As an entrepreneur, you often ask the relevant question, “How important is it to have a business plan?” Whether you’re running a large corporation or a brick-and-mortar business, It’s not an easy task and more often than not, you would need a business plan templates in order to sort out the finer details of your enterprise. When your business experiences either a boom or a bust, both necessitate a business plan. There always exists a fundamental need to do comprehensive business planning, especially when launching a new product or expanding your business. The same principle applies when your business is not doing well and you’re experiencing a slump in sales. In fact, business planning is one of the most important aspects to review on where your sales strategy went wrong.
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In this essential guide to making a comprehensive business plan, you will be shown the basics of proper business planning, from how to write down a business plan to implementing it, and the tasks needed to achieve your business objectives. You will also be taught financial projection and how to avoid some common business plan mistakes. This way, you will be better armed to tackle the challenges of your trade and do well to avoid any pitfalls that befall other businesses.
Business Plan Essentials
What is a Business Plan?
In its proper perspective, a business plan can be explained simply as an outline of your business tasks and goals that will guide you in defining what needs to be done to achieve those goals. Whether you’re writing for yourself or for your investors, you need to do a planning process to know how to steer your business in the proper direction.
In large corporations, a formal business plan document is important to present to your investors, especially if you need to apply for a commercial loan. This way, you make your intentions clear about which direction your business is headed and the plans you need to do in order to expand and profit from the business. Your business plan is an assurance that you are headed in the right direction and you have a contingency to tackle any challenges and risks that arise from doing your kind of business.
What is the Purpose of a Business Plan?
Just like an architect who lays out the blueprint for designing a structure that will act as a guide for building it, the same principles apply when making a business plan. In order to benefit and maximize your company’s potential growth, a business plan must be formulated to determine which factors have the capacity for growth and to minimize any mistakes in choosing where your business is headed.
Here are several reasons why you need a business plan:
To Get Organized and Clarify Your Business Direction. Just like any organizational planning concept, a business plan helps to define what your business is all about and where it is headed. Your business plan helps to clarify the purpose of your business and the direction it would need to grow and move forward. This covers the basic details of your business ranging from your products or services being offered to the specifics of how your marketing strategy will attract the attention of your customers in your target market.
Staying on Track Plus Future Projections for Your Business. Since your business is patterned after your customers’ needs, you should evolve and adapt as time goes by in order to stay competitive. To do this, you need to refer to and review your business plan according to trends which keep changing over time. This applies as well to changes in the market and innovations that may grow or slow demand for your products or services. Your business plan makes it easier to follow and track business developments and adapt accordingly.
To Attract Investors. A comprehensive business plan complete with facts and figures, aside from a detailed marketing plan, has a potential to attract investors due to minimal risks involved. This is because diligent and proper planning about your business give investors a proper perspective about where your business is headed. When you need additional financing for your business growth, your business plan is already enough proof of which direction to take and what potential it has in order to make a profit.
Easier Management. Besides attracting investors and securing supplier accounts, a business plan makes it easier to attract top-level managers and employees who want to be a part of your company. It also gives a proper description of each individual’s duties and responsibilities for easier handling, steering the course of the business, meeting goals and achieving sales targets.
How Do I Write a Business Plan?
Since you already have a general idea of what a business plan is, writing one actually poses a challenge especially if you haven’t tried making one before. In this section, we’re giving you the basic tips when writing a business plan:
Keep It Short, Clear and Concise. Writing a solid business plan involves developing a plan for strategic growth that can be clearly relayed to all members of your team. Therefore, a business plan should be kept short, clear and direct to the point. It wouldn’t help if you develop a business plan that’s 100 pages long since it can become confusing to your team. Highlight certain points and use numbered or bulleted lists for important sections for easier guidance. Make sure your business plan is also easily accessible for each of the management team members, with everyone having their own copy for easier access and effective referral.
Tailor-fit Your Business Plan for Your Audience. Knowing your audience means your business plan should be written in a language that can be understood by every member of the management team. Do not use overall scientifically complex terms when all you need to emphasize are marketing ideas. The key is to adapt to your members’ expertise and write your plan in such a way that they can relate to it for easier implementation. You can also explain your products or services in a way that your investors will become excellently acquainted with your business since their investments matter.
Be Bold About Your Plan. Writing a business plan should not be intimidating even for first-time businessmen. As long as you know the basics to writing your business plan properly, you’ll go along fine. Most successful entrepreneurs actually don’t have business degrees and succeeded only through a trial-and-error concept of their business. Writing a business plan may at first look difficult, but as you go along the course of writing it, you will know how to properly approach it based on your guidelines that you have mentally set for improving your sales and marketing performance.
Do I Really Need a Business Plan?
There has been much debate about the viability of making a business plan, with both sides equally having valid points about whether having a business plan is really necessary or not. While this article doesn’t intend to be biased and doesn’t endorse any side, the feasibility of a business plan is being presented here in as balanced an argument as possible.
If your business is bigger than a typical brick-and-mortar store with several products or services spread across several places, chances are, you’ll definitely need a business plan. Even seasoned consultants and financial advisors will tell you how your business plan is important for the continued growth of your business. It would be disastrous if your company doesn’t have goals, growth and financial projections for its operations. A business plan not only outlines your business’s direction with regards to projected growth, goals, risk factors and profit projections, it’s also a necessary documentation when your company goes public with an initial public offering (IPO) to sell its stock to the public.
Unless your company really has more than enough liquid assets to finance its own growth and expansion, chances are, you would need to apply for a loan or invite investors in to finance your growth and expansion. The same goes with going into a partnership or joint venture. An investor or business partner would want to scrutinize the viability of your business to find out if it’s worth the investment or if it’s too risky to venture into through your business plan. It’s in these aspects where you’ll realize how important a business plan is.
Even if your business is not that big and you have no immediate plans of expansion or borrowing money, you’d need at least an informal business plan to efficiently run your business. Things like sales margins, order quantity, cash flow, new programs implemented and even upgrading your website need a quarterly update on a spreadsheet. You’d need to list these down, divided into qualitative and quantitative components. This way, you’ll be able to track down on the finer details of your business and do necessary corrections in areas that need improvement.
