Do you know how to create an effective business plan? Great planning often draws the line between success and failure. Failure to plan only results in more failure. Your business plan should foremost be able to convince you that your idea is a solid one before you can convince any other person.
Your business plan does more than guiding you and other important stakeholders on your business’s growth. It also shows potential investors and partners where your business is headed.
Therefore, a great business plan is a prototype for a successful business. Writing a business plan might seem tasking, but it’s not, as long as you don’t forget to include essential information.
Top 7 Essential Steps to Creating a Business Plan
Step 1: Develop Your Executive Summary
This is the first chapter of your business plan. It explains what your business is all about. Your business’s current stance, where you aspire to take your business in the next two to five years, and why you’re business would be a success. You can explain briefly with the following points:
• Mission Statement
This explains why your business exists and where you want it to be in the future.
• Overview of company’s information
The date your company was formed, the founders of the company, the number of employees. This gives an insight into the numbers of manpower at the company.
• Company Highlights
This will show your business’s success growth and give investors more reason to partner with you. It can be shown in graphs and charts.
• Products and Services
Describe what you sell and who your market audience is. If you don’t have any products yet, describe your plans for what you intend to sell.
An estimate of how much money the business will need and a breakdown of how it will be used. However, if you are looking for financial assistance, be sure to add this to your executive summary.
Step 2: Execute Your Market Analysis
This is the quantitative and qualitative assessment of a market. It looks at the volume and value of market size, the customers, the buying and selling pattern, the competition, and the economic environment.
You have to perform an in-depth analysis to show your investors that you know your market and that the market is big enough to build sustainable economic growth. To give a proper analysis, you have to follow these plans:
• Demographics and Segmentation
• Target Market
• Market Need
Step 3: Defining Your Business Organization
This section explains the function of your company’s employees and what they offer to the team. The start of this section should include your business’s organizational structure, showing who manages an aspect of your business.
Also, explain the background of your team, partners and board of directors. These backgrounds will convince potential investors that your business is surrounded by business-minded individuals to make your business a success.
If you’re thinking of expanding your team, list out essential hires you’ll need to achieve your goals.
Step 4: Describe Your Products and Services
A description of your products and services should be detailed here. Your product should be able to meet the needs of the consumers. You should be able to cite the reasons why your service stands out from other competitors.
Describe your products’ current status; is it just in the idea stage, or do you have a final product ready to go in the market?
If your product is still in the idea stage, discuss how you will bring it to the finalized stage. If there are any future products, give notes on how you would like to develop them.
Step 5: Expound Your Marketing and Sales Plan
After explaining what products and services your business renders, you should expound on your marketing and sales plan.
How will you get customers to be interested in your business? With the right marketing and sales strategy, you would attract many potential customers in the long run.
You can employ the 5 P’s of marketing
Step 6: Detail Your Financial Plan
Your financial statement should include:
• Income Statements
• Cash flow statements
• Balance sheets
• Accounts receivable statements (if applicable)
• Accounts payable statements (if applicable)
• Documentation of debt (if applicable)
This part of your business plan should show the current level of your company’s finances and where you’d like to be financially in the future. The last part of your financial statement should include any funding your business might need in the future.
Step 7: Make It a Living Document
After drafting out your business plans, you should make it into a living document. This will help to keep track of your business growth. You can also readjust your strategy as the need may be.
However, share your business plan with your business mentor for revision and get professional guidance from someone who has had the experiences.
How to Create an Effective Business Plan Video
If you’re starting a new business or have been in the business for years, it’s likely that at some point you’ve considered writing a business plan. A well-written and researched plan can help you navigate all kinds of obstacles along the way. They are also extremely valuable when looking for financing, as they help investors see how your company will grow and make money.