A business plan is a document that sets out your company’s objectives and its strategy for achieving them. It’s essentially your company’s instruction manual, helping potential investors and lenders understand your business, the risks involved and how you intend to grow it. Not all businesses need a business plan, of course. If you have limited capital or no intention of seeking external finance, there’s no obvious need for such a document.
However, even if you don’t intend to seek external funding in the short term, writing a business plan can be an excellent process for any early-stage entrepreneur. Whether you want to launch your startup as a standalone company or launch as part of an existing organization (such as a university incubator), having a detailed plan can help ensure that your ideas are well thought-out from day one. Here are four tips for creating an effective business plan.
Define your objectives
Every good business plan starts with clear, measurable objectives. Why do you want to write a business plan? What are you hoping to achieve from it? Are you looking for investment? Are you trying to grow your customer base? What will be different in six months’ time if you write a business plan now? Will your customers be larger or smaller? Will you have more or fewer orders?
Getting clear on your objectives will help you decide which subjects to include in your plan, as you’ll know what kind of information is relevant. Your objectives may change as you explore different options through your plan, but you’ll know what issues to explore as you go along.
Research your market
When investors consider supporting your business, they’re not just interested in what you want to do: they want to know how many people you think will buy your products or use your services. Your business plan should include a thorough and realistic analysis of your market (usually called the “market analysis” or “market assessment”). This will show the investors that you’ve done your research and know who your customers are.
It will also help you to understand your customers better and to identify potential problems in your business model. Investors appreciate a good market analysis because it helps them to understand your customers’ needs, which will influence their decision about which projects to support. Your customers, in turn, are likely to be more satisfied with their products if you have a clear idea of what they want.
Create a dynamic plan
Business plans are meant to be changed, not set in stone. They’re there to guide you as you pursue your goals, helping you to make the right decisions at the right time. Your plan should include a timeline, so you can mark out key milestones and deadlines. This will help you to stay focused on what you need to do next and when, as well as helping you to identify how much time each element of your plan will require.
Your business plan should include sections on your company’s objectives, your market analysis, your company’s financial needs, and your strategic approach to reaching those goals. Your plan should also include relevant information about your company, such as your team and your past experience.
Ensure you’re writing for your audience
The best way to make your business plan successful is to write it for your audience. This means that you’re tailoring your plan so that it speaks to your readers. There are a few key elements that you’ll need to include in your plan, such as your company’s mission statement, your company’s overview and goals, a SWOT analysis, a breakdown of your company’s finances, a description of your team and advisors, your product’s selling points and a marketing plan.
Your business plan is meant to be an overview of your company and its goals, so you don’t need to go into great detail on any of these topics. You can always consider retaining the services of a company that specialises in business plan writing.
Bottom line
A business plan is meant to help you launch your company and grow your business, so it’s important to finish your plan with a final “bottom line”. This is the final sentence that you want readers to remember after reading your plan, summarizing what your company is all about. This might be “Our company makes children’s books that are personalized, so parents can read them with their kids” or “Our company makes a device that shuts off people’s cellphones when they’re driving.” Your business plan should be a dynamic document, reflecting your company’s growth and change. When you’ve completed your first draft, you can then use it to evaluate your progress and make sure that you’re on track with your goals.
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