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How to Write a business plan, step by step.

How to write a business plan? This question is often asked by most people who are thinking of starting their own business, starting a startup, or finding an investor. Everyone understands that the answer to the question ''how to draw up a business plan competently and correctly?'' is an integral part of the success of the company and enterprise. The completed business plan should provide a complete picture of your business from analysis to development prospects.

What is a Business Plan?

A business plan is a plan that covers the concept of the business, marketing and financial section. Your writing plans the strategies necessary to leverage sales of the product or service offered and to create an authority for the brand. Bearing this in mind, having an innovative idea to open a company is not easy and keeping it in the market is even more difficult, especially when you, the entrepreneur, have doubts about how to act in the market in which you are inserted or intend to enter.



Research shows that the lack of a business plan has proved to be the second biggest cause of business failure in the USA and the UK. So, In this article, we will see how to write a business plan that will get you ready to better understand the market, project stocks, seek investors and get your hands dirty, take your idea off the paper and turn it into a successful venture also prepared to face the challenges that will arise?

The importance of planning

The first step in structuring a business plan is to understand why and how writing one can help you. When planning, you clearly understand all the processes that your company does in different areas, from marketing to finance, which can attract investors to your business and make proactive decisions in the face of a problem.

The link between good planning and the success of a startup was proven by a study conducted by Harvard Business Review, where entrepreneurs who presented a good business plan were 16% more likely to achieve business viability than those who did not.

After understanding the importance that a business plan has in your company's useful life, we move on to the second step: market research. There is no way to undertake or continue your business without a good understanding of your current and future customers' behaviour. 

"Why would anyone be interested in my service?" “What are my differentials in the market” are some of the questions you must answer. This research will help you to understand the facilities and difficulties you will have with your enterprise.

How to create a business plan yourself, and what is needed for this?

For your business plan to be easy to assimilate, none of the sections must be written in isolation, making all the parties talk to each other. For this reason, the person responsible for structuring the plan must have a sense of the complexity of all areas covered in the plan.

The best person to write your business plan is yourself. This will ensure that you can identify challenges and know how to solve them. In addition to learning each aspect of your business, which is crucial when meeting potential investors.

Before drawing up a business plan, you must first assess the current situation and work with the information. One of the recognized technologies for preliminary analysis before drawing up a business plan, especially for small businesses, is a SWOT analysis, which structures all information.

What is a SWOT analysis, and how is it used in a business plan?

SWOT analysis is needed to assess the internal and external resources of the company, drawing up an objective picture for the business plan and consists of the following components:

Strengths: The strengths of a product or service, such as low production costs, high professionalism of employees, an innovative product component, attractive product packaging, or a high level of company service, etc.

Weakness:  these include such factors as the lack of own retail space, low brand awareness among potential buyers, etc.

Opportunities: business opportunities imply such factors as introducing new materials and technologies for the production of a company's product, obtaining additional funding for a project, etc.

Threats: for business, these can be criteria such as the economic and political situation in a country or region, peculiarities of consumers' mentality, the level of technology development in the territory of doing business, etc.

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What should you include in a Business Plan? 

After understanding the entire background of a business plan, we started to ask ourselves: "After all, what should we put in this planning?" and to answer that question, we need to know that a business plan basically has three parts:

  • The business concept
  • Marketing section
  • Financial section

 Within these parts, there are subdivisions, which may vary in number from plan to plan, but which, in this article, will be presented in ten.

1. Executive Summary

Although presented as the first section, the executive summary should be the last written part of a business plan. Its objective is to summarize all the ideas described in the plan in a clear way so that a critical analysis of the business plan can be made already in the first part of it.

It is important that it does not exceed a maximum of two pages, so put the information that is most relevant. There are some essential elements of the Executive Summary; they are:

The concept of your business

You must describe what your company does, sells, what market it operates in, and what are its differentials.

Financial Characteristics

Highlight the accounting characteristics of your business, such as profit, sales, return on investment, and cash flows.

Financial Requirements

You must calculate how much capital your company will need to start and expand. Also, specify how this capital will be used.

Current trading position

Highlight the general characteristics of your company, when it was formed, who are the main employees, who is the owner or who are the partners, and how it works legally.

Main achievements

Try to highlight all the points of development of your business. Challenging projects, marketing results, patents, and everything you think are important for your success.

2. Description of the company

Describing your company may seem like a simple task, especially for an entrepreneur passionate about your business, but care must be taken not to extrapolate the level of detail of the points that should be highlighted. Here you must put:

The name of the company, the legal type of the company, its properties, and intangible assets

  • Objectives and indicators
  •  How your business will make a profit
  •  Characteristics of the market in which your business is inserted
  • The strengths and main competences of the enterprise

If you are making the plan to apply for financing, it is interesting that you make it clear how the investor's money will grow your business.

The size of this section will depend on the complexity of the plan you are putting together, but it is good that it does not exceed two pages so that the other sections go deeper into the subjects that are intended for them.

3. Opportunity, industry, and market description

At the beginning of the article, we talked about conducting market research and how important it was for you to do it before you started writing a business plan. In this section, you can use all the information collected to be able to structure the opportunities that your business can take advantage of.

