What Is a Business Plan and How To Create One
Historically, creating a business plan has been a core step in the process of business building. But in today’s modern age of online marketing, where and brands can start selling online in just a few clicks, is it worth investing the time?
In the following post, we discuss business plans, what they are and what one entails. We also discuss why you should create and maintain one for your next business venture.
Contrary to some beliefs, creating a business plan is not a once-off exercise. Over time, as your business grows and is subjected to changes in its industry, your plan will need to account for these factors and outline various strategies through periods of growth. As your business evolves, so should your business plan. Read on to find out how creating an ever-evolving plan can help your business.
What is a Business Plan?
A business plan is a guide that outlines a business’s objectives and the business strategy that will be employed to realise these goals.
As well as business goals and the strategy for achieving them, a business plan also includes high-level information about the business, such as the products and/or services sold, financial projections for the company and more.
A common assumption is that business plans are only created for first-time businesses, start-ups and for entities seeking financing. This assumption is incorrect, and in fact, businesses of all shapes, sizes and lifespans can benefit from creating a plan.
In the traditional sense, a business plan took the form of a physical document. While this is still one of the easiest forms to create, it can be any media. It could be an infographic, video, a presentation, anything that fits your brand, as long as it includes a number of key insights about your company.
Regardless of media format, a business plan is a guide that helps a business outline their objectives and the strategy that’ll help them achieve these goals. The business plan also includes financials of the business as well as the time factor relating to the attainment of business goals.
What Is Included in a Business Plan?
Mentioned above, a contemporary business plan does not have to stick to the traditional information flow. However, a number of key concepts should still be communicated. From offering an outline of the business, the business strategy, the company’s objectives and the financials. They are:
- Executive summary: An overview of the business, the executive summary briefly outlines the key concept of the business, explaining what the business model is, what it will sell, who it will target and so on.
- Company overview: Next, the business itself is introduced. This section includes information relating to the business’ history, its form (whether it’s a PLC or LTD etc), insight into what shape the business will take (will it be an online store, a physical store, a franchise etc) and the model or models it’ll run on.Also in this section, information related to the internal side of the business is included. This includes details of the founder, team, management style. You could also add a mission statement and vision statement here if this is relevant to your business.
- Products and/or services: Then, the business offering is described. Here, products and services are outlined in detail, with aspects such as features, production etc.
- Market analysis: Following the products and services, the market is explained. Here, information is two-fold. First, it describes the industry that the business will operate in, as well as any trends, macro factors and key players. Then it describes the market that the company aims to target, including the target market, audience demographics, competitors and the competitive advantage.
- Strategy and implementation: Next, the business plan outlines the forecasted sales and marketing strategy for the business. This includes the advertising and marketing of the products and services, promotions, distribution, pricing strategies, and related projections.
- Financial projections: One of the most important sections of a business plan is the financial forecast. Here, the financial goals and expectations of the business are revealed for the first 12 months of operation. As well as the detailed first-year projection, the following year’s annual projected earnings for up to five years are included.
- Appendix: If additional resources such as graphs, charts, images or similar are included, they can be referenced to in an appendix.
Why Should You Create a Business Plan
Traditionally, business plans were essential pieces of business property. Nowadays, some entrepreneurs are of the opinion that they are outmoded and unnecessary.
Even though some entrepreneurs have been running their businesses successfully without a business plan, creating one is still a great idea. Sure, taking the time to research, write and format all of the thoughts in your head will take time, but this will certainly not be time lost.
The benefits of writing a business plan:
- Not only does creating one help you solidify your business and marketing strategies, but it’ll also give you more clarity on your business purpose and goals. With this, you’ll be able to communicate your offering clearly.
- Sections relating to the market and industry analysis will force you to get serious about your research. During this process, you’ll gain a deep understanding of your market, your consumers and the competition.
- Creating a business plan will force you to get crystal-clear about money and finances. Sitting down and mapping out financial forecasts for years into the future can be an incredible eye-opener, and can even steer company expenditure strategies.
- Finally, if you are considering pitching for funding of any sort, a business plan is key.
Tips for Writing a Business Plan
If you have decided to create a business plan for your next venture, have a look at the following tips:
- Make sure your it is easy to understand. From angel investors to interns, it can pass through the hand of plenty of stakeholders. With this, make sure that it is easy to read. If any industry or market-related jargon must be included, consider offering definitions for these either in the text or referenced to in a glossary.
- When creating a business plan, make sure it is in a format that can easily be edited.
- Once you have created your business plan, do not push it to one side and forget about it. It should evolve, along with your business, so be sure to revisit it periodically.
Have you written a business plan? Let us know your experience in the comments section below!
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