, for example.
- Groups – people with shared interests, habits, and life-styles.
- Competitive analysis
Every business has competition, and a good business plan presents a comparison of your business to your direct and indirect competitors. You must show that you know their strengths and weaknesses. Also, it’s important to explain how your business will differentiate itself from all the others. That might be based on price, service, quality, range or value.
5. Description of management and organisation
You have to introduce your company managers and summarise their skills, and job responsibilities. Also, you can include a hierarchical chart of your company and describes steps for your staff expansion.
Don’t forget to indicate whether your business will operate as a partnership, a sole proprietorship, or a business with a different ownership structure. If you have a board of directors, you’ll need to identify the members.
- Build a financial plan
All business plans should contain some financial information. This should include the overall costs of setting up your business. For example:
- Cost to make/buy products.
- Staff costs.
- Distribution and marketing costs.
Some of the available accounting software can help you create a draft financial model.
7. Marketing plan
In your business plan, it’s important to describe how you intend to get your products and services in front of potential clients.
And for this section of your business plan, you need to think about the five ‘Ps’:
- Pricing – what will be the price of the end product?
- Positioning – how does your product or service fit into the market?
- Promotion – what channels will you use to attract customers?
- Profit – how much do you expect to make per item sold?
- Place – what are your sales outlets?
- Financial Projections
In this section of your business plan, you’ll reveal the financial goals and expectations that you’ve set based on market research. Report your anticipated revenue for the first 12 months and your annual projected earnings for the second, third, fourth and fifth years of business.
If you’re trying to apply for a personal loan or a small business loan, you can always add an appendix or another section that provides additional financial or background information.
- Plan your business around your strengths
While you’re writing your business plan, keep in mind your strengths – and areas for improvement. This will help you establish a plan which shows your abilities, while still being realistic. That’s more likely to convince investors that you’re serious.
Keep getting feedback from your advisors – official and unofficial ones. With their help, you’ll create the perfect business plan.