A business plan is an essential part of the process when launching a new venture. Rather than looking at your business plan as a barrier to your progress, you should be looking at it as a tool. The right business plan will act as a step by step guide to both your long and short-term strategies.
It’s all well and good to have a great business idea, but by committing to writing a solid business plan, you are forced to assess your idea much more realistically. If you’re thinking about the future of your business, or you need a business plan to help your application for bank loans or equipment financing, then this guide will take you through the essentials.
Business Plan Goals
There are three main reasons why you need a business plan. The more well-thought out your plan, the more likely that it will help you get the responses and solutions that you need. The three reasons are:
- For raising funds: Investors and lenders are going to want to know as much as possible about your business venture before they part with any cash. The more detailed and researched your plan, the more likely that you will secure that financial boost that will allow you to spend on vital company acquisitions or to cover your hiring costs.
- For better decision making: The more that you have researched every level of your business, the better your decisions are going to be once you’ve started trading. Look at your business plan from every angle. Assess the running costs of your marketing budget, carry out market research, and do a costs analysis so that you know what you can afford and what can’t wait until you’re more financially secure.
- Identifying Risks: Launching a new business always carries an element of risk. The right business plan can help to reduce those risks. It does this by forcing you to think in more defined and practical ways. The focus that comes with a business plan can help you with making decisions at every level of your business model.
It takes time and awareness to build the best business plan. There’s no need to make it a complex document that rivals War and Peace for complexity. For the most basic template, break your plan down into:
- What you want your business to do
- Where you are currently positioned
- Where you want your business to be in 1, 5, 10, and 20 years
- How you plan to achieve those targets
Creating a business plan involves a lot of thought. You need to consider what you want to do, and use that as a starting point. It doesn’t need to be complicated. At its core, your plan should identify where you are now, where you want your business to go, and how you will get there.
Rules for a better business plan
Once you understand the importance of a quality business plan, the question then becomes how to create it. Luckily, there are some simple rules that you can follow that will act as a roadmap to a better business plan.
Short and sweet
There’s no need to write a huge essay. You’re not studying for a PhD! Keep your business plan concise. There are some obvious reasons for not handing in a 100-page document that goes into every imaginable detail.
- Nobody is going to read it if it’s too long. You’re going to return to your business plan through the life of your venture. The longer you make it, the harder it will be to find the information that you need when you need it.
- Keep your business plan short and concise. You are not being judged on your word count. You’re proving to yourself and potential investors that you have thought about the needs of your business development.
Be aware of your reader
There’s no need to use technical jargon or use industry relevant terms in your business plan. Keep it simple and easy to read. Investors want to understand what you are proposing, and they are not going to judge you on your technical expertise. They want to know what your issues are and how you are going to counter them.
Make sure that you don’t confuse your prospective reader with unnecessarily complicated language.
If your business model is very technical in terms of products or services, then it’s worth having a technical section in your appendix for those that want a more in-depth understanding.
Don’t be put off
It can be intimidating to approach a potential investor with your business plan in hand. Don’t let it be. If someone has agreed to meet you in order to go over your plan, then they already have an interest. If you’re passionate about your idea, then bring that passion with you. Investors want to make a profit, and your passion along with a well-thought-out business plan could be the thing that convinces them that you’re a risk worth investing in. When that investment is all that stands between you and that essential industrial equipment financing, the more you have confidence in your plan, the better.
Your business plan is the key to moving your venture forward. Take the time to get it right, and it could be the stepping stone that brings launch day even closer.
What belongs on a business plan?
There are any number of online templates available if you’re struggling to structure your business plan. However, you can simply start with a plain document, as long as you include these elements:
- Summary: A basic overview of the business you want to build and your general plan to do so.
- What, how, and who: This is going to be one of the most important parts of your plan, so make sure that you have the answers firmly planned and presented. Consider:
- What are you selling?
- What problem are you solving for your potential customers?
- Who are your target audience?
- Who is your competition?
- Strategy: You are going to need to provide details on how you plan to market your business. This section should also include details of your sales plan. It’s also worth including additional info in this section about how you get your product to customers efficiently.
- Team details: Unless you’re planning on being the only person in your business, you’re going to need a plan in place to make sure that you get the right team surrounding you. If you already have a team, then use this section to detail what they are bringing to the table. If you are planning to outsource sections of your workforce, include those details in this section as well.
- Money matters: This is very important. You will need to break down as much of your current financial projections as possible, and include both a positive and negative response plan in case of a profit forecast misstep.
- Appendix: Remember all of those tech details that are going to send your reader to sleep? This is where you put those. Not every investor is going to want to read this section, but it will be useful for you if you have written your business plan well and take the time to refer to it in the future.
There are endless resources available to help you devise a better business plan. However, these steps are the bare bones of what you need. Make sure that you have the best business plan and it can end up being the most essential stage of your business launch. Use your plan to guide your decisions, and your future will be much more secure.