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8 steps to creating a sound business plan
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A business plan is a vital component of any successful business, as it both provides direction and attracts investors. Without a business plan, you risk detouring from your original goal and ending up at a destination far from where you want to be.
That said you may be dragging your feet to create this crucial document. This may be because you've heard rumors that the beast sucks time, money and mojo at a moment when you need all the resources at your disposal: the birth of your business.
If that's the case, scratch what you heard and rejoice in the fact that the process doesn't have to be all that complicated. Use the tips in this article to learn how to write a business plan without expending resources you may not have.
Know what goes into your plan
First and foremost, it's important that you understand what goes into a business plan. The Small Business Administration recommends incorporating the following elements into your document:
- Executive Summary: This provides an overall snapshot of your business
- Company Description: Use this section to describe what it is you plan to do
- Market Analysis: Research your market, industry, and competitors and detail your findings in this section
- Service or Product: Detail the products or services you plan to offer
- Organization and Management: Outline your business and management structure here
- Marketing and Sales: Describe how you plan on marketing your business and your intended sales strategy
- Financial Projections: Provide a snapshot of your balance sheets
- Funding Request: Detail how much money you anticipate needing in the next three to five years
- Appendix: This section is optional and should include resumes and permits.
Even with a clear idea of what a successful business plan format entails, it can be difficult to get started. These steps should help you develop a business plan that will serve as a definitive guide to success.
Do your due diligence
Research should comprise more than 50 percent of the business plan development process. Before you can even attempt to create a working guide, you need to intimately understand your industry, company, product, competition and target market. To gain the insights you need, spend time reading up on everything you can and talking to your audience.
Know your purpose
Because business plan creation does require a lot of resources, it should not be attempted without a definitive purpose. Know your reasons for developing a plan in the first place.
Is it to obtain funding for your business ? To serve as a roadmap to success? To attract partners? By better understanding the document's purpose, you can tailor each section to your overall goal.
Create a profile
When crafting this section, keep your target audience in mind. Ideally, you should be able to pull the information in this section and use it on your website's about page.
This section should answer your target market's most pressing question: How are you going to solve its problem? Discuss your products or services, address your unique selling point and describe how your organization came to be.
This is the first section you will actually write and can set the tone for the rest of your plan.
Outline your marketing plan
Your business plan should explore how you plan on attracting and retaining new customers. Though this section of the document is essential for all business owners, it is especially so for those who plan on winning over investors. This portion of the plan should detail your marketing objections, such as:
- Introduce new products
- Boost sales for a particular product or service, or within a particular market
- Enter new territories
- Enter into long-term contracts with repeat customers
- Refine a product
- Streamline manufacturing and product delivery
- Develop a content marketing strategy.
Don't stop there. Once you outline your initial objections, create subsets of objectives that outline your plan for achieving those goals. This section should also propose a budget for each marketing activity.
Talk about your business
Your profile is your sales pitch and is essential for gaining excitement about your products or services. However, excitement won't get you funding.
If you hope to attract investors, you need to prove that your business model is a profitable one. The best way you can do this is by detailing everything from your cash flow to expenses to industry projections.
You should also discuss minor details such as location strategy and licensing.
Make your plan adaptable
Business plan development requires a lot of time and resources. Because of this, you want to make your plan as adaptable as possible. Though you'll have to make tweaks here and there depending on your target audience, the bulk of your plan should speak to most audiences and require limited alterations from plan to plan.
Explain your why
Though passion and success don't always go hand in hand, you're much more likely to persevere through hard times if you're passionate about what you do. Investors, customers, and team members know this, which is why your plan should convey your passion and dedication to the business. Discuss why you chose the industry you did and what problems you hope to solve.
A business plan is a vital component of any successful business. Though you may not need one right away, you will eventually if you hope to grow and attract investors.
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