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A wise entrepreneur is not just one that sleeps, wakes up, and opens a business; it is one that is wise in properly following the right and basic steps to starting not just a business but a successful one. Such an entrepreneur will consider a business plan to be an effective tool in starting or even growing his business.
It is on this notion that this article is established to expose to you the proper way of writing a business plan. This article is going to be helpful to both business starters and growers of businesses. Now here comes the big question?
What is a Business Plan?
A business plan is a document unfolding a business, its products or services, how it earns (or intends to earn) money, it’s leadership and staffing, it’s financing, its operations model, and many other details essential to its success.
The Need to Write a Business Plan
I believe you will be wondering on the need to write a business plan. You will be like…is it useful?
Investors depend on business plans to evaluate the feasibility of a business before funding it, which is why business plans commonly are associated with getting a loan.
But there are various compelling reasons to consider when writing a business plan, even if you don’t need funding.
- Planning: Writing out your plan is an invaluable exercise for clarifying your ideas and can aid you understand the scope of your business, as well as the amount of time, money, and resources you will need to get started.
- Evaluating ideas:If you have multiple of ideas in mind, a rough business plan for each can help you focus your time and energy on the ones with the highest chance of success.
- Research: To write a business plan, you will have to research your ideal customer and your competitors. Gather information that will help you make more strategic decisions.
- Recruiting: Your business plan is one of the simplest ways to communicate your vision to potential new hires and can help build their confidence in the venture, especially if you’re in the early stages of growth.
- Partnerships: If you plan of approaching other companies to collaborate, having a clear overview of your vision, your audience, and your growth strategy will make it much easier for them to identify whether your business is a good fit for theirs; most especially if they are further along than you in their growth trajectory.
- Competitions: There are many business plan competitions that offer prizes such as mentorships, grants, or investment capital. To locate relevant competitions in your industry and area, try Googling “business plan competition + [your location]” and “business plan competition + [your industry].”
Now that you have seen the need to write a business plan; let me proceed to show you the way to writing an effective one.
How to Write a Business Pplan
There are a few key things to keep in mind to assist you in writing an effective business plan.
1. Know your Audience:
When you know who will be reading your plan even if you’re just writing it for yourself, to clarify your ideas, you can modify the language and level of detail to them.
This can also help you in making sure that you’re including the most relevant information and figure out when to omit sections that aren’t as impactful.
2. Have a Clear Goal:
You will need to put in more work and deliver a more effective plan if your goal is to secure funding for your business versus working through a plan for yourself or even your team.
3. Invest Time in Research:
Sections of your business plan will mainly be informed by your ideas and vision, but some of the most fundamental information you’ll need to include relies on research from independent sources.
This is where you can spend time in understanding who you’re selling to, whether there’s demand for your products, and who else is selling similar products or services.
4. Keep it Short and to the Point:
No matter who you are writing for, your business plan should be short and readable. Generally, not longer than 15 to 20 pages.
If you do have additional documents you think may be useful to your audience and your goals, consider adding them as appendices.
5. Keep the Tone, Style, and Voice Consistent:
This is best achieved by having a single person write the plan or allowing time for the plan to be properly edited before distributing it.
What to Include in Each Section of a Business Plan
A good executive summary is one of the most vital sections of your plan. It is also the last section you should write.
The purpose of an executive summary is to distill everything that follows and give time-crunched reviewers (e.g., potential investors) a high-level overview of your business that persuades them to read further.
Furthermore, it is a summary, so highlight the key points you’ve uncovered while writing your plan.
If you are writing for your own planning purposes, you can skip the summary altogether; although you might want to give it a try anyway, just for practice.
An executive summary should not exceed one page. Admittedly, that space constraint can make squeezing in all of the prominent information a bit stressful; but it’s not impossible.
Here is what your business plan executive summary should include:
- Business concept: This will include what your business does
- Business goals and vision: This will include what your business wants to do
- Product description and differentiation:This will include what you sell, and what makes it different.
- Target market: This will include who you sell or want to sell to.
- Marketing plan: This will include how you plan on reaching your customers.
- Current financial state:This includes what you currently earn in revenue.
- Projected financial state:Include what you foresee earning in revenue?
- The ask:This should include how much money you are asking for?
- The team:Who’s involved in the business?
There are numerous important reasons to write a business plan. It is not solely the domain of entrepreneurs who want to secure funding to start or grow their business.
A business plan can assist you to clarify your strategy, identify potential roadblocks, decide what you will need in the way of resources, and evaluate the viability of your idea or your growth plans before you get your business started.
Whatever your reason for writing a business plan is, the task will probably still feel like a homework assignment.
Not every business launches with an official business plan, but many founders find value in taking time to step back, research their idea and the market they are considering to enter and comprehend the scope and the strategy behind their tactics.
Take your time in writing one today and you will get to realize the miracle behind every successful business.
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