Parts of a Business Plan
Key Elements in Creating a Business Plan
In order for your business plan to follow a coordinated format that can guide your company’s management team, your business plan should include the seven key elements. This is aimed to provide both vision and clarity in your plan with regards to goals and guidance. These key components are also meant to guide entrepreneurs who are writing a business plan for the first time.
To make writing your business plan easier, these seven basic sections will guide you to make a well-balanced business plan:
Executive Summary. In the structure of your business plan, this is the first chapter which drafts an overview of your tasks and goals, two important factors that are the meat of your whole business plan. You can summarize your plan here which should include your business name, location, products or services and mission statement among other factors. While this is the first part of your business plan, it’s advisable to make your executive summary only after you’ve completed your business plan. The logic behind this is that once you’ve worked out the details of your business, you’ll be better prepared to write your executive summary in its thorough perspective.
Company Description. This describes the nature of your business if it’s either a corporation, partnership or single ownership. You may include a brief history of your business, with a summary of its growth and highlights, your short-term and long-term goals, meeting customers’ needs, plus an overview of your products and services.
Products or Services. This is one of the essential parts of your company’s existence. In fact, your products or services are the lifeblood of your business which compels the need for a business plan. In this portion, you must describe in detail what products or services you are selling, the problems that you are facing, the solutions you’re doing and how your business can flourish in a competitive landscape. Besides focusing on how your customers can benefit from your business, you should consider your net revenue after supplier payments, taxes, and overhead costs for your products or services. You may include graphs, images and illustrations on this part while considering the possibility of future expansions.
Market Analysis. In this section, the key question to ask is: “Who are you selling to?” Depending on the size of your business, you may need to do market research and analysis that should include the demographics of your target market, projected marketing data for your products or services, and any relevant data on your closest competitors. This is where you’ll need to determine how your products or services are effectively capturing your intended market and making a positive impact on your business in terms of sales and revenue. This is also the part where you’ll reflect on what changes need to be made if your intended target market is not making any positive impact on your business.
Operations and Sales Strategy. This section of your business plan explains your operating plan for your target market. This includes your pricing scheme as well as the distribution of your products or services. Your marketing plan should put emphasis on how to penetrate a saturated market and reach your target customers. By doing this, you have to include the three important parts of your sales strategy, particularly market analysis, marketing plan and sales plan. The key aim of your sales strategy is to make sure your products or services will fit your target market and fill their need. Another strategy that’s harder to pull through is to create a need for your target customers. This is easier planned than executed but once you pull this through, success will just be around the corner. You have to elaborate your plan of operations from how you’re going to acquire your supplies, to your source of labor, the number of employees involved, and delivery matters.
Management and Organizational Team. This part outlines the company’s organizational structure. This is very important when your business has an investor or if you’re applying for a loan. This not only identifies the owner or owners and key management team plus employees but also names the partners, board members and advisors of your company. A management team put together also gives you an overview if you have the right team in place to execute your business plans and strategies. With the right people in your team being assigned tasks and responsibilities, there’s no reason why your sales and marketing plan won’t be successful. For investor funding purposes or when making a loan, it’s best to make an organizational chart that outlines each member’s duties and tasks. Besides funding purposes, you’ll have the big picture on how to steer your company’s growth by getting the most out of your organizational team.
Financial Plan. In this final section, you may need the help of a professional accountant in outlining your financial statements to include in your business plan. You should include your sales forecast, personnel plan, profit and loss statement, cash flow statement and balance sheet. You also need to include a brief analysis of your financial data as well as ratio and trend analysis for your financial statements. A typical financial plan should have a monthly projection within the first twelve months followed by annual projections from three to five years depending on investor requirements.
What is an Executive Summary?
Basically, an executive summary is the first chapter of your business plan which gives an overview of all necessary information and detailed in key elements of the plan. It’s a formal introduction of your business and acts as a stand-alone document that essentially highlights your business plan. If you have several investors in your company, an executive summary gives them an overview of the direction of your business. It’s a way for them to evaluate the viability and profitability of your business. For this reason, it’s important that your executive summary is clear, concise and direct to the point. You must emphasize on the key highlights of your business but keep it brief as possible, with a maximum of two pages for your executive summary. In case an investor wants additional details after reading your executive summary, that’s the time you’ll need to submit a complete plan plus supporting data about your business.
Synopsis of a Business Plan
A synopsis is the compressed form of your business plan. Just like making the chapter for market analysis, the synopsis basically covers the historical performance of your business and its projected growth that normally covers from three to five years. This is similar to the financial plan element of your business plan although your growth projection covers all aspects including sales and marketing besides financial projections. By making a synopsis, your business partners and investors will have a clear idea of your business strategy and growth projections in less than five minutes of readable material.
Here are the key parts when making a business plan synopsis:
Business Plan. When making a business plan, you not only comprehensively detail the direction for growth and expansion of the business, you’re also satisfying investor or lender requirements who need assurance that procedures are in place for continued business growth and profitability. The business plan details your company’s organizational structure and your products or services being offered. You may also include additional products or services in development that you plan to launch plus any new projects in progress. Essentially, your business plan should include your sales objectives and marketing plan with an in-depth analysis of your business. The same goes with your financial section, where your financial data should include a projection within your business plan’s strategy of three to five years.
Market Review. This section gives a review of the prevailing market conditions and its effect on your business. You also need to consider your competitors and how they affect your business. Besides the tone of the market, you should also consider your company’s relevant sales projections and how your strategies give you an edge over your competitors and other players in the industry as a whole. Your market review should not be one-sided and has to look at both sides of the industry with both positive and possible negative outcome depending on the market condition and how you plan to ride out any negative effects of your sales and projected growth.
Numerical Data. Visual aids will always be your friend. Using charts and graphs to present data will make it easier for your audience to understand your plans and projected goals. Visual representations make it easier to explain where your business is headed in relation to projected growth and sales and marketing strategies. Using visual tools will also make it easier for you to illustrate to investors and lenders how you go about with your marketing strategy to maximize sales.
Proofreading. Writing a synopsis of your business plan requires careful review of what you wrote. Remember that your business partners, investors or lenders are going to read your synopsis and it would be quite embarrassing to find your synopsis full of typographical and grammatical errors. Having a business plan filled with writing errors will not make your report credible or worse, could possibly leave a bad impression on your business. Have someone who knows how to proofread carefully examine your synopsis to spot errors before you submit it to your business partners or investors.
