Guide To Starting A Business

3. The Step-by-Step Guide to Writing a Business Plan

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Running A Business

The Step-by-Step Guide to Writing a Business Plan

Mar 15, 2023 • 10+ min read
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      If you have big aspirations for your business, a detailed plan is usually the best way to make your dreams a reality. Despite this logic, many small business owners flounder when articulating their business goals and their plans of action for achieving them. That’s where a business plan can help.

      Putting together a business plan—and regularly updating it—is a great way to periodically step back from the minute details of running your company and refocus on the big picture. Getting started is easy if you approach it correctly. First, answer the simple questions below (we’ll compile them into a digestible format later). Start with what you know—then research what you don’t. You’ll be surprised how much you already know about your business, industry, customers, competitors, and more.

      What is a business plan?

      A business plan sounds daunting, but it’s pretty simple to create. As a straightforward description of your business’ future, a business plan outlines what your organization’s strategy is and how you intend to accomplish it. It can be as short and plain as you’d like — or as lengthy and detailed as you need.

      Business plans serve several vital functions. They give you, as an owner, a guiding path to map out goals and how you’ll achieve them. They can include your go-to-market strategy, as well, allowing you to plan for contingencies and other situations. 

      Perhaps more importantly, business plans can help small businesses secure funds from investors. Because it features the step-by-step process of how a business intends to succeed, a business plan gives investors important insights into where and how their capital will be used and how their investments will help the organization achieve its goals. Furthermore, it will help them determine the potential ROI they’ll see, should they choose to invest.

      Why write a business plan?

      A clear business plan can help your company in a number of ways. It serves as the guiding force for all of your future decisions and remains open to adaptation as your company’s needs and focus change. Here are a few specific reasons you’ll want to create a business plan for your organization:

      • You’ll clarify your business vision and goals – Whether your business is still in the pre-launch stage or simply needs a bit more guidance for continued growth, a business plan will provide a detailed structure of all the key elements you need to focus on to accomplish your next goal.
      • You can attract investors, lenders, and potential business partners – A well-thought-out and -written business plan is the key to securing funding. Your future financial partners will feel more confident in your business if they can see your goals and projections for success on paper, rather than just by word of mouth. In this aspect, your business plan can be used as a tool to persuade a potential financial partner to come on board with your business.
      • You’ll make better, more informed business decisions – By having a business plan to refer to, you can make decisions more objectively to help your company continue moving toward success. Decisions about how to run your business, as well as how to structure it—or restructure it—will also be influenced by your business plan.
      • You can properly allocate resources – All of the resources available to your company can be listed in your business plan, in order of importance, with a brief explanation of where you intend for those resources to go. It’s important to denote if a certain resource will be used for recruiting, marketing, office equipment, and other necessities for your business.
      • It’s easier to measure progress and track results – Although your business plan should be created with adaptability in mind, it will help you see which milestones you are approaching—or at risk of falling short on. With a written plan to track your company’s progress, it’s easier to adjust goals as necessary and see which processes are working and which are not.

      How to write a business plan.

      You understand the importance of a strong business plan—but where to begin in creating your own? Here is a helpful, step-by-step guide to creating a business plan, from market analysis to financial projections.

      1. Research and analyze your overall market.

      Start by analyzing your market, including the current state and needs of your customers, your industry, and the market as a whole. Consider who your ideal clients are, what they want, how their needs may change over time, and the best way to reach them. (If you haven’t yet established your customer persona, it’s best to do it now before you dive into writing your business plan.) Analyze any industry trends that could impact your or your competitors’ operations, as well as those that might drive market demand.

      2. Draft an executive summary.

      An executive summary is the first page of your business plan. Like an elevator pitch, this section should provide a high-level summary of your company, and entice reviewers to keep reading. Include a mission statement, the products or services offered, and a broad overview of your financial plans. Once you’ve completed your business plan, it’s a good idea to review this section and ensure you’ve included everything you want to convey.

      3. Describe your company.

      In your company description, explain the problems your business will solve and for what audience. Share your competitive advantages or strengths, such as a prime location, a proprietary technology, or experts on your staff. Include logistical details, such as your business’ registered name and address, your business structure, and the percentage of ownership and extent of involvement of each business owner.

      4. List out your business goals.

      In a few sentences, write an objective statement that delineates your specific short-term and long-term business goals. Ideally, this statement should be written as an assertion (“We will…”). Make your goals as specific as possible—and, while you want to remain realistic, don’t be afraid to dream big.

      5. Define your products or services.

      While your products and services will be referenced throughout the business plan, this section will describe them in detail. Explain your products or services, who will use them, the product/service lifecycle, and your pricing structure. If you have any upcoming offerings or future plans for new products and services, you can also include those here.

