Having a big business dream is great, but to convert your dream into reality, you need a business plan. Whether you’re a startup or established business, a business plan serves as a roadmap to steer your business in the direction of your vision.
You can either write your business plan from scratch or use a business plan template, but in any case, completing your plan is a must if you want to achieve lasting success.
What is a Business Plan?
A business plan is a written document that presents your business details. This document explains the nature of your business, an overview of your industry, customers and competition, the marketing and sales strategies you intend to employ, and financial projections of your business’ future performance.
Though a business plan is typically used for new businesses, every business can and should have one. An effective plan helps you compare milestones against set goals, and analyze if your business has evolved, or deviated from your vision. This information enables you to make timely and accurate business decisions.
A business plan should include the following sections:
- Executive Summary: Provides an overview of your business
- Company Overview: Gives your company’s background; when you launched, milestones achieved to date, etc.
- Industry Analysis: An analysis of your industry
- Competitor Analysis: An analysis of your competitors
- Customer Analysis: Details of the customers you serve
- Marketing Plan: A description of your products and services and your promotions plan
- Operational Plan: A description of your business operations
- Management Team: Bios of your management team
- Financial Projections: Forecasts of your future income statements, balance sheets and cash flow statements
Why is a Business Plan Important?
There are several reasons to create a business plan:
1. To Reduce Preventable Business Problems
A good business plan enables you to focus on all aspects of your business, including financial, operations, marketing and management. With all aspects duly planned for, there will be fewer unforeseen issues.
For example, performing customer analysis as part of your business plan enables you to better understand your target audience. You are thus less likely to make the mistake of spending money and resources on promoting your products and services to an irrelevant demographic.
2. To Demonstrate Credibility to Stakeholders
Existing stakeholders such as your executive team or partners, and prospective stakeholders such as financiers need proof that you really understand your business and that it is financially feasible.
A well-prepared business plan is crucial to make them believe in you and your business, and to secure essential financial backing.
3. To Communicate your Business to Important Individuals in your Life
An entrepreneur’s life is not easy. Personal relationships can turn sour amidst caring you’re your business. A good business plan can act as a bridge between the entrepreneur and the special people in their life.
A business plan conveys your dream and passion while explaining the realities of your operations plan. Reading this can make others more understanding and supportive.
Uses of a Business Plan
A business plan can help you grow your business, sell your business, and manage your entire internal and external team. In order to realize these benefits, your business plan must be highly-focused.
Here are some ways to make your business plan work for you:
1. Sell Well with a Proof-Based Business Plan
It is easy to make predictions of success to make your business plan look positive.
But investors are more interested in knowing the reality – why do you believe your business will be a success? Is it because you are offering a never-heard-of product? Is it because you have industry experts on your team? Or, is it because you have extensive experience in the field?
Give proof for every claim you make in your business plan.
2. Show Investors Potential for a Solid Return on Investment
Lenders want to know they’ll receive their interest payments and principle repayment. Equity investors like angel investors and venture capital firms want to make sure they’ll earn, ideally within 5 years, a solid return on their investment (ROI).
3. Make the Right Impression with a Realistic Business Plan
You can dream big. But to make your big dream a bigger reality, you need to be realistic. Be conservative with your financial projections; do not over project your business resources; and do not present overly optimistic timelines. Stick to reality.
Ensure business success with a well-written business plan. Seek the help of mentors, peers and professional business writers as needed.