Simple Business Plan vs Detailed Business Plan
Since you already have an idea about how to make a business plan and its key components, let’s explore how to make a simple business plan compared to making one in a comprehensive manner. This infographic will show you the comparison between making a simple business plan, which is a generalized form compared to a detailed business plan, which is complete and systematic:
Implementing a Business Plan
How Do You Implement a Business Plan?
Any company will agree on the importance of a well-thought of business plan especially before entering a new business venture. However, no matter how great your business plan is, if your company fails to pair it with an appropriate implementation plan, it’ll only guarantee the failure of your new business project. Since your company will be investing financially on a new venture, a great business plan plus appropriate implementation approach will make your investment worth every cent. In this section, we’ll provide you a rundown of the proper business plan implementation.
Have Clear and Realistic Objectives. We all know that objectives are considered to be the building blocks or foundation that make implementation highly effective. Let us assume for a minute that your company is looking to launch a new product. Make sure to have a clear picture of the marketing objectives you want to achieve. Knowing where to start is an essential key in the implementation of your business plan.
Division of Tasks and Assignments. Even the most astute objectives cannot work if you and your team lack coordination and strategic management in the implementation of the tasks and assignments. As much as you want your new business venture to work, working hand-in-hand with the whole team is the most effective way to achieve your goals.
Take for example the division of tasks and assignments below:
As the head of the project, your main task is to obtain business licenses and permits that are required for operating a business, as well as opening a bank account.
You’ll need a real estate agent to find and secure an office space.
Once the real-estate agent has secured an office space, you’ll assign the office manager to set up the phones, computers and other office necessities.
The marketing manager should be assigned to create and design a marketing collateral.
You’ll also task the sales manager to gather up clients.
After the recruitment of clients, it’s the duty of the relationship manager to seek referrals from the clients.
Realistic Time Frame. If you want to ensure achievement of the tasks, enforcing an appropriate and realistic time frame is imperative. As the project head, providing a timeline can help your team be guided on the different tasks that need to be accomplished.
Progress Monitoring. Once you and the whole management team has begun implementing your business plan, monitoring the progress of your new business venture can provide you a clear picture of the areas that need improvement and the areas that are working out well.
What are the Operational Plans for Business?
Just like any commercial infrastructure, your company should also have an efficient blueprint of your business. In this case, an operational plan is considered to be the blueprint of your company’s business processes. This is most helpful especially if you’re operating a small and medium enterprise (SME). A business operational plan serves as your roadmap to achieving your business goals and a cheat sheet to overcome any obstacles you may encounter.
In this section, we’ll give you a clear idea of the key components of your business operational plan.
Production and Distribution Management. This part of your operational plan will give you a clear idea of the overall production and distribution process of your business.
The names of the suppliers who will be providing the materials
The facilities where you will store the supplies
The number of personnel needed for the daily operations
The equipment you will require to operate the business
Shipping and handling of all deliveries
Inventory of the supplies that are coming in and out
Supply and Inventory Management. If your new business venture is selling a new product, you will have to record every detail that involves all the supplies and the finished products in your inventory. This will help you determine the quality of daily procedures and operations, as well as the protocols in supply and inventory that need to be practiced. Here are a few essential things that you need to consider:
The products you’ll need to produce
The time it will take you to produce a single product unit
Methods of quality control needed to implement before and after the production
The methods and cost of product distribution
Team Management. How well you manage people involved in the operation plays a crucial factor in the success of your business plan. Your operational plan should include the names of your team, as well as their duties and responsibilities in a hierarchical structure. It’s also important to include the philosophy and values of your company and how it motivates your team to ensure the success of your business.
What are the Key Objectives of a Business Plan?
The objectives of your business plan can make or break the potential success of your business. If you want to know what your business plan objectives are, simply close your eyes and think about the things you want to achieve in the following years. Do you want to expand your business? How about launching a new product and/or services for your target market? Are you planning to build a business empire that would be the envy of your competitors? The answers to these questions hugely depend on the objectives of your business plan!
Keep in mind that a plan without clear objectives makes achieving your business goals impossible. When determining your set of key objectives, be sure that it’ll complement with your current business strategies. We have provided a short yet significant list of the key objectives to include in your business plan.
Productivity. The term productivity has a broad meaning in business. It does not only mean the number of product units produced in a single day. It also includes employee training, maintenance of equipment and new purchases. That’s why you need to provide your employees all the necessary resources to keep them productive as much as possible.
Profitability. Since revenue is an essential factor that makes your business stay afloat, your objectives should include control and management of the expenses both in production and operations as it helps boost your profit margin.
Marketing. Aside from advertisements and acquiring customers, your marketing goal should also include understanding the changes in the consumer buying trends, developing new business partnerships, and providing effective solutions to all your product distribution needs.
Retention of Employees. One of the main reasons why employees leave and switch to other companies is that they are not satisfied with the management of their current company. As a business owner, your goal is to retain your employees as much as possible because employee turnovers mean decrease in productivity, which ultimately cost you a lot of money that you are supposed to be earning.
Maintaining Your Company’s Core Values. Business trends may change and customers come and go, but you must be able to maintain the core values of your company to help preserve a positive business culture between the company and its employees.
Business Growth. The success of your business is measured on how much it has grown from the start to the present. So if you’re looking for growth in the next five years, you’ll need to utilize carefully the resources of your company. By resources we mean your company’s employees and finances.
Customer Satisfaction. Your company needs customers to survive in the competitive world of business. That is why your objectives should include customer satisfaction. A good customer service is a great way to increase your clientele and your business revenue.
Strategies in Implementing a Business Plan
Your business plan will fail if you don’t have an effective strategic approach to its implementation. If you want your business plan to succeed, you need to create and map out a flawless strategy that will support your objectives. Keep in mind that no matter how expertly crafted your plan is, if you don’t have any strategic plan to execute it, it will remain a useless piece of paper. In order to maximize the full potential of your business plan, we’ve listed down different strategy approaches:
Marketing Research. Performing a market research can help you understand customer demographics. Discuss all the information you have gathered from your research with your marketing management team. Heard about the phrase “there is strength in unity”? Getting your whole team involved is essential in brainstorming new ideas and increasing your scope and perspective that are beneficial in the implementation of your business plan.
