You are pumped about starting your own business, and you feel that it is time to turn on the action mode.
Hold on! Your action mode needs- a plan of action, aka a Business Plan.
A business plan can be a great way to put your thoughts together and figure out the baby steps to get started. Formulating the plan may seem long and tedious. Here’s a step-by-step guide on how to write a business plan to make the process easier for you.
A business plan is like google maps for your goals.
What do you do when you are driving to a place you have never been before?
You open Google Maps; you check different routes to your destination. You check the traffic you might get. You choose the fastest and the most convenient route for your destination. And then, you hit the road.
A business plan precisely does this for your business goals.
- A business plan is a document where you clearly state your business goals and execution-oriented steps to achieve them.
- It covers your strategy to raise capital. (if you are moving in this direction)
- In-depth market research to know the game you are going to enter.
- Competitor analysis to understand your strengths and weaknesses concerning your competitor companies.
- Operational planning, such as hiring your team, suppliers, estimated cost, and profit projections.
- Ideas for marketing that can fetch you maximum returns.
Why is Business Plan important?
“A goal without a plan is just a wish.”
– Antoine de Saint-Exupéry
Before addressing “How to write a business plan,” you need to understand WHY it is important in the first place.
- A business plan helps you analyze the viability of your idea. The thorough market research gives you an overview of the challenges and prospects for growth.
- It also gives you solid facts and information to pitch to an investor.
- It gives you mini-goals that help you in achieving the bigger target.
- If you plan to build a team, your business plan will help you share your vision with the people you want to hire.
How to write a business plan – Time to roll your sleeves and get started
The following sections must be included in your business plan template-
- Executive summary
- Company description and objectives
- Market Analysis
- Competitor Analysis
- Financial Analysis
Executive summary – Like a detailed trailer to your movie
Executive summary as the name suggests is a brief description of all the points that will be covered in the upcoming sections of your business plan.
To think about it, you will prepare it after you have information on other sections. But you will place it as the first document in your business plan.
It is generally one or two pages long. It broadly explains how your product/service solves a particular problem faced by potential customers.
“How there is a problem to which your product is the solution. “
If you are pitching to an investor, give details on how you plan to use the funds. Show them how you plan to make a profit.
The executive summary is a critical part of the business plan, so take some time to summarize your thoughts.
Company description and objectives – Who are you, and what you want to become?
This section includes a brief description of your company. Here, you give an honest picture of your business (a lot like the pitch in Shark Tank).
The company’s history, its financial worth, the sales so far, and the projected growth. How long have you been in the business? Who is your target audience? You answer all these questions.
This section presents an opportunity to showcase the unique selling points of your company.
After covering the details about your present set-up, mention your future goals and the larger vision.
Think about the insights you have gained so far and the vertical in which you see yourself growing?
Market Analysis – Become a “Know it all” person.
Information on just the market share of your product is not enough. Thorough market research plays a huge role in determining crucial aspects of your business.
In this analysis, your goal is to make your target audience your best friend. You need to learn everything about them (well, almost).
Build a profile of your ideal customer.
-Age, gender, interests, purchase power, mode of purchase.
This information will help you set the price points for your products and place your product more strategically.
Additionally, the information on market trends will help you understand the scope of growth in your domain.
Competitor Analysis – Sometimes, it’s good to be a nosy neighbor.
Competitor analysis is a great way to find areas where you can have the edge over other players.
Divide your competition into multiple categories
– the ones in direct competition to you,
– the ones who might offer something similar to what you are offering, and
– the ones who might potentially enter your domain in future
Take into account their existing market share—research about your competitors in all aspects.
Research, research, research!
– check their product categories, history, financials, and maybe even buy a thing or two from them to understand their user journey.
By the end of this exercise, you would have identified your unique selling point and the areas where you can become better than your competitors.
Products and Services – Your product needs a price.
This section of a business plan is different for every business owner. It will vary depending on your product and the industry you are in.
You can start this section with a short description of your product and its uses for the end consumer.
As you move forward, make it as detailed as possible.
For example, if you are selling a product, you need to mention the per-unit cost of manufacturing and your present manufacturing capacity.
If you are not into manufacturing, then consider the plan to acquire the product.
A vital component of this section would be the price points of various categories/variants of your products.
For example, if you are selling handmade cookies online. Mention the different price points for various flavors of cookies?
Your market research would help you answer these questions.
Operational planning – Imagine a day in your office.
The plan of operation is all about how your office would look on an up and running day. It is fundamentally the “how” part of the business.
You need to address multiple questions here.
– What would the office hierarchy be? Who are the leading members of your team? In which location do you plan to set up your office? What kind of pay structures would there be? Do you have a backup for your suppliers?
All this can seem like a lot. Take a deep breath!
Make smaller segments of each of these sections.
– Suppliers, Employees, Office space, etc.
The next step is to jot down the things or more like a mini to-do list for each of these segments to run smoothly.
Don’t panic if you are still figuring out some of this stuff. There would be few things that you will figure out as and when things unroll.
The important thing is to have some tentative planning around them.
Marketing – Let’s get loud
Marketing your product is a creative process. However, make sure that you measure the result of every campaign/activity. Your results will guide you in deciding the growth strategies.
Before throwing in money, take a few fundamental decisions like-
-What is your marketing goal? Lead generation or awareness?
-How do you plan to divide your marketing budget?
What would your tone be with your audience- cool, quirky, straight, and simple?
-Do you plan to do it in-house or hire an agency?
Even before starting with the campaigns, take out time to know your audience. You can conduct surveys, phone interviews, etc. The other important aspect would be to have complete insights on the pain points of your audience. These two aspects would be the foundation of all your marketing campaigns. Thinking about the most effective ways to market your business could be tedious. To simplify the task, read marketing for small business-ideas and tips and more.
Financial Analysis – Know your numbers
Everything comes down to numbers! Period.
A thorough financial analysis will help you determine the operational budget. You will also get an approximate estimate while pitching to an investor.
Three things that you must state clearly –
-income statement (report on revenue and expenses),
-cash flow statement (money to launch and scale),
-balance sheet (account of liabilities and assets)
While pitching your plan, you should know precisely how much money you need and your plans to use it (otherwise, sharks would be unhappy :P).
Such an analysis would also help you in making calculated risks, especially when you are just starting.
Few tips for your planning journey
- Use simple words and language. Once you complete your business plan, you can review it on hemingwayapp.com. It scores your text for its readability.
- Be transparent about everything. It is essential for building trust with your employees/partners.
- Highlight what makes you different and the problems that you solve.
- Lastly, believe in yourself and be open to receiving feedback.
You are still the driver.
Now that you have a better idea about writing a business plan, it’s time to flex your fingers and get started.
Starting your own business is a brave decision. Be open to adapting and making changes to your business plan, as a lot of things will vary in the real-world scenario.
It is a roadmap, but you are still in the driver’s seat.
