If you want your company to last long, you need a business plan. It lays the foundation for your growth that outlines and explains every stage of starting, managing, and successfully running your business.
Just like you would need a study plan when preparing for exams, you need a business plan to prepare yourself for the coming tasks you’ll have to tackle in the next three to five years. If you were to operate without it, you’d find many obstacles in your way that could’ve been foreseen and avoided had you invested in a business plan.
Not only could you circumvent unnecessary mistakes, but you could save yourself money. Having a business plan promotes analysing projects and planning ahead of time. This way, you know what to avoid and how to work through potential problems and obstacles that would arise.
What Is a Business Plan?
In short, a business plan defines your objectives, goals, and how you’ll reach them through marketing, financial organisation and management. It can be used to attract investors and secure your lending from financial situations.
A business plan is the easiest way to show off your analytical and organisational skills, even before you have a track record to prove it. It isn’t only useful for startups, but companies as well. By providing a business plan to your team, you can assure everyone is aware of what goals you want to meet and what strategic actions need to be taken to reach them.
There are three types of business plans with slight differences. We will talk about each in this article, so you can decide which format works best for you.
Types of Business Plans
1. Traditional Business Plan
The traditional business plan, also referred to as a formal business plan, is most commonly used. It’s the one that takes the most effort to create. Usually, venture capitalist firms, investors or lenders require this kind of business plan from you.
2. Lean Business Plan
The lean plan, or the one-page business plan, is simply an abbreviated version of a traditional business plan. Companies that use this plan prefer a condensed form of their business that covers only the key elements.
A lean plan is used for onboarding new hires or modifying existing plans for a specific target market. Usually, they are short, such as one page in length. Though, this makes them useless for an investor or lender.
This Lean plan can include a value proposition, advantages of the company, revenue sources, staff, and much more.
3. Non-Profit Business Plan
The non-profit business plan is, as the name suggests, used for social or public benefit. This is the plan that donors might request, That is because it covers the same information as the traditional business plan, but with the addition of the impact the company is trying to make.
As you can see, choosing the right business plan format is crucial. Different situations call for different plans, so it is good to know which one follows your specific requirements.
Let’s now take a look at how to write a business plan. Specifically, a traditional business plan, since it’s the most common and difficult to write. Plus, it serves as a foundation for the rest.
How to Write a Business Plan
Fortunately, a business plan is much like a CV. All you need to do is follow a few simple guidelines for an ideal result.
Simply put, your business plan should explain what the goals of your business are, and how you intend to reach them.
The first part of your business plan should include your mission statement, information about the company’s leadership, operation, employees, location, and financial information. In short, you have to include information from all the subheadings of the business plan that are listed below. Keep in mind that the executive summary should not exceed one page.
We also recommend you write it last, since it is one of the most important parts of your plan and includes information from all the following parts.
It’s similar to writing a thesis. Usually the introductory sentence and summary are the most daunting task. Though, once the thesis is written, you’ll know exactly what you want to include from each section.
To avoid wasting time, we advise you to jot down only a few notes. There’s no need to write full sentences at first, as bullet points will suffice. Once you’ve compiled a small list of things, just leave it at that and continue with the rest of the business plan.
At the very end, you can go back into your executive summary and finish it, you’ll find that it is much easier to write now than it was before.
The company description should of course include all the basic information:
- Business name
- Names of key personnel in your team and their salaries
- Business structure and model
- Products and services, such as: pricing, lifespan, benefits, research and development, and manufacturing of your product
All of that is simple, fact-based information. But the following two points need more time for consideration, which is why they are listed separately:
- Mission statement. The reason why your company exists, the vision you had when creating your business, so to speak. You’re allowed to be emotional here because the mission statement is supposed to be inspiring and captivating. Be careful, however, that it perfectly represents your business and its core values, even though it doesn’t have to be much longer than a sentence.
- Objectives. This part is all about your plans for the company. Explain what advantages your business has over others and what elevates you from the competition in reaching your goals. Mention your team and the kind of experts it’s made up of, as well as other strengths that make your company special. Your objectives have to be clearly formulated and logically put.
Market Research & Analysis
In this section of your business plan, you explain in detail what makes your business special. For that, you first need to know the size of your market. Learn about your target market’s trends and themes, as well as the demographic information of your ideal potential customer.
Start by researching your competitors, analyse their strengths and most importantly their weaknesses, and then explain how you can do it better. Some things to look out for:
- What are their sales strategies?
- Do they invest in advertising?
- How do they rank, especially in comparison to each other?
Marketing and Sales Strategy
Now’s the time to come up with your marketing and sales strategy, a crucial part of your business plan that decides how your business will perform.
Describe how your company plans to attract its potential customer base and what the value proposition of your business is. Give details on the advertising and marketing campaigns you’re planning and what types of media you want to use for them.
You should know your ideal target markets and have already developed strategies on how to grow and expand your business. Your marketing and sales strategy should be a logical solution to the results and goals you expect to reach with your given resources.
Financial Plans and Projections
It is important to provide a cohesive financial plan that breaks down sales, profit, revenue, and expenses of the last three years minimum, as well as projections for up to five years into the future. Even if your business has yet to accumulate financial data, you need to formulate financial projections to outline and supplement your funding requirements.
Depending on your audience, there are certain financial metrics you don’t have to mention, however, these are a must:
- (Forecast) Income statements
- Balance sheets
- Cash-flow statements
- Capital expenditure budgets
Business expenses like staffing, development, manufacturing, marketing, and so on are also figures we recommend you include. When providing this data, you mustn’t underestimate business costs, especially when you’re a new company.
The best way for you to summarise this information is in graphs and charts. These are easy to read and give a quick overview of all the relevant data
In this last part of your business plan, you can provide any other additional information. This is the part for uploading official documents or materials that are required of you.
Those can be, but aren’t limited to:
- Letters of reference
- Credit histories
- Bank statements
- Product pictures
- Resumes of key employees (especially if previously mentioned)
Make sure that in the end, your business plan is well-thought-out and written, to make it attractive and comprehensible to read. You can invest in quality design and formatting by using online templates to build your plan. There are many options to choose from, for example Atlassian, LivePlan, or Bplans. These are great if you need examples of what a potential finished product could look like.
While we showed you how to write a traditional plan, it is the foundation for the rest and certainly the most complicated to write. So, if you can conquer this style, then you have nothing to worry about.