Conducting a Staff Training. There are different stages involved in the implementation of your business plan. You’ll need the project management to conduct a training for the whole team. Marketing experts recommend staff training at least 2 months before the implementation of your business plan. The training should specifically focus on handling imminent changes and how to turn them into advantages.
Analyze External Factors. Incorporating new ideas may be beneficial for the strategic implementation of your business plan. However, such ideas can have potential effects on your sales. When planning your strategy, you must carefully consider and study how these changes will affect the manner of doing business with your target market. If possible, you should discuss the potential changes with your clients to determine if there is a need to modify new ideas before implementing your strategy.
Maintain Open Communication. Two heads are better than one as the saying goes, but do you think it would be a lot better if you’ll involve not only two persons, but the whole team in your business plan implementation? Keep an open communication line so that the people involved in the project can freely give their input regarding the prospective changes throughout the implementation process.
Business Plan Timeline Basics
Determining the correct timeline for your business plan is essential for its success. However, the journey in developing and/or implementing your business plan may depend on the factors that you encounter along the way. While your business plan is different from the others, there is no standard rule on how long it would take you to develop it. You must make sure to move at a pace that is reasonable for the whole team. You should keep in mind that setting your timeline should reflect the capacity of your whole team to accomplish the plan at a given time.
In this section, we’ll provide you with some useful basic business plan timeline. You will need to include the following:
Write a Business Narrative. When formulating a business narrative, you will need to base it on the timeline presumed on your business plan. If your company focuses on selling a single product line this year, then add a new product or two in the following year using the revenues you have gathered. While this narrative is based on your assumptions, keep it realistic to motivate you into achieving it.
Create a Spreadsheet for Your Business Plan Budget. Label 12 columns for each month. Down the left column, one row should be intended for your anticipated revenue while the next role is for the expenses for each month. Calculate all your total revenues and expenses. You will also need to include the capital of your investment for cash flow calculations.
Calculate Cash Flow. The bottom of the spread should be your cash flow section, while the top row will be allocated for the cash on hand at the date you started operating your business. You can utilize the calculations on your spreadsheet by copying the total amount of your income and expenses and placing them in the next two rows. You’ll need an additional row at the bottom where you’ll add the total amount of your cash on hand to your income and subtract the sum to your expenses. The result will be your cash on hand at the end of the month.
Cycle. Repeat the process to get the amount of the cash flow for the succeeding months until you’ve calculated the whole budget for the first year of your business operation. If in case your cash on hand becomes zero or negative at the end of any month, all you have to do is to make some necessary amendments either on your anticipated investment capital or expenses.
Create a new spreadsheet for the years two, three, four, five, and so on and repeat the process.
Types of Business Plan
Business Plan for Dummies
While we’ve discussed in previous chapters how to make a business plan including a table that shows both general and comprehensive business plans, it always helps to break down and simplify a business plan and get tips from a “cheat sheet”. In this chapter, we explore the simplest and easiest ways to make a business plan. This is especially helpful for startup businesses and first-time businessmen who need to formulate a business plan for the very first time. This business plan for dummies will simplify things for you in a process that is easy to understand and contrive.
Before formulating your business plan, it’s essential that you do the following steps:
Learn how to implement a business plan and make it work
Know all the major parts of a business plan
Include all vital pieces of information for your business planning checklist
Include a basic financial statement
Research your customers and target market
Know your competitors
Try to avoid mistakes that lead to business failure
Step 1: Implementing a Business Plan and Making it Work
A business plan is intended to let you have a complete grasp of every aspect of your business surroundings. After all, the only way to ensure your business survival and growth is to know your business inside and out. To make your business plan work and assure your company’s future, you must include these elements to help you be prepared:
Strategy: This includes your company’s plans, mission, vision, goals and objectives that must be in conjunction with each other in order to make your business plan work.
Structure: Your company’s organization to make your business plan work
Program: Procedural scheme for effectivity and efficiency of work for business productivity
Direction: The leadership needed to provide direction and control, influence and encouragement to help make your business flourish
Proficiency: The competence and expertise needed from your team to make your business succeed
Environment: The right culture and attitude needed to make the business environment conducive to productivity
Step 2: Knowing the Major Parts of a Business Plan
As discussed in earlier chapters, a business plan must be divided into seven key parts in order to be complete and effective”
Executive Summary: The basic report and summary of your business plan that partners, investors and lenders often read prior to reading your entire business plan. Depending on how it’s written, an executive summary may either capture the interest of your intended audience or it will cost you that much-needed investment. It’s important that you keep it brief, concise and direct to the point.
Company Overview: This is basically what your company is all about. The overview gives all the necessary information about your company including its history, what market it aims to satisfy and how your products or services will meet consumer needs.
Products/Services: This part of your business plan gives a detailed description of either your products or services and how these will meet customers’ needs. Besides that, you need to indicate how you plan to have an edge over your competitors, being able to handle or bring down supplier and other overhead costs and maximizing your net revenue from your sales.
Market Analysis: When marketing your product, you just don’t rush blindly and release it to the consuming public like they’ll gobble it up quickly while you count your profit from all the sales you racked up. While that is every businessman’s dream, it just doesn’t happen in real life. Nor will your target market respond to how you expect it to behave. That’s why market analysis is very important. You have to research and do qualitative and quantitative assessment of your target market to have a clear idea how your products or services will fare in the market.
Operations and Strategy: This covers your business planning and usually covers a period of from three to five years. To ensure your business future, a long-term planning is advisable, given that a business plan is usually intended for long-term operational strategy. This is intended to achieve the desired goals and objectives of your business in the course of its operation. You also need to consider the acquisition of your supplies to make sure your company is continually supplied with minimal to no disruptions, plus how you intend to maximize your delivery system.
Management Team: In order for a business plan to be carried out successfully, a management team composed of key management personnel such as managers and board of directors (besides the owners) are responsible for implementing the needed parameters the employees need to do for the business to succeed. While a management team may sound authoritative, it basically covers the whole company’s structure, from the rank-and-file employees to the sales staff to function together in order for the company to be successful.
Financials: Doing business forecasts and statements are very necessary because this covers the financial aspect of your company. Key among the financial statements are the balance sheet, cash flow statement, capital expenditure and income statement. Without a summary of your company’s revenue and expenses, some very important problems may surface without being noticed and your business could suffer a catastrophic failure with no chance of recovering from a disaster.