      6. Outline your marketing and sales strategy.

      Explain your current and future marketing and sales tactics and overall strategy, with a focus on how and why these will help you attract and retain customers. To frame this strategy, think of the four Ps of marketing: 

      • Price of your offerings 
      • Product (or service) you’re selling and what makes it distinct and differentiated
      • Promotional strategies for selling your offerings
      • Place you will sell your product or service 

      7. Define your operations and management structure.

      Describe the legal structure of your company—whether it’s a sole proprietorship, a limited liability company (LLC), a C-corporation (C-corp), or an S-corporation (S-corp). Then, outline the management structure and responsibilities of each individual within it. You will also need to cover your operation’s structure, including information on suppliers, productions, facilities, equipment, inventory, and shipping and fulfillment.

      8. Determine your financial projections.

      If you’re using your business plan to help secure funding, this is one of the most crucial sections. In short, your goal is to show investors how your company will generate sufficient profits, whether it’s to repay a loan or provide a solid return on investment. Share your current financials, including your balance sheets, cash-flow statements, and income statements. From there, you can project your sales, expenses, and profits for the future—ideally, at least three years into the future—based on the assumption of approved funding.

      Tips for writing a business plan.

      Writing a business plan is an essential first step toward entrepreneurial success. Once down on paper, jumbled thoughts can begin to form into a well-thought-out strategy, and before you know it, your business idea has legs to stand on—and a reason for investors to send capital your way. 

      When sitting down to write your business plan, consider the following tips:

      • Keep it clear, concise, and focused – More than anything, your business plan should use direct language and charts to clearly convey your strategy and preserve its intended use. Not only does keeping it concise and focused help you get the information you need when you reference back to the plan, but it also keeps investors engaged. A long-winded business plan can make stakeholders’ eyes glaze over, so make sure you’ve made the “highlights” and key takeaways clear.
      • Be realistic with your financial projections – Keeping your financial projections realistic manages expectations. If you overestimate your projections, investors will expect you to deliver on those projections. If you underestimate, you may be unintentionally excluding yourself from more or bigger funding opportunities. Do your research and partner with a financial advisor to ensure the numbers you include in your business plan are realistic and reasonable. 
      • Highlight your unique selling proposition (USP) – Why should an investor choose to support you, instead of another entrepreneur or startup? What makes your business singularly unique and poised for success in the marketplace? Don’t shy away from including the points of differentiation throughout your plan that prove how your product or service solves a pain point for your target market.
      • Make sure your plan is tailored to your target audience – Ensure your business plan speaks to the correct target audience, whether it’s potential investors, future business partners, or existing stakeholders. Just as you spent time determining the purpose of the plan, know who you’re pitching your plan to (and potentially even create multiple tailored versions) so you can include the information they’ll care most about.
      • Use charts, graphs, and visual aids to make your plan more engaging – Leveraging visual aids or graphics in a business plan can help you create a clear and focused message. Not only do charts and graphs vary the information in a business plan from blocks of black-and-white text, but they’re also a great way to effectively communicate financial information, projections, product prototypes, and more.
      • Get feedback and input from others before finalizing your plan – Do not send the first draft of your business plan to investors. Talk to trusted friends, other business owners, or even a business coach or mentor, and ask for their feedback. Stay flexible and make changes to your business plan based on any gaps or clarification opportunities they see to ensure your plan is both comprehensible and provides a compelling reason to support your business.
      • Review and update your plan regularly to keep it relevant and accurate – Keep your business plan on hand as your products or services evolve. By continually updating it, you’ll have a handy document to send to future investors (should you need more) or potential partners. Keeping your plan up-to-date means you’ll always have a great and relevant way to introduce your business, its purpose, and pertinent financial information to anyone who may need it.

      The bottom line.

      Take a step-by-step approach to writing your business plan, considering the guide and tips above, to craft a document you’re proud to share with investors and partners. After you’ve completed market research, draft an executive summary, describe your company, and list out your business goals as a framework. Then, you can define what you’ll make or provide to your customers. Finally, you can outline how you’ll promote your business and determine realistic financial projections.

      Remember to engage your audience, whoever that may be, and use concise language to communicate your business’s intentions. One you’ve incorporated feedback from trusted sources, your business plan is ready to use and update as your business grows.

      About the author
      Sean Peek

      Sean Peek has written over 100 B2B-focused articles on various subjects including business technology, marketing and business finance. In addition to researching trends, reviewing products and writing articles that help small business owners, Sean runs a content marketing agency that creates high-quality editorial content for both B2B and B2C businesses.

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