While not everyone starting a business or already in business has a developed business plan, everyone most definitely should have one. You might think of a business plan as a blueprint that can help guide your company along, especially in the early stages. And if you plan to try and get investors for your company, you most definitely are going to have to have a plan to be able to show them. The good thing is, you can keep it relatively simple when it comes to creating your business plan. And fortunately, you don't have to have an advanced degree in business to be able to develop a comprehensive and effective plan. In this article, we look at the key parts of a solid business plan.
Why have it?
Again, not everyone has a business plan in place before launching their business. However, there are several reasons why having one just makes sense. Perhaps one of the main reasons for generating this type of plan is so that you are better prepared when it comes to pitching your company to investors. Think about it, with a solid business plan you seem more prepared, more organized, and more diligent about ensuring your new company's success. These are all things that are going to matter to a potential investor. An investor wants to see that your business is indeed a sustainable one and therefore by investing their money into it, they are making a sound decision. The more you can present them with to convince them of the tenability of your company and/or idea, the better.
It also provides you with a guide of sorts that can help you more firmly establish the foundation of your business. This in turn will help your company grow more rapidly than it otherwise might if you did not have a business plan in place. You have the information and the projections you need at your fingertips to make smarter decisions overall for the company.
Not to mention, with an accessible business plan the company stakeholders are more likely to be on the same page when it comes to evaluating where the business is and consequently where it is going.
Tips for better business plan writing
Short and simple
As mentioned, business plans do not have to belong and complex. While some can be, the key at first is to get it done, and then you can always build on that business plan. Also keep in mind that if you are using your business plan to pitch to investors, they are likely not going to read through something that is overly dense and complicated. They want the highlights and the key points. Keeping your business plan on the shorter and simpler side could benefit you to this end.
Who are you writing it for?
Knowing what audience will be looking at your business plan is key when developing this plan. If for example yours is a scientific firm and your investors are generally from the science community, you are going to want to gear the language used to them. Overall, you want to try and avoid though using too much jargon. Simple, straightforward language is usually better for it.
Layout goals and objectives
One key thing that your plan needs to do is to lay out the main goals and objectives of the company. Is your goal for instance to expand to two locations within two years? Are you looking to launch into a new secondary market within five? Whatever the goals are that you have in mind for the company, clearly explain these in your business plan. Again, this is a very good thing as far as making your company more enticing to investors because as the business grows, so does their investment.
Even if you do not reach a goal or hit that milestone, it is still important to have included these in your plan. At each stage of the business, you now have the opportunity to reevaluate, adjust and assess based upon what is contained in that plan.
Anyone can create a business plan
As noted, you don't need a business or accounting degree to create a workable business plan for your company. There are numerous tools and resources to help you and of course, you will learn as you go as well. Remember, you know your company, you know what you want to accomplish with it, and you know what challenges and milestones lay ahead. This knowledge is essential to business plan creation.
The Main Parts
Whatever the reason you are creating your business plan, there are going to be parts that are common to any such plan and that need to go into yours. Below are the main components of most business plans.
1. Executive summary
This is the general overview of the company. It is usually only a page (sometimes two/) long and outlines the primary plans for the business moving forward.
In this section, you will be outlining what it is you do primarily. That is to say, what do you sell? How are you solving your target audience's pain points? And what's more, who specifically constitutes that target audience?
In this section of your business plan, you want to talk about your marketing agenda, how you plan to generate and manage sales, and also, you will need to discuss how you will gauge your success in these areas.
4. Financial plan
Another key element of your business plan is going to be your financial forecast. You are going to want to look at things like sales forecasts, current and future cash flow and income statements as well as include your current balance sheet. Investors are going to want to see your financials before deciding whether or not to invest.
The appendix can contain miscellaneous information and images that you want to include, such as product pictures for example.