Step 3: Business Planning Checklist
A business planning checklist is essential for each key element of your business plan. This is intended to be thorough and meant to be answered when formulating a business plan. By having a checklist and tackling each important question, you’ll be better prepared to meet any possible challenges that could arise from doing business. In this section, we’ll explore the common questions that need to be answered in each of the key elements:
1. Executive Summary
– How do you intend to make your business succeed?
– What kind of business do you want to start?
– How much capital is required?
– What is the projected return of your investment?
– How viable is the business venture?
2. Business Description
– What type/kind of business are you pursuing?
– What kind of products/services will you offer?
– What kind of business venture is it (new, growth and expansion, seasonal, year-round,etc.)?
– What is its premise for success?
– What is its growth potential?
– How unique is your business?
– What is the product/service?
– What is its value proposition?
– What is the right name for the product/service?
– How will you sell, distribute, and service your product?
– What are the options and can your product be customized?
– Who are your pilot targets to gauge consumer reaction and product acceptance?
– How do you determine the pricing model?
– Is the market significant enough for your product/service?
– Is it a growing market? – How big are your competitors?
– How much market share are you anticipating?
– Is your market price-driven?
– Is the market seasonally driven?
– What’s the ideal location for your business and why?
– What are the necessary requirements to produce your product/service?
– What facilities or equipment do you need for production?
– Who and what type of suppliers do you need?
– What kind of transport delivery do you need?
– What type of available labor do you need?
– How much is the cost of production for
6. Management Organization
– Who is/are capable of managing the business?
– What leadership qualifications do you require?
– How many employees do you need?
– How will you structure your management organization?
– Do you need any consultants or specialists to help the management team?
– What form of ownership do you think is suited for your business?
– What kind of licenses and permits do you need?
– How much does it cost to open the business?
– What is your projected monthly operating cost?
– What is your total financing cost?
– What is your potential funding source?
– Do you need a loan, how much, and where will you secure it?
– How much sales earnings will you need to make a profit for the first three years?
– What are your monthly, quarterly and yearly estimated business income?
– How much will your break-even point be?
– What will be your projected assets, liabilities and net worth during the course of your operation?
Step 4: Having a Basic Financial Statement
One of the essential parts of a business plan is, of course, a financial statement. Your financial activities should be recorded to keep track of all your finances, make economic decisions and check on your financial position. These four basic financial statements should be included in your business plan financials:
Income Statement – The report of your company’s financial performance during a specific accounting period. It’s essentially a summary of your revenues and expenses through operating and non-operating activities and determining your net profit.
Balance Sheet – Summarizes your company’s assets and liabilities. Also determines how much your company owns and how much it owes, plus your shareholder’s invested amount. By making a balance sheet, you’ll have a clearer idea what your company is really worth financially.
Cash Flow Statement – Show how changes on your balance sheet can affect your cash flow. It basically monitors the flow of cash in and out of your company.
Budget -Indicates your financial forecast to that of your actual financial performance to compare your budgeted performance to that of your actual performance in a specific accounting period.
Step 5: Researching Your Target Market to Determine Customers
There are several ways to research and determine your target market in order to get a clear picture of what your customer base will be. The following characteristics for your market research should include:
Demographics : Age, gender, income, economic group and family size
Geographic : Region, town/city, type of neighborhood
Psychographic : Social class, lifestyle, personality/character
You may have trouble thinking of ways trying to find out information about your competitors but there are several ways to do this. It’s amazing how much you can learn about your competitors by looking for information online. You can use the major search engines and learn how your competitors do their product or service promotion and marketing. Besides web searches, you can ask industry associates for any information that they may know regarding your competitors. Besides that, you can do the following:
Use all available data you’ve gathered online to observe the customer base they are targeting and marketing techniques they are employing. From here, you can look up which viable areas you’ll be able to complete.
Regularly monitor your competitors’ advertising promos and techniques, how they print their brochures to great effect, and any updates on their website.
Familiarize yourself with your competitors’ products or services and their locations and try to analyze if you can compete in the same areas they have a presence on.
Become one of their customers and buy their products or try their service so you’ll have a firsthand knowledge of their products and what makes them appealing. This way, you can also find out the quality and make notes on how you can improve your own products or services.
Step 7: Avoiding Mistakes That Lead to Business Failure
For most startup businesses, committing a fatal mistake usually means total business failure where there’s no more hope of recovery. Both these fatal mistakes must be avoided and or corrected before you can start with your business operation:
Lack of Preparation
Lack of Thorough Research
As seen in steps 5 and 6, both of these can be addressed by researching beforehand how your products or services can penetrate the market. By properly researching on your business’s major areas of concern, you’ll be able to avoid the pitfalls of what others have experienced. Knowing your competitors and learning to adapt instead of trying to find ways of edging them out is a more realistic way to run your business.
6 Types of Business Plan
Depending on your business, you may need to use a single type of business plan from among at least six kinds that will fit your kind of business. While the usual form-follows-function principle applies to every type of business plan, you may need to use the kind of plan that is tailor-made for your kind of business. To guide you with these kinds of business plans, here are the six primary types of business plans:
Starting a new business entails a lot of preparation and hence, a detailed plan for your business. In a startup business plan, all the basic essentials you need to consider such as your company description, products or services you intend to offer, your market research evaluation, and financial analyses that include income and cash flow forecasting should be included.
A standard business plan includes all the seven essential parts of the business plan that have been thoroughly discussed in previous chapters such as the executive summary, company description, products or services, market analysis, strategy, organization and financial plans. It has to be brief, however, but you may thoroughly present it in its entirety if you’re planning to have business plan event to be presented to investors, lenders or business partners.
Internal business plans are specific to your business team directly involved in your company’s operation. It is used to describe and inform members of your company about the current state of operations that include operational costs, market analysis, profitability and areas for improvement. It’s also useful to make the company aware of the current financial health of the company, whether it’s making any money or if the current business climate is negatively affecting your business’s income.
Like an internal business plan, an operations business plan is also meant to be made for your business team involved in your company’s business operations. It focuses on your company’s goals and objectives, each company team member’s responsibilities and priorities to track projects, know the results of each implemented programs and meet projected deadlines. Basically, an operations plan tracks each member’s responsibility and what they are doing to achieve positive results for the company.