Start writing detailing all the data you have about the market your company operates in, your industry, and what opportunities you can see through the market research you have done.

From this, you will be able to determine what the optimal price of your product would be, what your sales strategies could be, and how your business would grow within the sector in which it is inserted.

A tip for writing, this section clearly and fully is that you try to answer some questions according to each topic covered. Below, I will give some examples to help you in this structuring.

To understand your opportunities, it is necessary for you to identify possible gaps that exist in the market in which you will operate. When you answer the following questions, the path your plan should take will already begin to take shape.

  • Where is the gap in the market in which you operate?
  • How did it happen, and how was it identified?
  • How will this market gap be filled?

It is important that you understand the industry that you will be operating in order to understand all the variables in your sector. Try to answer the following questions:

  • Which companies will compete with yours, and how strong are they in the market?
  • Who are your product's customers, and how much power do they have within your industry?
  • Are there any substitute offers for your product or service?
  • Who are they, and what is the influence of their suppliers within the industry?

To conclude the section, we have come to detail the market in which you will be established. To do this, try to focus on your current and future customers.

  • How big is the market?
  • How fast is it growing?
  • What are the main consumer preferences?

Try to synthesize all of this content within 2-3 pages.

4. Strategy

After understanding what variables will influence your performance in the industry and the market that your company will operate in, and what are the opportunities you have to develop, it is time for you to describe what your strategies will be for the growth of your business.

  • To make your strategy complete, it is important that you focus on the following points:
  • What will your company focus on
  • How you will achieve success in the market
  • What differentiates your company from the others and how you can use your differentials to your advantage
  • What is the value of your service to your customers

It is recommended that you use one or two pages to write this section. To structure your strategy, try to focus on your differences and how they can help you succeed. Your customers will only consume your product if it has an advantage that others don't.

5. Explanation of the business model 

A good business model is a key to good financial performance for your company. it is important that you detail all sources of revenue for your venture

  • Main costs for revenue generation
  • Business profitability
  • Necessary investments

The size of this section will depend on what your business model looks like, but it is important that you are able to synthesize all of your explanation on one page so that it is easy to view and understand when done.

Include information about what your company will offer (services and products), your differentials in the market, who your customers will be, and how you will profit.

Avoid drawing a model that makes your business unfeasible, that is, that does not make your service attractive to the public.

6. Team - Management and organization

Who is behind your business? Who are the people who make your company work? This section is specifically for you to introduce your team and the role that each member assumes in the enterprise.

Describe who the founders and/or partners are, who runs the company on a day-to-day basis, and the employees who play a direct role in business development.

Do not forget to make a list with everyone, listing the qualifications, experiences, and what each one develops in the business.

Use one or two pages for this section.

7. Marketing Plan

The Marketing Plan must contain all the strategies that will increase the sales performance and acceptance of your product. As it is a section with more information, you can make two to three pages available for your development.

Try to base yourself on your market research to describe your target audience, the image that your product should convey to the customer, which pricing strategy will be adopted, which sales channels will be used to show your product to the potential customer and public relations, advertising, and marketing activities.

Your plan should contain:

 

  • The current first-quarter advertising schedule
  • The budget that will be allocated to advertisements
  • Product packaging templates (if required)
  • Phrases promoting your service

Always try to stand out for the differences between you and your competitor; your marketing is what will define whether your product will be accepted on the market or not.

If you do not have a vast knowledge of this area, ask for the help of a professional, but do not forget to participate in the whole project to understand the complexity of it. 

8. Operational Plan

The operational plan is very specific to each company, and it depends on the services or products it offers. However, in general, this section describes how your business works on a daily basis.

There is some basic information that can be placed, such as:

  • Description of the operational cycles of delivery and sale of your service/product
  • What materials and skills are needed for production
  • Tables for operating expenses, capital requirements, and commodity costs

 Try to concisely detail everything you think is important in your company's operating cycle. It is suggested that you write this section on two pages.

9. Financial Plan

Probably the ninth section is the most laborious and the most difficult to write.

If you have no affinity for finance, ask the help of an expert to set up all your planning, but make sure you can explain all the information to future investors and partners.

There is some information that cannot be left out, such as:

  • Initial and capitalization expenses
  • projection of 12-month (month-to-month) and three-year (quarter-to-quarter) profit and loss
  • Cash flow projection for 12 months and three years (quarter to quarter)

This section will undergo some additions after the completion of the plan. It is important that you do income statement calculations at the end of each month, in the first year, and quarterly from the second year.

The purpose of these statements is to see if your plan is meeting the outlined expectations.

10. Appendix

The appendix section serves to attach all those documents that you think are important for the explanation and interpretation of your marketing, operational, financial plans, and the other parts of your business plan.

An interesting tip is to include in this section the extra calculations that detail your financial plan. The appendix does not have a stipulated number of pages.

Completing your Business Plan

After completing the ten sections of your planning, I suggest that you read all parts calmly, review, and ensure that all the branches of the business plan talk to each other.

Remember that in addition to helping you to organize and manage your company in a competent manner, the business plan is an important document to attract investors and potential partners; for this reason, everything must be well structured, explained, and consistent.

Regarding the time allotted for the completion of your entire plan, it is interesting that it is neither too long nor too fast.

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