Does the idea of writing a business plan have you feeling anxious? You are not alone. Many entrepreneurs skip over this important step entirely because they have never taken business classes and they don’t have any idea where to begin. They assume they will be fine without one unless they ever need an investor. But in reality, the true value of a business plan is the work that goes into creating it.
Entrepreneurs probably spent a lot of time thinking about some aspects of the business, but there are undoubtedly some areas you haven’t even considered. There are so many elements that goes into creating a successful business enterprise, and it’s nearly impossible to anticipate them all on your own. A good business plan helps you find the pieces you are missing and put everything together to create the finished puzzle.
There are several sections of a business plan and it will be examined in chronological order.
1. EXECUTIVE SUMMARY
The Executive Summary of a business plan will appear first in the final version of your document, but it should be written last. The Executive Summary is an overview of the entire business. It gives potential investors/ readers a brief introduction into what they can find in your business plan and it helps you succinctly explain what your business is all about. The Executive Summary section should capture the following:
(a) Experience and background.
(b) The business mission statement.
(c) How the business fills a gap in the market.
(d) Target customers.
(e) Your products and the benefits customers would enjoy.
(f) Your financial information and funding needs.
(g) Future goals and plans.
The executive summary of a business plan is of paramount importance as investors could decide on whether to part with scarce resources based on the executive summary alone without having to go through the whole document.
2. COMPANY DESCRIPTION
The Company Description is the section where you’ll highlight the different facets of your business. Starting with your pitch and your goals. Here are a few questions to answer in this section:
(a) What is the business name?
(b) When was it started?
(c) What do you offer / serve?
(d) Does your business satisfy a gap in the marketplace?
(e) How does your business meet the community’s needs?
(f) What is unique about your business?
(g) Who does your business serve? (a specific group of customers, local businesses, events)
(h) What competitive advantages do you have over similar businesses? (location, value, expertise, efficiency, a unique service, etc)
(i) How will you attract customers to your business? Note: This should be a brief description, as you’ll tackle this question in depth when you get to marketing and sales in section 6.
(j) What kind of demand is there for your business? Again, answer briefly because you will address industry trends more thoroughly in market analysis section.
(k) What are your short-term and long-term goals for the business?
(l) What type of business philosophies do you operate under?
(m) What is your truck’s mission statement?
3. MARKET ANALYSIS
In the Market Analysis, you will explain your knowledge of the industry your business falls into and give report on any research you have completed. Be sure to include any data or statistics you have and explain how you arrived at the answers. Here are a few questions to consider in this section:
(a) How big is the industry your business falls into?
(b) What type of growth rate has the industry seen in the past year? The past 5 to 10 years?
(c) How is the industry expected to grow over the next year? The next 5 to 10 years?
(d) What customers make up your target market? What characteristics do they share?
(e) How big is your target market? Where are they located?
(f) What do your customers need? Is anyone else currently meeting their needs?
(g) When will your customers patronise you? What challenges will you face in making sales?
(h) What percentage of the market share can you reasonably expect to obtain?
(i) Do you expect this population (market) to grow over time?
(j) What businesses will you compete against? Assess the competition by looking at each business market share, advertising methods, strengths, and weaknesses.
(k) How will you cost your products or services? Will there be any discounts?
(l) What are the regulations, laws and policies regarding your business in your city (and any nearby cities you might serve in)?
(m) How will local ordinances affect your ability to sell your product or service?
(n) What does it take to be successful in the industry your business falls under?
(o) What is the greatest obstacle to starting and running a successful business such as yours and how will you surpass it?
4. ORGANISATION AND MANAGEMENT
Next up is the Organization and Management section. This is the section where you are going to explain who is on your team and what each person’s roles and responsibilities include. Be as specific as possible while answering these questions:
(a) Who are the owners? What percentage of the business does each person hold?
(b) What is each person’s job description? What are his or her responsibilities?
(c) What experience does each person have? (education, job background, unique skills, previous duties, honors and awards)
(d) Do any of the owners have experience in the industry where the business falls under?
(e) Have any of the owners ever started a business or been involved in a startup?
(f) Why is each person qualified to own and operate the business?
(g) How will each person be compensated or remunerated?
(h) Why is each person involved in this project?
(i) How will each person’s unique skills contribute to the success of the business?
