If you’re starting a business or looking to expand your existing one, you’ll need a solid, written business plan.
A good business plan provides structure and guidance for every aspect of your project, and can help you save time and avoid financial mistakes. It can also be instrumental in securing funding for your project while providing goals and objectives to measure your progress.
While developing a business plan can be time-consuming, it doesn’t have to be overly complicated. There are many online resources and templates that allow you to create a good business plan.
You’ll need to provide financial data, goals, marketing strategies and other elements, but once you gather that information, it’s likely that creating your business plan will be easier than you think.
This is one of the most important tasks you can do to ensure that your small business has a solid roadmap that shows where you want to go.
How to write a business plan
The typical business plan has 10 key components that should always be included:
- Cover letter: Like any proposal, your business plan should include your company’s name and address, as well as contact information for owners and executives. Table of Contents: Break down the sections of the plan. Include page numbers.
- Executive Summary: This is a key part of the plan that summarizes the main points. It should briefly state each section that appears in the table of contents. Also, include your mission statement, which explains your company’s goals and values in a brief formal summary. Write the executive summary once you have completed the rest of the plan.
- Business description: Your business plan is not just about where you want to go; it should also explain where you’ve been. Include the history of your company – when it was founded, number of employees, etc. – and identify your customers. You can also include your competitive advantage and unique selling proposition (USP) here.
- Product or service description: Briefly describe what product or service your company offers. How does a product work? What does a service look like from start to finish for consumers? What makes it different? Use simple language here; avoid overly technical descriptions and industry terms to provide the clearest possible idea to the widest range of readers. Explain how your products are different from the competition – or if there is competition at all.
- Market analysis: Understanding the market and industry you are entering helps you identify competition, risks, customers and advantages. General information about the history of your industry, as well as current and future trends, helps you get a clearer idea of what your company should accomplish.
- Executive team: Having the right team members in the right positions is critical, and this section explains who fills each role. The length of the section will vary considerably according to the size of your company. It should provide a clear picture of how the company is run (and who runs it).
- Activities: This part of the plan is closely related to the section on the executive team. It discusses how day-to-day activities are carried out and includes each person’s duties. You should include an organizational chart. This is also an excellent place to include goals and projections, quality control and risk prevention measures, and supplier information.
- Financial analysis: While this is one of the most important components of any business plan, it is especially important for companies or startups seeking financing. If your business is already in operation, provide as much financial data as possible for the past five years, including balance sheets and cash flow statements. Then create a financial forecast that includes revenue and expense projections. It is important to show how and when your business will be profitable.
- Implementation Plan: Now that you have outlined the key components of your plan, explain how you will combine them to start or grow your business. Set a timeline, but be realistic with your expectations. Make a list of key dates and objectives.
Benefits of a good business plan
Knowing how to write a good business plan will be beneficial in many ways. Even if you are not seeking financing, it serves as an internal guide to what you want to accomplish and how you are going to do it.
The more detailed the plan, the more knowledge you will have regarding what needs to be done, what can be eliminated, and where you need to improve or gather more resources.
If you need help writing your business plan, CedarSmith is here to help.