How to Write a Winning Business Plan
How to Write a Winning Business Plan
Writing a business plan is essential to starting and running a business correctly. It creates a roadmap and document to clarify your vision, set goals, and state the necessary steps to implement the plan. A business plan confers the following benefits:
- Writing a business plan requires researching and gathering pertinent information, which you can evaluate, identify strengths and weaknesses, and adopt the best ideas.
- To write a credible business plan, you must engage in and incorporate information from strategic planning. Strategic planning is a brainstorming exercise used to generate clever ideas, concepts, methods, models, actions, and strategies for starting and running a business competitively and profitably.
- A business plan defines the business model and its value proposition and creates a document you can use to attract investors, partners and employees.
- A business plan creates a roadmap which guides you in starting and running your business well.
Here are the critical steps for writing and documenting an attractive business plan:
1. Title Page
The title page contains details about the business and the business plan, such as the name, logo, address, owners' names, plan date, and table of contents.
2. Executive Summary
The executive summary should contain the following information
- Overview: Briefly describe your business and its history, mission, vision, and values.
- Products/Services: Summarize what your business offers, including the features and benefits of the product or services. Here, you describe the value proposition, highlighting the problem in the market and how your product or service will solve the problem. You identify the job to be done and how the product will be the best solution. You must also describe the manufacturing process and requirements, including distribution and sales channels. This section is also where you explain any expansion potential of the business and the product's cycle.
- Market Opportunity: Highlight the target market or customers and the opportunity you are addressing. Here, you describe what the clients need, what competitors do or are not doing to address the gaps and what you will change to satisfy the perceived customer needs. This part is where you show how your business differs from the competition.
- Team: You highlight the critical team members and partners and what you will do to fill gaps, if any.
- Financial Highlights: You include critical financial projections, such as income and financial position statements and critical revenue and profits ratios.
- Funding Requirements: Briefly explain the necessary financial resources and how to raise the funds. If seeking funding, state the amount needed and how you will use it in the business.
- Milestones: State key goals such as target market share, break-even sales values, profit levels, and return on investment (ROI); show when you expect to achieve the targets.
2. Company Description
- Business Name: State the name of your business.
- Legal Structure: Describe the business's format, for example, sole proprietorship, partnership or limited liability company, including shareholding.
- Location: Indicate your business' location, address, email and website.
- Business History: If applicable, provide a brief history of your business.
- Mission Statement: Articulate the core objectives or mandate of your business. A mission statement is a broad but brief declaration that communicates the purpose of the company's existence to stakeholders, including employees, shareholders, vendors and the community in which it operates.
- Vision Statement: State what you want your business to become once it achieves the mission. It is an imagination of an attractive future position worth striving to attain.
- Value Statements: State your value statements, also called the code of conduct. The statements outline the company's beliefs and guide how you expect employees to behave towards one another, with customers, vendors and stakeholders.
3. Market Research
While addressing the points below, you must outline the ideal customer, their needs, what the competitors are doing to serve them and what you intend to do to outcompete the competition. The aspects you must cover include the following:
- Industry Overview: Outline the industry landscape, including trends, size, and growth potential.
- Target Market: Identify your target customers, including demographics, needs, and buying behaviours.
- Market Needs: Explain the market need or problem your business and product solve. Here, you highlight the job to be done and how the product will do the job.
- Competitive Analysis: List your competitors and analyze their strengths and weaknesses, as well as how your business and products will outperform them.
- Market Positioning: Describe how your business will differentiate itself from what is available in the market.
4. Organization and Management
- Organizational Structure: Describe the management team and the organizational grading structure. The Hierarchy indicates the flow of authority, how the various roles are distributed among departments, and how the departments interrelate. An organization chart provides a good picture of the business's setup.
- Key Personnel: Highlight the experience and expertise of key team members and how gaps, if any, will be filled.
- Roles and Responsibilities: Define the roles and responsibilities of each position in the establishment. This requires describing the functions of each job, section, and department in the organization.
- Advisors: Provide comments on any board members or advisors who contribute to your business.
5. Products or Services
- Product/Service Description: Describe the products or services you offer.
- Unique Selling Proposition: Explain what makes your products or services unique, describing their features and benefits.
- Research and Development (R&D): Mention ongoing or planned R&D activities.
- Product Lifecycle: Outline the lifecycle of your products or services.
- Intellectual Property: Note any patents, trademarks, or other intellectual property.
6. Marketing and Sales Strategy
- Marketing Strategy: Outline how you will reach your target market (e.g., online marketing, social media, content marketing).
- Sales Strategy: Describe how you will sell your product or service (e.g., direct sales, retail, e-commerce).
- Pricing Strategy: Explain how you will price your products or services.
- Promotion Strategy: Detail your plans for advertising and promotions.
- Sales Forecast: Provide a sales forecast based on your market research.
7. Operations Plan
- Operations Strategy: Outline how your business will operate daily to create and deliver customer products.
- Location and Facilities: Describe your business location and any facilities needed.
- Production/Service Delivery: Explain how you will produce and deliver the products or services to the market.
- Suppliers and Partners: Identify key suppliers and partners.
- Inventory Management: Describe how inventory will be managed (if applicable).
- Technology and Equipment: Mention any technology or equipment essential to your business operations.
- Expansion: Explain any expansion potential of the business.
8. Financial Plan
- Revenue Model: Explain how your business will generate revenue.
- Financial Projections: Provide detailed financial projections, including income statements, cash flow statements, and statements of financial position for the next three years.
- Break-Even Analysis: Calculate the point at which your business will be profitable.
- Funding Requirements: If seeking funding, specify how much you need, where it will come from, and how you will spend it.
- Exit Strategy: Explain your long-term plan, including a potential exit strategy for investors.
9. Appendices
- Supporting Documents: Include any additional detailed documents that help your business plan, such as resumes, product photos, legal agreements, or detailed market research data.