A strategic business plan is also an internal plan that is meant as a comprehensive map to emphasize each team member’s responsibilities. It focuses on the collective effort of management down to the common employee’s contribution to meeting the company’s goals and objectives. Its key elements include the following:
– Vision and Mission Statement
– Definition of Critical Business Factors
– Implementation Schedule
– Strategies to Achieve Objectives
A strategic business plan illustrates the big picture and is meant to encourage each member of the company to achieve the company’s goals.
A growth plan may be used for both internal and external purposes. Whether a new product or service is being offered or an expansion to new areas of your company’s operations is proposed, a detailed forecast of sales and expenses is needed as a financial projection for growth and expansion. As an external feature, growth and expansion plans are detailed descriptions needed to satisfy investors, business partners or loan requirements to guide them on your company’s potential for success and profitability.
Common Business Plan Mistakes
If you plan to expand your business and want to attract potential investors, you would need to present a business plan that is neat, well written, and as comprehensive as possible. To avoid common mistakes mostly associated with poor business plans that do not make the grade in attracting investors, the following business plan mistakes should be avoided at all costs:
Vague Business Plan. A business plan is supposed to be a solution to a problem. It’s supposed to point out your plans in a comprehensive detail of your projections. This is where you have the chance to comprehensively establish your business plan to convince potential investors of the viability, marketability, and profitability of your business. Having no clear explanation of all these important details means there’s no clear blueprint for your business, something no investor in his right mind would want to risk his investment on.
Plan is Incomplete. Your business plan should cover all bases especially in areas of concern like the details of your products or services, management team, sales and marketing and competition. Besides that, your business plan should focus on plans for the industry and details of your target market so that it can be determined if your market is growing or shrinking, something investors are mostly concerned about.
Not Having a Clear Business Model. For your business to be successful in its operation, you must have a clear business model. Your business must be set up not just to have a clear definition of your products or services that you’re offering, but also your revenue source and details of how your financing should be channeled to ensure profitability. If you don’t have a clear business model set up, your business is as good as dead and no investor will risk his or her money on a business that has no profit potential and considered a risky dead end trap.
Too Much Detail. While it’s good that your business plan is as detailed as possible, too many details in every part of your business plan could bore your potential investors entirely. This may result in them entirely missing out the important aspects of your plan. To avoid this, you may highlight the most important parts of your plan and keep all technical details on another page where your potential investor will be able to read it in its entirety if he or she wants further details of those parts of your business plan.
Not Enough Research. As pointed out earlier, lack of planning and research are two of the fatal blunders you can commit when making a business plan. Market trends are continually changing and not being able to adapt in time due to lack of research can be disastrous to your business. Not only will you fail to adapt, your competitors will have the utmost advantage over your business. It’s important to note that except for the executive summary, every aspect of your business plan needs thorough research. The more research you’ll do in all aspects of your products or services, the better prepared you’ll be in tackling your competition.
Ignoring Your Market. Your company is just half of the equation of the whole business procedure. If you think your product or service is good enough that you’ll ignore all tried and tested market fundamentals, then you’re committing a fatal blunder. Diving blindly into the market without testing your product to get customer sentiments means you’re ignoring market reality. Besides the market, you also have competitors to deal with. These two things emphasize the importance of both planning and research in order to get a better grasp of what kind of market you’re dealing with for your products or services.
No Thorough Financial Preparation. It’s a no-brainer to even remind you as an entrepreneur about how much money you need to start and operate your business. It’s a fundamental rule that you have at least an idea of how much money you need to spend and how much your projected income will be. Your financial preparation should focus on being realistic about your expenses and being cautiously optimistic about your business prospects.
Business Plan for Startup Business (with example in PDF)
Developing a business plan for a startup business need not be complicated. Since it’s always advisable that you make a business plan prior to operating your business, the Tennessee Department of Treasury has an excellent business plan model template in PDF that can be downloaded for free:
Being an entrepreneur necessitates a lot of fortitude and foresight. After all, it’s not easy risking your money on a venture that makes no guarantee of success. Having a business plan may mitigate the risks but you need to be cautious since as helpful a business plan may be, it’s not the be all and end all of business solutions. Nor will it guarantee that you can lure in investors towards your business. To avoid the pitfalls of any business disillusionment brought about by unmet expectations in making a business plan, here are some common myths that you should be careful not to believe in so easily:
Myth 1: A Business Plan is Key to Success
As good as this may sound, a business plan is not a road map for success. If anything, a business plan provides a clear direction where a company is headed. It outlines what needs to be accomplished and gives everyone in the organization a clear view of their tasks and the goals they need to achieve.
Myth 2: A Business Plan is a Sure Way to Attract Investors
Unless your company really has a strong growth potential, you may not be eligible for venture funding. Venture funding is meant to provide capital for startup and small and medium businesses with high risk and high return opportunities. However, most businesses make a mistake of not making their business plans comprehensive enough but instead rely on business plans that are big in words but few in important details.
Myth 3: A Business Plan Will Not be Read in Detail
This is only true if your business proposal is so poorly written and filled with typographical and grammatical errors that investors and lenders would tend to put it in a trash can instead of reading it. However, if your business plan is well written and convincing enough to warrant an investor or a lender’s interest, you can bet your last dollar that your plan will be scrutinized carefully and read in detail.
Myth 4: I Don’t Need a Business Plan at All
Full of self-confidence, a lot of entrepreneurs think their business plans are in their heads and that they don’t need one that is written. The problem is, there are a lot of uses for a business plan besides just presenting it to be read by a business partner, investor or lender. For one, your financial statements need to be presented not just for tracking your financials, but by the government’s tax collection agency to determine how much taxes your company owes among a lot of other things.
Myth 5: A Business Plan is Too Time-Consuming to Make
While it’s partly true that a business plan takes time to make, brainstorming ideas with your team often do wonders in formulating goals and objectives. Identifying problems early and pooling your team’s ideas together often do wonders since each team member’s ideas are uniquely different from each other. Investing in planning is preferable to diving head-on into the market with no clear objective in how to succeed in your venture.
