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How to write a business plan - Step By Step

How to write a business plan Step By Step

A well-thought-out business plan is critical to a company's success. It isn't easy to maintain a future vision and establish your company's next steps without one. Consider a litmus test to show that each stage is part of a larger, well-thought-out plan. A business plan is also necessary for the company's external activities, such as applying for a loan or welcoming a new partner. On the other hand, writing a business plan is not an easy undertaking, and few people are capable of doing so. Also, even though the firms are similar, no two business plans should appear alike. Please try to customize the plan to fit your company's requirements. As a result, this tutorial walks you through a step-by-step process of what a business plan should include and how to construct one.

Before writing a business plan, you should consider a few things;

Know who your audiences are, what level of education/knowledge your audiences have, and tailor your plan to suit them. Do not use complex language if your business operates in a very niche space. Another tip is to keep the length of your business plan as short as possible. However, some people might be interested in high-level details while others might want more details, and that's why being aware of your audience is critical.

How to write a business plan;

In a nut shell a business plan should include;

Executive summary
Company description
Market Research
Competitive analysis
Product or service
Marketing strategy
Business financials
Describe your organization and management
Funding request
Appendix

Executive Summary

This is the first page of the business plan and should include a mission statement outlining your company's principal goal, as well as a brief explanation of the products or services you provide. Also include the basic information about your ownership structure, and a summary of your plans. Then add a high-level summary of your plan and company strategy to your pitch. However this should be limited to one or two pages. On the executive summary, include the following;

The name of your business
Key Employees
Business Physical Address
Business Background
Listing of goods/services offered

Company description

This part of the business plan provides you with a snapshot of your small business. It contains crucial information such as the company's registered name, addresses of any physical sites, the names of key personnel, the company's history, the nature of the business, and more details about the products or services it offers or will offer. Keep this section as detailed as possible as it will help your investors have a clear understanding of your business and products offered.

Conduct Market Research

Market Research is an integral part of writing a business plan. Making assumptions about your customers, market, competitors, or processes can lead to a waste of time, money, and effort when it comes to running a business. You will need to devote part of your resources to market and marketing research to make good decisions that will expand your business and use your resources efficiently. Any smart business will need to do extensive market research before entering a new market. This isn't confined to big businesses, and your readers will almost definitely want proof. You can specify the industry and market in which your business will operate, as well as the prospects that your business will pursue. As a result of your market study, have you seen any unexpected patterns? If that's the case, this is the place to show it off.

Market research helps in;

Improving Communication
Identifying Opportunity
Lowering the business risk

Conduct Competitor Analysis

Create a competitive landscape as well. Competitor Analysis is part of Market research where you identify other Companies that currently sell in the market you are looking to enter. Setting aside enough time to research every possible competition may seem daunting, but is highly beneficial. What are the things that your competitors are doing well, and what are they doing badly? Why are you entering this market, and what weaknesses in the business might you exploit? What will rivals' rational response be? Will you be accepting clients? Also consider the following;

What are your competitors doing?
What is their business model?
What is their pricing model?
Identify their unique proposition.
Are there gaps you can utilize (Something your competitors are not doing)

Describe your Product and Services

This part discusses the advantages, production process, and life cycle of your products or services, as well as how your company differs from its competitors. It is critical for investors to clearly understand your products and how they will add value or pay off. Describing your products and services helps highlight the value, describes the benefits and showcases the unique selling points that make the product and service stand out.

You should include;

Unique features of your product and services
Translating these features into benefits
Emotional and practical payoffs to your customers
Intellectual property rights or any patents that protect differentiation

Within the production, life cycle portion includes the following;

Time between purchases
Up-sells, cross-sells, and down-sells
Plans for research and development

Develop a Marketing Strategy

A marketing strategy is a company's overall strategy for reaching out to potential customers and converting them into paying customers for their products or services. Research on your target audiences first to determine the best marketing strategies. Determine which is the best media/ platform that will give you a wider reach. A good marketing strategy includes:

The company's value proposition.
Core brand messaging.
Information on target customer demographics.
Other high-level elements.

Briefly explain the following;

The value proposition
Target audiences
Existing Customer segment.
Launch plan
Growth tactics
Retention Strategy
Marketing channels.

Compile business Financials

If you're just getting started, your business may not have financial data, financial statements, or complete reporting. You'll still need to make a budget and a financial plan, though.

If your business has been around for a while and you're looking for investors, be sure to include the following information:

Profit and loss statements

Statements of profit and loss
Statements of cash flow
Statements of Financial Position

Avoid underestimating costs, profit margins, and sale prices are all intertwined, and many business owners establish selling prices without considering all costs. This is a problematic error for novice business owners to understand. Your product or service pricing must reflect all of your expenses, including overhead. You won't estimate a sale price that will generate the profit you want if it doesn't.

Describe your Organization and Management

Your business is only as good as the individuals in charge of it. Identify your team members and explain why they are qualified to assist you in turning your business idea into reality or expanding it. Emphasize knowledge and qualifications throughout your company strategy—this section should highlight your management team's superstars. This helps in giving your investors’ confidence that the business is in good hands and make them want to invest in your business. Having qualified people in your team is a huge plus.

Explain funding Requests

When determining how much money your small business will require, try to be as realistic as possible. You can specify a numbers range instead of an exact number if you don't want to provide an exact number. However, make sure to include both a best-case and worst-case scenario.

You'll probably sell equity to raise capital in the early phases of a new company because it doesn't have a track record of producing money. So you're effectively selling a piece of your company when you sell shares to raise funds.

Appendix

Finally, create an appendix that contains everything readers will need to enhance the information in your plan. Take into consideration any data that:

Assists investors with their due diligence; provides context and easy access to you or your team.

The following are some valuable details to provide in an appendix:

Deeds, local permits, and legal documents are examples of legal documents.

Certifications that increase your trustworthiness
Business registries and professional licenses relevant to your legal structure or business type
Intellectual property and patents
Associations and memberships in the industry
Identification numbers or codes issued by the states and the federal government
Contracts with key customers and purchase orders

Whether the plan is a document for internal reference only or an external call for investors, the appendix should be a dynamic business plan.