When launching a business, you never want to go into it blindly. Developing a solid business plan will ensure you’re staying on track every step of the way, laying out a vision and convincing prospective employers to be a part of it. And since you need to secure money to launch the company, it is important to get creditors and investors on board. In a nutshell a business plan, it will help outline your goals and describe how you’ll reach them.
If you’re a newbie entrepreneur and aren’t sure how to write a plan, we’re happy to help. Success begins by following these seven steps!
1. THE EXECUTIVE SUMMARY
When starting your business, you will need to come up with the startup cash whether it’s through loans or private investors. The executive summary clearly and concisely explains your reasons for wanting to start the company and what you want to achieve. A good executive summary never teases the audience with vague hints about what’s to come, instead it provides all of the essential information. Given that they are being asked to contribute money to the business idea, it makes sense that they would want to know exactly what they’re getting themselves into.
2. COMPANY DESCRIPTION
As you describe your proposed business, you’ll provide such details as the industry your plan to enter, the intended targets, and your long-term vision for the company. Make sure not to describe things in general terms; you should be as specific as possible. At the same time, you don’t want to make this section too long. Keep it to 3 or 4 paragraphs at the most.
Next, you’ll discuss what your business will offer in terms of products and services. What is the purpose of your proposed company? Why is there a need for your business, and how will customers benefit? How is it different from what other companies provide?
4. MARKET AND COMPETITION ANALYSIS
Whenever you start a business, it is essential that you consider both the size of your market and the competition you’ll face. Which segment of the population are you targeting? For instance, do you offer a product/service that is targeted towards women? Or perhaps you are seeking out younger demographics. How many other businesses in your community offer similar products/services? What is your strategy for overtaking them? How much revenue do you predict your company can generate and what is the timeline for reaching this? These are all very important questions that you’ll need to answer. If you live in a large city, it might be the case that you have a lot of competition, but at the same time, there are enough people to justify another business. On the other hand, if you live in a small town, you will need to explain how you’ll manage to gain customers given their limited numbers.
5. BUSINESS STRUCTURE
Next, you should demonstrate that you have a clear plan as it relates to your organizational structure. Do you plan to start as a small company and then hire more employees as you grow? In terms of logistics, how will you obtain the materials that you’re selling? What will the chain of command look like at your company? How many people will you initially employ? What is each of their job descriptions?
6. FINANCIAL COMPONENTS
Every business plan needs to include financial figures. Your balance sheet should highlight such things as cash flow and income. Potential investors love to see the numbers, and when the figures look promising they are less hesitant to jump in. They also want to see that you have a budget and intend to spend the money wisely. Most companies need time before they start making a profit. What is your expected timeline for this?
7. ADDITIONAL DOCUMENTATION
You should include additional documents that make it clear that your business is legitimate. Some examples include contracts with suppliers, references, legal paperwork, and even tax returns. For good measure, the president or CEO can attach their CV, so investors know the business will be in good hands. Any information that portrays your proposed idea in a positive light is a good thing.
Starting a business requires a lot of money upfront, which can come in the form of bank loans or through private investment. In order to secure the cash, you need to convince creditors and investors that you’ve got a great business idea. A business plan is the most effective way to achieve this. Not only does it offer your vision and mission, it also highlights your business in the best possible terms. It is never easy to start a company and it can be even more difficult to convince investors to contribute their money, but if you follow all of these steps, there is no reason why your company can’t get off the ground!