Want to know how to write a business plan step by step?
Gone are the days of 30 – 40 pages business plans. Modern business plans are shorter, easier to write and easier to read. This article will help you know how to write a business plan- standard format.
But first, what exactly is a business plan?
What Is a Business Plan?
A business plan in its simplest form is a guide – a road map for your business that outlines goals and details of how you plan to achieve those goals.
You don’t need to swallow the obsolete idea that a business plan must be a long, formal document as if it were a term paper.
While every business has huge benefit to gain from going through the business planning process, only a small subset needs the formal business plan document required for seeking investors or supporting a commercial loan.
At heart a business plan is just a plan for how your business is going to work and how you’re going to make it succeed.
Click to download full business plan sample
For most real businesses it can be just a one-page business plan with few bullet points to focus strategy, milestones to track tasks and responsibilities and the basic financial projections you need to plan cash flow budget expenses.
How to Write a Business Plan Step By Step
Let’s check out the standard format of a modern business plan.
- Executive Summary
- Financial highlights
- Product and Services
- Problem worth solving
- Our solution
- Validation of problem and solution
- Road map/future plans
- Market Analysis
- Market segmentation
- Target market segmentation strategy
- Market needs
- Market trends
- Market growth
- Competitors and alternative
- Our advantages
- Strategy and Implementation Summary
- Marketing plans
- Sales plan
- Location and facilities
- Equipment and tools
- Key metrics
- Company and Management Overview
- Organization structure
- Management team
- Personnel plan
- Company history and overview
- Management team gaps
- Financial Plans
- Revenue/sales forecast
- Projected profit/loss
- Projected cash flow
- Projected balance sheet
- Business ratios
You may ask; is the order important? If you have the main components, the order doesn’t matter that much, but what’s presented here is the sequence I suggest for a standard business plan.
Understanding The Key Components of a Business Plan
If you want to know how to write a business plan, you must understand these key components.
To make the best impression on banks and investors, when writing your business plan, presented a standard format. Following the outline will give you a higher chance of getting your business funded.
Your executive summary is just a page or two that highlights the points you’ve made elsewhere in your business plan, so it will be best to write it last. Perhaps the word ‘summary’ says it all.
An executive summary is like a doorway to your plan. After looking over your executive summary, your target reader is either going to dump it somewhere or keep reading, so you have to get it right.
All you have to do is to summarize the problem you’re solving for customers, your solution, the target market, the founding team and financial forecast highlights. Keep things as brief as possible and entice your reader to read more.
Products and Services
Describe the problem you solve for your customers and the solution you’re selling. It is always a good idea to think in terms of customers’ needs and customer benefits as you define your product offerings, rather than thinking of your side of the equation (i.e how much the product/service costs, and how you deliver it to the customer).
Sometimes this part may feature tables and graphs for more details but what’s most important is to describe what you’re selling and how your product and service will fill the need of your customers.
Market Analysis and Summary
You need to know your target market – the types of customers you’re looking for and how the market is changing.
You should use this section to discuss your customers’ needs, where your customers are, how to reach them and how to deliver your products/service to them.
Here, you should know who your competitors are and how you can have an edge over them (i.e why you’re sure there’s a room for you in this market).
Strategy and Implementation Summary
You’ll want to outline your marketing plan, your sales plan and the other logistics involved in actually running your business.
Here, you’ll want to talk about the technology you plan on using, your business location and other facilities, equipment you might need.
Finally you’ll want to outline the key metrics you’ll be tracking to make sure your business is headed in the right direction.
Company and Management Summary
This part is an overview of who you are. It should describe the organization of your business, and the key members of the management team.
But it should also ground the reader with the nuts and bolts (when your company was founded, who is/ are the owner(s), when your company was registered if registered, what state your company is registered in and where you do business.
Summaries of your manager’s backgrounds and experience – these should act like brief resumes and stating their functions in the business will be a nice thing to do as well.
At the very least this section should include your projected profit and loss and cash flow tables, and a brief description of the assumptions you’re making with your projections.
If you’re raising money or taking out loans, you should highlight the money you need to launch the business.
Writing a Business Plan
To write a good business plan, you must know which type of business plan you want to write.
Depending on your business needs, there are different types of business plans you may want to consider. But Generally, There are 3 types of business plans
- The one page plan
- The Internal business plan
- External business plan
To learn how to write a business plan which features all business plan components, click here and you’ll find a one page sample business plan template.
Who Needs A Business Plan?
Anyone looking into starting a business or any endeavor that will consume time, resources, etc needs a business plan. If you are serious about business, taking planning seriously is critical to your success.
According to a recent study by Professor Andrew Burke, the founding Director of the Bettany Centre for Entrepreneurial Performance and Economics at Cranfield School of Management, He discovered that: “Businesses that write business plans and use them to manage their businesses grow 30% faster than businesses that don’t”.
Business plans here helps founders to break uncertainty down into meaningful bits i.e. you’ll be certain about sales projection, expense budget, milestones and tasks.
Here, business plan is focused on explaining what the new company is going to do, how it is going to accomplish its goals and most importantly – why the founders are the right people to do the job.
A start-up business plan also entails the amount of money needed to get the business off the ground, and amount that will get the business through initial growth phase.
Not all business plans are for startups. Existing businesses needs business plans to:
- Manage and steer the business
- Address changes in the market
- To take advantage of new opportunities
- To reinforce strategy and establish metrics
- To manage responsibilities and goals
- To track results, manage and plan cash flows and physical resources
- They use it to schedule for regular review and revision.
Simple Business Plan Example
I’m sure you want a done for you and easy to use business plan sample, right? Visit ou quick free forms page to download our free business plan template.
How to Write a Business Plan – What You Should Know
- Business plans is not just a tool needed when just starting a business or when in need of a loan, it is vital for running a business (needed as market conditions change and new opportunities arise).
- Business plans should be printed on select occasions, to share with team members/outsiders but should be dynamic document that you maintain on computer because the plan goes on forever. (Printed version is like a snapshot of what the plans were on the day it was printed).
- If you need a formal business plan, then you include executive summary, company overview, some information about product/services, your marketing plan, list of company milestones, some information about team members, their roles, details of company’s financial plan – all these are called chapters/sections of a business plan.
- In all cases, the most important section of a business plan is the review schedule – it sites or acknowledges that it is the part of the business planning process, in which results and metrics will be reviewed and revised regularly.
- A real business plan is always wrong. Hence, the regular review and revisions (most times never done) is vital.
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