Business Proposal and Business Profile
How to Present a Business Proposal: A Step by Step Guide
Oftentimes, when a large corporation needs to buy products from outside sources, it will require bidders to submit a business proposal. In today’s cutthroat business competition, your ability to write a powerful and effective business proposal could mean the success or failure of your business. The art of writing a persuasive proposal is an important element in expanding your business and establishing impressive relationships with your clients.
It’s no secret that writing a convincing business proposal can be an extremely challenging task. A powerful business proposal should effectively explain and provide details on how your company is more able to meet the needs and standards of the client and persuade them into choosing you instead of your competitors. In this section, we will provide you a step by step guide in presenting a business proposal that will help you win more clients.
Understand the Requirements. Clients usually release a formal document called Request for Proposal (RFP), which outlines their requirements. A great way to impress a prospective client with your business proposal is to study and have a clear understanding of their requirements. Once you have clearly understood what they want, it will be easy for you to research and design a business proposal that’s perfect for them.
Understand the Client. Proposing to a client can be a fairly mind-boggling process. A lot of times you need to know about the client’s set of requirements. If you’re not able to determine the client’s problem, then it’ll be tough to come up with a sensible proposal that would solve the problem. The best solution for this is to talk to the client personally and ask them about their organization’s goals, concerns and operating policies. That way, you’ll be able to design a business proposal that doesn’t just meet their requirements, but also provide effective solutions.
Develop a Methodology for Your Client. Once you’ve gathered useful information about your client’s goals and concerns, the next step is to develop an effective methodology that can benefit their organization. While developing a methodology is not an easy task, brainstorming ideas with the management can be extremely helpful. And since a methodology is not a one-size-fits-all approach, you have to consider every client’s unique set of requirements and concerns.
Keep an Alternative Solution Ready. Despite developing an outstanding methodology for your client, there are times when your client doesn’t agree to it. That’s why you’ll need to be always ready with an alternative solution whenever this scenario happens. When evaluating a solution, you’ll need to have a clear understanding of the background and orientation of the client, as well as how he/she view the project. In order to convince your client, you’ll have to describe how your solutions are favorable to their organization.
Stand Out from Your Competitors. Always view your business proposal as a sales document by emphasizing the strengths and accomplishments of your company. You can also use it to address any potential issues that are holding a client from hiring your company’s services.
Business Proposal Format
We all know how a business proposal can help you secure and close a deal with a prospective client. A well-written and structured proposal ensures snagging a client with ease and confidence. Write a poor proposal and you’re more likely lost your chances of securing a new client, no matter how great your offer is.
But just like any other forms of business document, your business proposal should have a format. Whether your purpose for writing is for a starting-up a business venture or securing a contract with an investor, it is highly crucial to make sure your document is formatted in an appropriate manner. However, there are cases when the RFP requires the bidder to follow the specific a format. But when no format has been specified, make certain that you follow this standard business proposal format:
Title Page. This section should include your name, your company’s name, the name of the person to whom you’ll submit the document, and the date of submission.
Table of Contents. It’s necessary to write a table of contents if you have a long business proposal. Writing one can provide your client with an overview of its content and makes browsing a lot more convenient.
Executive Summary. The ultimate purpose of writing an executive summary is to sell yourself, as well as your products and/or services, to the clients. It is in this section where you need to convince them why they need to invest their time and money in your company.
Statement of Requirements and/or Issues. In this section, you’ll need to discuss the requirements and/or issues faced by the client. Take this opportunity to show that client that you understand their needs and that you’re the right person to offer them the best solutions.
Methodology. You will have to go into details how you plan address their potential issues by showing them a step-by-step methods of how you’ll execute your plans.
Qualifications. A little bragging can help convince a prospective client why you are the best person to take on the job. Make sure that you highlight relevant specific industry training and certificates, as well as your company’s accomplishments.
Project Delivery Timeframe. When proposing a timeframe for the delivery of the project, make sure that it is realistic and refrain from being tempted to underestimate the time.
Detailed Pricing. Since the details of cost and payments need to be accurate, it is important to refer to the client’s RFP if possible.
Benefits. This is your last shot to sell your products/service to your clients. Do not hold back in providing the client with a detailed picture of all the benefits that come from selecting your company to complete the project.
Business Plan vs Business Proposal: A Comparative Analysis
A business plan and business proposal are two different, yet important forms of document in the business world. As a business entrepreneur, you should not confuse yourself with their distinct meanings and unique purposes. A lot of times when you do a research on the Internet about how to write a business proposal, it will display results predominantly about writing a business plan. Here is an infographic depicting the difference between a business plan and business proposal:
What is a Business Profile?
Not only job applicants need resumes, your company does too, but in the form of a business profile. Just like a basic applicant resume, your business profile should contain basic information about your company, such as:
Goals, mission and vision, and philosophy
Number of employees
Quality of financial and physical resources
Organizational and management structures
Sales and networking
Past, present, and anticipated achievements
Reputation of the company, as well as its products and/or services.
Your business profile serves as your introduction to your business/company and inform your target market about the products and/or services you’re offering. That’s why it is highly critical to have a clear purpose when writing your business profile so that you can provide clear details on why clients should be working with you.
Business Plan vs Business Profile
Unfortunately, there are several entrepreneurs who aren’t quite familiar how a business plan is different from a business profile. And since we have already discussed the difference between a business plan and business proposal, in this section, we’ll know how a business profile is different from a business plan. Take a look at the infographic below.
Business Plan PowerPoint Templates
The quality of your presentation can be your vehicle towards the success or failure of your business plan. Since you’ll be discussing the elements of your business plan with prospective investors, it’s highly recommendable to avoid boring templates with poor designs. Instead, use a professionally designed business plan PowerPoint template as your first shot to impress and engage an investor throughout your business plan presentation. Here are a few reasons to use PowerPoint templates:
Expert Graphic Designs
Matches Your Business Branding
Utilizing templates can give you an idea on how to draft your own business plan, based on the examples provided below. Choose from this collection of expertly crafted business plan PowerPoint template for ease and convenience.
A great marketing plan is an integral part of your business plan because it determines the elements significant for the growth of your business. It’s your roadmap to attracting and increasing your clientele and bringing your company closer towards the doors of success. Below are the importance of writing a marketing plan:
Prevents future uncertainties
Helps make objectives/goals achievable
Easy coordination and keeps the line of communication open among departments
Guarantees full customer satisfaction
Boost potential success in marketing operation
Don’t know how to start? Below are a couple of marketing plan business template samples that you can use as guidance when drafting your own marketing plan.
