Every business needs a plan. Your business plan will keep you focused and help convince investors to lend you money. But how do you write the perfect business plan? Here are 10 steps to help you get it right.
Why do you need a business plan?
You may be wondering why you need a plan in the first place. After all, you have a clear idea in your mind about what you want to achieve. You know the market, you have the necessary skills. So why do you need a plan?
There are many good reasons. Here are just a few of them:
- To clarify your ideas
Writing something down gives it structure and substance. Your ideas will be clearer on paper than in your head.
- To discover and solve problems
The business idea you have in mind may have some holes – you might not have covered everything. This will become much more apparent when your words are on the page.
- To get feedback from others
A properly written business plan can be shared with trusted people to get their advice.
- As a formal document
Banks,investors, accountants and lawyers will want proof that you’re serious about your business. A written plan will provide that proof.
- To guide you as your business grows
A good business plan will keep you on track and focused, even as day-to-day work becomes a distraction.
If you’ve never written a business plan before, it can be a daunting prospect. But these 10 steps will help you create the perfect business plan.
1. The executive summary
This is where you describe your company and the product or service that it will sell. This must be brief, to catch and hold people’s attention.
Try to describe the goal and mission of your business in just a couple of sentences. Work hard at this and try to make it memorable.
Treat this section as an “elevator pitch” document – it should be succinct and easy to remember.
2. Who are your customers?
Do you have a clear idea of the type of people (or businesses) who will buy your product or service? If not, think carefully until you do.
This is one of the first questions any investor will ask you about your business plan. Have your answers ready:
- Know whether your customers will be consumers or businesses. If they are businesses, who will you target within those companies? Maybe it’s the salesperson, or perhaps it’s the CEO?
- Determine whether you’ll have regular clients or one-off buyers.
- Make sure you’ve actually spoken to some of your potential customers.
3. Evaluate the target audience
There’s no room for guessing here. You need to identify the people who will buy from you. Think about the following:
- Demographics – such as age, gender and social status.
- Firmographics – this applies when selling to businesses. Firmographics includes size of the company, revenue of the company and services or products of the company.
- Location – perhaps a specific area, town, or even country.
- Profession – maybe you’re targeting accountants, police or lawyers, for example.
- Groups – such as people with shared interests or habits.
The better you evaluate your target audience, the more comprehensive your business plan will be.
4. What are your opportunities?
Successful businesses think big. You might be starting small, but you don’t have to stay that way. So write down the possible opportunities for your business as it grows.
For example, perhaps you’re planning to start by selling over the internet. That’s great, but how will you get traffic to your site? How will people find you online? Will you need salespeople? If not, how will you convince people to buy from you?
As the business grows, is there scope for a bricks-and-mortar retail outlet? What other opportunities will you have if your business grows as planned?
5. Understand the competition
Every business has competition. If you don’t mention yours, investors will think you’re unprofessional – or just plain naive. Be thorough, and list all your existing and potential competitors:
- Who are your direct competitors – those selling the same products as you?
- Who are your indirect competitors – those whose market overlaps yours?
- What will prevent other companies competing with you – what are the barriers to entry?
- What is your USP (unique selling proposition)? In other words, what’s your point of difference that makes you different from your competitors?
That last point is important. You need to explain how your business will differentiate itself from all the others. That might be based on price, service, quality, range or value. Make sure you spell it out.
Next week we will share the final 5 points to assist you create the perfect business plan for the new financial year. You may also like to check out our free resources page where we have heaps of free guides and tools you can download.
We also have an interactive tool to help you create a business plan, click here to access