If you are starting a business, you need a business plan. In many ways, your business plan is your roadmap – it not only guides you and other stakeholders as you grow your business, but it also shows investors, lenders, or potential partners your business is aimed at. Therefore, a successful business requires a well-thought-out business plan.
While the prospect of writing a business plan may seem intimidating, it doesn’t have to be. If you take the time, include essential information, and follow a few simple steps, you’ll be well on creating the perfect plan. To help you through the process, we have created this guide on how to write a business plan, step by step. We’ll walk you through each step and section so you can complete yours in no time.
How to write a business plan in 8 steps
In general, a business plan can be divided into eight main sections. The best way to approach these sections, especially if this is your first time writing a business plan, is to take each section as a step one at a time.
Ahsan Sohail, CEO of Maven Business Plan Consultant, agrees with this approach on how to write a business plan, saying: “A business plan can simply be considered as an answer to a series of questions. Try to answer only a few questions at a time. Preparing a small part of a business plan at a time is easier than locking yourself in the office for several weeks to finish the job immediately and completely. ”
So, once each section is completed, step by step, the final result will be a complete analysis of your company as it is now and as you hope it will be in the future.
You can also get help from business plan writers. They will help you to prepare extraordinary business plan.
Step 1: Create the Executive Summary
The first step you will need to take when writing a business plan is to create your executive summary. This executive summary will be the first chapter of your business plan – it will explain what your business does, where your business is currently located, where you want to take it in three to five years, and why you will be successful.
While it sounds like a significant amount of information, the executive summary should be no more than a page or two in length. However, just because this is a short section of your plan doesn’t mean it’s unimportant. On the contrary, it could be the most important part of your business plan. Some investors may just ask for your summary when deciding whether to consider your business – so they’ll want to ensure the company can stand up for itself.
Please note that any information that does not answer the “what, where and why” questions we have listed above should not be included in your executive summary. Instead, make this step of your business plan easier by sticking to the following six pieces of information.
- Mission Statement: In no more than one paragraph, the mission statement or mission statement should explain what your business is and what overall goals you have.
- General Company Information: Indicate when your business was formed, the name of any founders and their roles, the number of employees and any location.
- Highlights: Next, include examples (with graphs and charts) of any growth you’ve seen since starting the business. These could be financial market highlights or business milestones. You should consider this part of your summary as evidence to support why you will be successful. You may not have numbers to show if you are a startup. If so, provide insight into your experiences and highlights from your past efforts.
- Products and services: Briefly describe what you sell and to whom you sell it. If you don’t have a product yet, describe your plans for offering products.
- Financial Information: If you are looking for business finance, we recommend that you include your funding goals at the end of the executive summary. Ensure you include any information about any banks or lenders you have worked with.
- Plans for the future: Summarize where you plan to take your business in the future.
Remember: While it may sound extensive, this is a summary first, so we recommend that you keep it short and to the point. There are still seven steps left to complete, so you will have plenty of time to go into details later. With this first step, you are showing readers what they are getting into. However, it’s also important to remember that every word of your executive summary counts as a first – and short step. It will show if you haven’t thought about your business plan enough.
If you are struggling with writing your executive summary from the start, try working on it after you finish writing your business plan from start to finish – that way, you will have a solid grasp of the details and be better consolidated to summarize them.
Step 2: Add your company overview
The second step you will want to take when writing a business plan is to add your company’s overview. While this step may sound similar to what you just wrote in the executive summary, the company overview is a high-level look at your business structure and what you do.
When you write your company’s overview, then, you can think of breaking it down like this:
- What your business does: Begin your company’s overview section with a few sentences that describe what your business does. You can think of this part as your elevator pitch in writing. The first piece of your business overview is intended to give readers and investors an overall sense of your business.
- Industry and market of your business: Next, we recommend that you explain the nature of the industry and market that your company offers. Where do you fit in? What is the need your business is specifically serving and how can you meet it? Again, the explanation of your offer in the market should be short.
- The legal form of your business: Once you’ve set the tone and explained your value proposition, you’ll want to describe the legal form of your business. Are you an individual company, sac, sas, srl or SpA:? Make sure you explain what type of company your company is and also provide an overview of your property structure.
Remember, just like the executive summary. You’ll want to keep your company’s overview short. But, again, this isn’t the section to go into the details. Essentially, the company’s overview of a business plan gives you a quick but engaging idea of what you do, who you serve, and why you will be able to serve them. This section also includes a brief look at your business’s current legal and ownership structure, so potential investors know what they’re getting into.
Step 3: Perform the market analysis
Your next step is to thoroughly analyze your industry, market and competitors. While the first two sections were panoramic, this section is where you will begin to get into the details.
The purpose of market analysis is to allow investors to come out with the confidence that you, the company owner, have a solid understanding of the dynamics of your industry, market and competitors.
To show this understanding, the market analysis should include the following sections:
- Industry Description: Give the reader a glimpse of your industry. Describe how big it is, how it has grown in the past, how industry leaders predict it will grow in the future, and other important trends and characteristics. Next, list the important players in your industry.
- Target Market Overview: You have looked at your industry as a whole and will now want to discuss your target market.
- Characteristics of the target market: Who are the customers in your target market and what are their needs? Who is currently trying to meet these needs? Where is your target market located? What is the demographic key you are serving? You should answer these questions as you provide insight into your target market.
