Starting a business is a great idea that can help you gain more for your time. However, you can’t just wake up and begin your business; there are things you must make ready. One of the first things to get ready is your business plan. Welcome to my channel home of all things business management, financial management, freedom, and lifestyle. For those yet to subscribe, then you are missing out. Show your support by dropping a comment, like, and share. Let’s head on back to the main topic of today.
Every business needs a business plan. This is irrespective of how you plan to raise money for it. If you are starting up with your own money, you might not demand to have a business plan, but it is recommended. However, if you plan to request for funding from an investor or the bank, then you will need to get a business plan.
What is a business plan?
This is a document containing research and conclusions of what your business is, what growth it plans to achieve, what goals it has, and how it plans to make profits. This document, when properly written, can help you get loans from financial institutions and get equity funding. It is also a document that allows investors to review the business and its future growth.
According to business experts, a business plan will identify the purpose of your business, company description, business goals, structure, product or services, required resources, financial plan with statements, business management and operation.
Now you understand the importance of a business plan; you can decide to get someone to write it or do the job yourself. I recommend doing the job yourself since it helps you to portray your goals for the business in your own words. It will also help you understand what your business needs to succeed.
Ten steps in writing a quality business plan
Legal business structure
Each business has a structure that is backed legally. Typically there are four types of legal structures, and you can choose which best suits your business and its future.
This is otherwise called a one-man business, and it works simply as a means to keep all the authority and deciding rights in one hand.
Here, you are not the sole owner but a person who works alongside others. You could be equal owners or have slightly higher or lower authority to the other persons. Typically authority is divided based on the contributing financial factor.
This is a larger body and has more than a handful of partners owning a business. There is usually a board of directors, employees, officers, managers, shareholders, and workers.
Limited Liability Corporations
This is more of an entity of its own, and its risks are not attached to the management team. What this means is that unlike the rest of the structures mentioned above where the owners are liable to any debt or issue in the business, this structure exempts the managers and manages all its debts and issues on its own.
Poorly written executive summary is often the reason why investors turn down investing with people. No matter the qualifications, one must include in the business plan all the information. You also need to keep the executive summary to under three pages. It should be delivered with care and details in an attractive and persuading way.
Explain to the investors what they stand to gain from backing you. Tell them why your business is better than the many others out there and why you are a capable hand for them to trust. You should also let them know in the document your exit strategy, returns ratio, growth rate and target customers. It should be simple and explain what the investor’s money will be used for. How you plan to generate income, your expenses and cash flow. But remember that this is a summary and should not be detailed since that part will come in the main document.
Organization and management
This is where you expressly explain everyone’s position in the company. It outlines the management team and the board of directors. It should state the qualification and essence of each management team member and board of directors. It will outline authority and limitations. Explain the various positions and duties of each person within the company.
If possible, you should also outline the qualifications needed to possess each position within the company. This could include educational requirements, experience, skills, and expertise. If the detail is available and the employment process is already in the works, then you can outline the name of those who will fill in the available positions and their past employment.
Description of the Business
Every business plan needs a business description. It should be a detailed explanation of what your business is, what its products or services are, who your target customers are and what you plan to solve in the world. When writing your plan, your business description is where you let your investors know that you have full control of what the business is going to do. Think of it this way; there are several problems in the world that need a solution.
Your business has picked up one problem in the world and has decided to find a solution for it. This is what you have to explain the problem and how you plan to solve it. The investors should be able to put themselves in the shoes of needing customers and know that their problems can be solved. It should discuss the structure of your business, the legal details, how the business will be formed, what type of business it will be, where it will be located, how the business will be conducted and how it will be run.
The next thing to consider is your operation plan. For every business plan and every business startup, an operating plan is necessary. The first thing to consider under this step is cash flow planning. How will the company make money? How will they profit from the business? What development is the company looking at in the next few years? You should also note the budget of the company and how it will be planned out.
An analysis should be included and an expense report for the setup. You can also add things like the mission and vision statements, the structure of the organization and its in-house team. It can also include compensation and incentive plans. The entire part of the business plan is a method of analyzing and breaking down the performance history and planning of any business. It will also be the deciding factor for how the company’s goals, future, and growth will be calculated and attained.
Products and services
Here you must mention the products or services which you are rendering in the business. What are they, what will they solve, what quality are they of, who are the target buyers, who are the target audience, who will benefit from it and who will not? These are some of the few questions to worry about.
Marketing and sales strategy
This is where you will note the marketing strategy your business will take up. How will they attract customers, what system are they using to gain customers and get the attention of the public? These are questions that must be answered. If you understand the target audience and location from the onset, you can set up a business that can conquer the market. And this is what investors want to see and hear, the fact that their money will earn reasonable profits.
Find out who your competitors are and know how to supersede their present market stance. Understanding other competitors will help you know from the start if your business will be successful. If you can prove that to investors, then that is excellent.
Without saying so much on this point, investors want to know how you plan to use the money they are about to lend you. They also want to know how they will make a profit and how the business will remain thriving in the market. Let them know your beginning expense and income generation plan.
Unique Selling Proposition
In a simple sentence, this should say in detail what makes your products better than the competitors? This is what investors want to know.
Make your business plan clear and appropriate and always think of potential risks. If you can ask and answer the questions before they are asked, your supposed partners will be convinced that you are serious for business. Thank you for staying with me. If you have any questions, leave them in the comment section. If you are yet to subscribe then do so now. In contrast, doing that hit the like and share button.
Recommended books for further reading:
- The Simple Path to Wealth
- Keys to Success – Napoleon Hill
- Business Secrets from the Bible – Daniel Lapin
- The Business Book: Big Ideas Simply Explained
- The Lean Startup: How Constant Innovation Creates Radically Successful Businesses