(j) What financial assets or capital does each person have?
(k) Do you have an attorney or financial advisor? List their contact information here.
5. SERVICES AND PRODUCT
In the Services and Products section of the business plan, you get to highlight all of the uniqueness your product or service has to offer. Explain your product / service in juicy details. It should include what you are going to sell and why it will hit a home run with customers. And if you have ideas for the future, lay them all on the line here. Use these questions to get started:
(a) What does your business offer?
(b) Why will people patronise your business?
(c) What advantages does your business offer over other brands?
(d) How developed is your products/ services and the recipes you’re planning to offer? Have you already prepared them or are they all in the idea stage?
(e) Do you have any unique product or ideas that require copyrights, trademarks, or patents? Have you applied for these licenses yet?
(f) Will your business center around a signature item or are you planning to offer an expansive line of products?
(g) Could you open additional branches or offer franchises in the future?
6. MARKETING AND SALES
Every successful business share the same main engine which is loyal customers. In the Marketing and Sales section, you will explain how you’re going to get them. Firstly, let’s focus on marketing:
(a) How will you break into the existing market?
(b) How will you reach new customers? (social media, local ads, press releases, word of mouth, events, discounts, local deal programs)
(c) How can you encourage customers to return ie customer retention? (discounts, samples, loyalty programs)
(d) How will your business grow and find more customers over time?
(e) Will you branch out to include new products & services or expand to find new customers?
(f) How will you compete with other brands?
(g) What will your marketing efforts cost?
Now, let’s examine the sales strategy. Some business owners answer these questions twice. Once with their best guesses and the other with their worst case scenarios.
(a) How many sales do you need to make per year, month, week, and day to break even and to turn a profit?
(b) What are your sales figures based on?
7. FUNDING REQUEST
Because many business owners bootstrap their businesses or work with partners to get their business running, the Funding Request section is optional. However, if you are interested in finding an investor to back your business, you will need to answer these questions:
(a) How much funding do you need to get started? Remember to include all of the costs associated with running the business including: the equipments, maintenance, fuel, insurance, licenses and permits, staff members, office supplies, credit card processing systems, website or phone fees, legal and accounting fees, and marketing materials, etc.
(b) What costs do you anticipate over the next year? The next five years?
(c) How did you arrive at these figures?
(d) How will funds received be used?
(e) How do you intend to repay any loans you receive and what percentage of the profits will your investor receive in return?
(f) What opportunities will funding provide for your business?
8. FINANCIAL PROJECTIONS
Once you have established sales plans and a cost analysis for your business, you will get more specific about the facts and figures in your Financial Projections section. Here’s what you need to include:
(a) For the first year, create monthly or quarterly projections for your total income, costs, and losses.
(b) After completing projections for the first year, create a quarterly or annual estimate for the next four years.
(c) If you are seeking funding and you already have a business, you may need to include financial data for the past several years related to your business income, cash flow, and costs. As well as records explaining your assets and existing loans.
Note: For most entrepreneurs, this section involves a lot of guess work and that’s okay as long as you clearly indicate where you are making assumptions from and how you are arriving at your figures. Be sure that any numbers included in your funding request clearly match up with the projections and expectations you have outlined in other sections, as investors will carefully examine your document for inconsistencies.
Some business owners also create appendices with important documents to supplement their business plans. Although an appendix is not required, but it is a good way to present your most important records to potential investors and to collect the information for yourself. Your appendix might include the following:
(a) A copy of your personal or business credit history.
(b) Pictures, recipes, or prototypes for products or services that the business will render.
(c) Resumes for your owners or team managers.
(d) Reference letters.
(e) Licenses, permits, and certifications.
(f) Patents, trademarks, or copyright information.
(g) Market analysis documents.
(h) Leasing information.
(j) Contact information for your business consultants or legal and financial advisors.
Congratulations! Now that you have known how to write about the key facets of each area of your business, you can start creating and revising your plan to present a clear and comprehensive outline of your business needs, goals, and assets. If you are presenting your business plan to an investor, keep in mind that spelling, punctuation and your writing style matters a lot. Investors will judge your business plan by the information you include and by the way you share your plan.
Feel free to like, share and comment if you have more questions on how to write a good business plan.
Content created and supplied by: Odagboyi (via Opera News )