A business plan may sound like a corporate catchphrase but it is a crucial task to complete when starting a company. However, knowing how to write up a business plan can be daunting not to mention confusing at times.
Here, we look to take out that confusion and outline a step by step guide on how to write a business plan as well as exploring how to write a business plan using template software. Templates are useful to help eradicate any uncertainty when completing this essential document.
What is a business plan?
A business plan is arguably one of the most important documents that you will draw up in the entire lifespan of your business. Its importance cannot be underplayed and will often be at the core of everything and anything your business does. This is because business plans lay out from the outset:
- what your business intention is
- how you are going to do business and achieve targets
- who is going to be in the business with you
- how much the business will cost
- how much money the business should bring in
In short, a business plan outlines the entire scope of your company and it can be used to inform your every subsequent business decision. As a business owner, you can refer back to your business plan time and time again. It can help you stay on track and true to what you set out to achieve with your business from the very start. As a result, as a reference document, it can help you reach your aims and get your company where you want it to be.
Ultimately, a business plan should be practical and underline why your business is going to be a success. It should provide enlightenment on all aspects of your business and how all those aspects will work together to achieve your business’s final aim as well as maximum profits. Additionally, business plans can be used to help find funding from banks or investors, but it should also be used by you and your management team to help drive the company forward in the future.
How to write a business plan - step by step
Here are the following steps that you need to complete to write a business plan. All the following elements need to be included to ensure that your business plan is as robust and useful as it possibly can be.
- Executive summary
The executive summary is the initial outline of what your business is and what your overall plans are. It can vary in length, but one to two pages is usually sufficient to include an overview of how your business will be structured to achieve its goals.
As a result, it should include a short description of what your business is selling - either products or services. It should also include what your business objectives are and the market within which you are doing business. From there, succinctly explore why the business will be successful in the face of all the competition, and why it will grow. Finally, touch upon what funding you will require now and potentially in the future.
The executive summary is often seen as the most important part of your business plan and often business owners will leave it until last to complete. Doing so enables them to summarise the rest of what they have explored in the business plan. Completing it last may not what works for everyone, but to some it will be a good way to go.
The what part of a business plan outlines what the opportunity is that you have identified. It explains what you are selling exactly. Go through all your products and services to describe all of them. The what section is also the part of your business plan where you explain why this is a good opportunity. Detail the hole in the market that you have identified and who your target audience is.
The how part of your business plan is where you examine how you will put your business into action. i.e how it will make sales and how it will provide the services and goods it is promising. Fleshing out the overall idea of your business is key to this section and materially important for when you are seeking funding. Without it, investors will not know how you put your idea into practice to make it a viable business that has the potential to make a profit.
Write down who you already have on board in the company and management summary section - or the who part of your business plan. Doing so can make your company more attractive to outside investors if you have people on board who are experienced in their field. It can also be beneficial here to name positions that you envisage filling in time as well that will help the business in future.
- How much
Going through the finances of your company with a great deal of detail is useful to both outside investors, but also you - if you return to your business plan time and time again. It can help keep you on the straight and narrow to ensure that you are able to maximise the profits you are making.
For outside investors, knowing what a product costs to make or how much a service costs to provide is helpful - alongside the corresponding profit margins and projected sales figures. Doing so can help highlight how much your fledgling company has the potential to make. Other figures or financial documentation that is helpful to include at this juncture can be cash flow statements, your balance sheet or your commission structure for sales employees.
- Any other business
Noting down any other information that you think is vital but does not fall under the above categories is a good idea in the appendix of your business plan. Use your own business acumen to decide what to include here and what to entirely leave out. While a business plan should be thorough and detailed, that is not to say it should be of encyclopaedic size. All information included needs to be pertinent and appropriate.
How to write a business plan - template style
Of course, while it is possible to write your own business plan from scratch, using a template can be a highly effective means to do so as well. In fact, owing to the confidence and comfort that users derive from using templates, it can be a highly attractive way of completing a business plan. Using a template ensures that you do not miss any important information or any important stages. Instead, you populate the template that has already been designed to optimise your business plan - making it the best that it can be.
Writing a business plan - key takeaways
Writing a business plan is a good idea if you are seeking investment, but it can also be helpful to your way of doing business too. Business plans can help you as a business owner harness your focus and keep you on the path you originally set out to take. While businesses obviously need to adapt and change to react to market movements, a business plan will undoubtedly help you reach your aims. Using a template to write it can be helpful therefore as it will provide appropriate direction so that you can leverage the true power of a business plan.