Are you starting a new business and want to learn how to write a business plan?
A business plan is one important component that ensures business functions the way it’s intended. It is regarded as a pathway or map of a business and how it intends to carry out its activities in the market place, it helps the owner know how certain things will be done and how to carry out the activities to ensure that the business progress and also succeed.
Benjamin Franklin once said that “If you fail to plan, you plan to fail”. Not having a business plan can be a factor in business failure.
Although a business plan is quite important, it is can be challenging to draw up a business plan for a business. One of the challenges people face with writing a business plan can be attributed to the perceived technicality involved in writing a business plan. Personally, I used to dread the prospect of writing a business plan until I realized the importance of having one for a business. The truth as I have realized is that a business plan doesn’t need to be seen as something technical but rather something written from our imagination, and idea coupled with research. The research is to help you solidify your ideas, concepts, and knowledge about your new business.
Now before we go further with how to write a business plan, let’s take a look at some of the benefits of having a business and also the possible danger or drawbacks of not having a business plan.
What is a Business plan?
A business plan is simply a description of a business, how it functions, the product or services it renders and how it is being financed. It serves as a pathway towards understanding how business functions, and guides it towards success.
It helps describe the owner’s ideas and intentions of the business.
Benefits of Having a Business Plan
Like we already mentioned, a business plan is important to have when starting a business and also important during the operations and management of any business. There are so many reasons why a business plan is important for the success of a business, we shall briefly explore some of the benefits to give us an inkling why we should have a business plan.
- It provides both you and the investor a clear description of your business, eliminating all ambiguity. It gives details about the product or business services, its marketing plan, finance, and so on.
- Serves as a pathway that guides a business towards its business goals and objectives with a detailed description of the owner’s ideas, concepts, and intentions.
- It helps you understand if your business idea is worth pursuing or not.
- It helps you as the business owner and also investor to discover various risks within the business and draw up suggestions on how to minimize them.
- It’s one factor that helps when applying for a loan or sourcing for finance for your business.
- Serves as an occasional reference while running your business.
- It’s a platform for communicating your ideas to a third party.
Point to Note Before Writing a Business Plan
Like earlier stated, writing a business plan should not be seen as something technical it should be perceived as one’s own way of eliciting thoughts, ideas, and concepts and nothing more. The following are a few more points to note before and while writing a business plan.
- Write out your ideas and concepts then do some research about the ideas.
- Keep it simple and straight to the point, avoid all ambiguity because they lead to confusion and make you overwhelmed when trying to explain your ideas.
- Don’t try to impress, trying to impress might make you become unrealistic about your projections. Remember it’s a guide, and a guide has to be accurate in order to lead you successfully.
- Ensure to carry out proper market research and avoid unnecessary assumptions. Assumptions are deceptive and often leads to problems.
- State your finance and financial projections as clearly as possible, ensure to be also realistic in your financial projections to avoid future troubles.
- Ensure to get feedback and suggestions from people you trust or from an expert in the line of business.
- Never overlook your competitors. It can be tempting to think you have the best product or service. But experience has shown that even the smallest competitor can pose a threat to your business. So, ensure to understand who your competitors are, what they are doing, and how they are doing it, understand the various ways you could do the things they do better.
Structure of a Business Plan
A typical structure of a business plan usually looks like this:
- Executive summary.
- Business Overview.
- Market Research.
- Sales and Marketing.
- Business Operations.
- Financial Breakdown.
- SWOT analysis.
· Executive Summary
The executive summary is basically a brief overview of what the plan is all about. It summaries each chapter of the plan giving the reader an inkling to what to expect at each stage of the business plan. It is worth repeating that this part of the business plan should be brief, just a summary of the basic business plan components. Also, this part is usually written last when writing a business plan.
· Business Overview
The business overview should contain the basic information about the business, information such as the business name, and contact details. Also, this is the part where you get to give reasons for starting the business, your products and services and also how you intend to deliver the proposed products or services.
In a simple word, this is where you get to write your aims and objectives of the business.
You get to describe your business unique selling point, what differentiates your business and the advantages of your products or services when compared with other competitors.
· Market Research
This section is where you get to carry out some little research about your business and the market you intend to serve called a business niche. The following are basic components to help you carry out proper market research:
Write out your target market, the size of the target market, and the sector of the business.
Who are your competitors?
What do your competitors have? State their products and services.
How are you different from your competitors? State what’s your unique selling point (USP) and why people would prefer your products/services?
Analyze the market and business environment, are they good for your business?
What are the various entry and operational barriers?
If your business would need collaborators like suppliers, you should get proper details about the different suppliers and how they operate.
Find out if their business process suits yours as well, how willing will the supplier be to work with you?
· Sales and Marketing
In this section, you get to elicit your various marketing strategies based on the market research you’ve conducted. You should clearly state your unique selling point (USP), also you get to carefully consider the 5P’s of marketing products and services. they are: –
product, price, place, people, and promotion.
Also list out the various means you’d employ in marketing your business i.e. internet, radio/tv, magazines, etc.
What pricing strategy would you employ to entice clients to your business?
· Business Operations
This is where you get to say how you intend to manage the business. Will you require to register the business before commencement, and what are the necessary body in charge of registrations.
If you have a team, it is important to list them out. Write out who is responsible for various components of your business, also write out their qualifications.
Also, in this section, you get to say if your business would require machines or types of equipment. If it needs machinery, briefly explain how the machine will be used in producing your products. What will be the frequency of production i.e. daily, weekly, or monthly?
· Financial Breakdown
Here is where you get to state the cost of running the business and various projections. This section is mainly for the forecast. Write out the start-up cost, cashflow projections, projected profit and loss, and all capital expenditures that are necessary to run the business.
State the various funding options available to you, and how long it would take before you start making profits.
SWOT analysis is a great analytical tool commonly used in businesses, it provides you with a clear understanding of your entire plans and ideas, pointing out various weaknesses and threats within the plan or business.
A SWOT analysis simply refers to Strength, Weakness, Opportunity, and Threats.
With SWOT analysis, you can determine the strength of your business and plan, the various weakness, opportunities, and possible threats.
The appendix is where you attach all resources used in writing the business plan e.g. market research plan, financial breakdown, etc.
In this article, we explain the basic meaning of a business plan, why it is necessary to have a business plan irrespective of the type of business. It helps a business become clear on basic things to do in order to be successful.
Also, the structure of the business plan discussed in this article is to help you in drafting your own business plan in a simple clear manner.
As already stated, avoid looking at a business plan as something technical, rather look at it as a process where you get to write out your intentions and ideas.
Wish you all the best in your business.