- Target Market Size and Growth: You should also give readers a look at how big your target market is. Try to provide as much data as possible on how your target market buys in the general sector: how many times and at what time of the year. After reviewing the current state of your target market, give an idea of the expected growth of your market.
- Barriers: Be sure to include any barriers to market entry you may encounter. It could be regulation, technological change, high investment, or a lack of staff in the area.
- Competitor Research: Now that you’ve looked at your target market, you can narrow your competition down. Look at their market share, strengths and weaknesses, obstacles they present, partnerships, and so on.
Step 4: Define the organization of the company
What is the next step in writing a business plan? First, define the organization and management structure of your company.
This section explains who does what at your company, what everyone’s background is, and what past experiences they bring to the team.
Here’s what you need to break down:
- Organizational Structure: Before diving into the details of each stakeholder, explain where they fit into the whole picture. The beginning of this section should include an organizational chart showing how your business is structured. This will show that you know who is managing what aspect of your business.
- Ownership Structure: You’ve already discussed this in your company overview, but here you should delve deeper into how your company is legally structured. Explain who owns what and how much they own.
- Background of the owners and board of directors: Explain the background of your team, manager, partner and board of directors. These descriptions will show potential investors that you have surrounded yourself with individuals who can and will make your business successful.
- Hiring Need: If your team isn’t that big right now, you’ll likely need to expand in the future. List all the key assumptions you need to make to achieve your goals.
Step 5: Make your products and services available
After describing your company’s organizational structure, it’s time to immerse yourself in the product or service your company provides. With this step, your goal is to define your plans for positioning your product.
When writing a business plan, you can begin this part by describing the service or product and who it is for. What need does it specifically fulfill?
To dig deeper, here’s exactly what this section should contain:
- A description of your product or service: Include your product details here and highlight what distinguishes your product or service. Make sure you talk about how your product meets your customer’s needs and how it differs from your competitors. It’s about framing the problem and the solution your company offers.
- Current Product Status: Explain where your offer is currently located. Is it just in the idea phase, or do you have a final product ready to market? Give a realistic and honest picture of your core product or service’s development.
- Research and Product Development Goals: If your product is still in the concept or creation stage, describe how you will lead it to a targeted product. What research and development activities need to be done before reaching the market? Also, if you have plans for future products that you want to research and develop, write them down here.
Step 6: Explain the marketing and sales plan
Now that you have provided all the crucial details of your core product offering, the next step in drafting a business plan is to explain how you will market and sell your product or service.
Let’s start with the marketing side. How will you find customers and get them interested in your business?
In general, this is what the marketing part of this section might look like:
- Positioning: The first part of your marketing plan covers how you are positioning your business and your products. How you position your brand determines how customers find and interact with you. Do you offer a free service? Or the service that can guarantee the quality? This sets you apart from your competitors in the sense of branding.
- Promotion: After explaining how you will uniquely position yourself, explain where you will spread the word and how you will reach your customers. This involves whatever plan you have to package your product, advertise the product (online or with traditional sources), engage in public relations, or engage in content marketing practices.
Once you’ve explained a marketing framework, dive into your sales plan:
- Sales Force: Describe who will sell your product. Do you need a sales force? If so, how big does your sales team need to be? Who will train them? Now is the time for you to put on a sales manager’s hat.
- Sales strategy: An overview of how you will sell your product or service. Will, your team cold call potential customers? Or will you attend sales meetings in person? Here’s how to start and close the deal. Make sure you describe what the sales funnel looks like for your business.
For more information you should visit business plan consultants.
Step 7: Describe the financial plan and projections
Although this section comes at the end of the business plan, it can be the most important part of the document. With this step, you will then detail your financial plan and projections, taking a look at the current state of your finances and mapping where you would like to be financially in the future.
If you’ve been in business for a while, you’ll use past performance financials in this section. If you have previous data to show, you should include the following financial statements :
- Income statement
- Financial statement
- Balance sheets
- Customer accounting (if applicable)
- Accounting statements (if applicable)
Even if you don’t have your company’s previous financial data, you need to include financial projections in this section. The financial projections are supported by past data or are determined by research and analysis of the sector and the main competitors.
That said, when forecasting your business financials, you’ll want to include these essential documents:
- Expected revenue declarations
- Cash flow forecast
- Balance sheets
- Capital expenditure budget
Typically, a thorough business plan has financial projections for the first 12 months of business, but it also has a longer outlook and sets out a plan for the next three to five years. To know all the details related to creating a financial projection, you can decide to consult an accountant or other financial advisor.
The last part of your financial plan should include any financing your business needs or will need in the future.
Whether you plan to obtain financing through equity financing with investors or corporations or through financing with small business loans, here is what you need to include in a financing request:
- The amount of funding needed at this time
- Any funding you will need in the future
- Purpose and impact of the funds (working capital, equipment purchases, franchise expenses, company acquisition, etc.)
Final remarks
There you have it – since we’ve broken down how to write a business plan step by step, you now have the tools you need to create a complete business plan.
The best place to start is by thoroughly researching the industry, competitors, and financial resources so that you have most of the information you will need to refer to and include it in your business plan as you write it down.
Once you start writing, remember to be concise and efficient and keep your audience in mind.
Our final advice is? Immerse yourself immediately. This crucial business document won’t write itself, so it’s time to move on, and once it’s done, this will be another thing you can check out on your business checklist.
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