It is important to include in your business plan how your marketing efforts and ideas are essential for the success of the new business venture. A great marketing plan doesn’t only define the specific tasks and responsibilities of your marketing management, but it’s also a perfect way to allocate your resources in the best and practical way.
Please check these examples of a marketing plan that are offered in this section. Download and use them as your references for your marketing plan.
No matter how small your new business venture is, you will absolutely need a project plan. Sometimes, your excitement to push your venture without proper and thorough consideration can lead to disastrous results. That is why it’s not advisable for business owners to take project planning for granted. Here are several reasons why you should write a project plan:
Better Communication with clients
Keeps both company and client on the same page
Brings you closer to your goal
To help you develop a well thought-out project plan, take a look at the examples provided below.
The primary and most crucial function of management is planning. Thus, a management plan is another business blueprint that shows how your company will be operating on a day-to-day basis and over the long term. It often includes factors, such as handling of finances, the actual work and performance of the people in your company, and its general philosophical and intellectual groundwork. Found below are a few samples of strategic management plans which you can incorporate in your business plan:
SWOT Analysis. It lets you know which of the business policy or processes needs improvement, as well as identify the strengths in your marketing objectives.
Vision Planning. It helps you focus and align long-term goals with your marketing efforts, as well as setting an achievement timeframe for the years to come.
Scenario Planning. Depending on the nature of your SWOT analysis, scenario planning allows you to determine potential threats and opportunities. It also helps you develop a strategy using different internal and external factors.
Issue Planning. It is used to analyze and address a specific issue faced by your company.
If you’re looking for highly effective references to guide you in writing a management plan, please check out the examples provided below.
A business development plan doesn’t only guide you in the creation of your company’s purpose, goals, mission and vision, and values, but it also acts as a guidance for all the people working in your company. The strategic nature of development plan allows your business to focus on specific areas, such as:
Also known as a statement of work, the work plan is an introduction to a project which provides comprehensive details how a group of individuals proposes to accomplish the work-related projects at a given time. It is basically an outline or summary of goals relevant to the project and a timeline for project completion and cost. A work plan isn’t only limited to employees, business owners, managers. and business consultants also require a work plan. However, its purpose changes depending on different circumstances.
Make sure to check out the different work plans provided below. They are available for free download so that you can use them as guidance when drafting your own business work plan.
Business planning often involves large projects which are tough to accomplish. But with the help of an action plan, you can break them down into smaller parts and subdivide the responsibilities to your employees. Thus, an action plan is an important document that should include the actions to be taken in order to achieve your business plan goals.
Use the professional action plan examples provided below. They can be downloaded for free and make them your reference when writing your own action plan.
A strategic plan is your roadmap that points the direction towards the success of your business. Without a strategic plan, the direction of your business can go out of track and can lead you farther from success. It is a powerful tool that you can use in making daily decisions, assessing the growth of your business, and changing the approach, if you need to. Additionally, it can also help you think outside-of-the-box when accomplishing the goals in your business plan.
When you’re looking to present a new business venture to prospective investors, you’ll definitely need a compelling company plan that details the different resources or factors needed to achieve your business goals. Depending on the nature of your business venture, your company plan should include the development cost of your proposed products and/or services.
For reliable references, you may want to view and download the following examples of professional company plan below.
An implementation plan is a competent tool you can use to support your strategic plan. Its main purpose is to subdivide each strategy into simple steps and assign them to different individuals or groups. To keep track of the progress, you’ll have to set a timeline for the completion each responsibility. While the process may sound simple, writing an implementation plan can be challenging and difficult because you’ll need to pair each step with a working strategy. That’s why we have provided implementation plan examples that you can use as your guidance in drafting your own plan. Please check out the examples found below.
There are a number of startup businesses that outsource their service support to other companies. If you’re running a startup business that offers services to other companies, it is vital for you to be aware of its benefits and disadvantages. A great way to start is by reading professional examples of service plans, which are found below. Feel free to download the examples provided and make them your guide in writing your own service plan.
A sales plan is another important document to be included in your business plan as it sets out your sales target and details the strategies needed to accomplish your target sales. It serves as standard protocol for your sales team in achieving targeted sales in a given timeframe. An effective sales plan also helps:
Motivate your sales team to achieve their goals
Makes sure that you and the people involved in making purchase decisions are on the same page
Breaks up major sales plan into small achievable goals
Makes complicated sales process manageable
Removes any hesitation and accelerates closing of deals
Helps examine your current sales status and where it’ll be going in the future
Below are some examples which you can use in developing, implementing and reviewing your own sales plan.
No matter what the nature of your business is, your budget is always considered to be an essential component in your financial statement. That’s why you’ll need a budget plan to keep track of on your finances and how they impact on your business decisions and daily operations plans. Here is a short list of why budget planning is important for your business:
Provides a forecast of your business’ potential income and expenditures
Helps in the decision-making process
Evaluates the quality of performance of your finances
Writing a budget plan can be a delicate process because it affect your overall finances. To make things easier for you, we have provided a few budget plan examples which you can use as your reference when writing a budget plan for your business.
When running a business, you’ll need people for its day-to-day operations. As a businessperson, it’s vital to invest in staff training to help your people carry out their tasks effectively and competently, and avoid human errors as much as possible. A well-structured training plan is a great way to develop and promote a thorough and effective class by identifying different staff needs.
If you want to know what an effective training plan is, check out the examples that we have provided below. They are available for free downloads and you can use them conveniently as your guidance in designing your own training plan.
Making a business plan should not be feared nor should it be considered a hassle to every entrepreneur. Instead of viewing a business plan as a burden, consider it as a guide through which you can improve your business and meet your goals and objectives. Doing business should not be like driving at night through a blizzard with no headlights on. That would be a recipe for disaster and you wouldn’t want your investment to go down the drain. Rather, let your business plan act as a paradigm for where your business will be headed through your journey of success or failure. Both can be a yardstick by which you can improve your business plan to adjust accordingly. Success and failure are often intertwined with each other but with a business plan, you’re better armed to ride through a storm and come out unscathed.