How to Write a Good Business Plan
An important first step when starting your own business is to prepare a business plan. A business plan is a written document describing your business' future. It tells potential investors and customers what your goals are for the company and how you plan to achieve that. You will need to define your business, products and services, operating procedures and the route your company intends to take to achieve the goals that are set forth. This information summarizes the sense of your business in a single document. Business plans are inherently strategic because it shows that you’ve thought about every detail and challenge that comes with starting a business in California. You can show people that you have a roadmap for how you will start the business and have it continuously move forward. A well thought out plan is also extremely helpful if your company needs funding from loans or venture capitalists. Below are a few tips on what to include in a good business plan!
Executive Summary/Mission Statement
Within the overall outline of the business plan, the executive summary will follow the title page. Your executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals. It briefly tells the reader where your company currently is, where you want to take it and how, and why your business ideal is exceptionally qualified to succeed, especially if you are in a highly competitive market. Although this section will appear first in your business plan, it should be the last section you write. This will allow you to highlight the best parts from each of the sections from your business plan. Each subsection is described below!
The business description contains information about the business itself: its legal structure, its owners and managers, information about the product and/or services it offers, a brief history of the company (if any) and various markets within the industry and how they are changing. Describe what products or services you will develop in order to keep up with the newest and latest trends. This demonstrates that you have a direction and gives you the opportunity to show what your business will do, exactly, to differentiate itself from all the others out there. This also lets you show the objectives and goals you have for the company, and even the strengths and weaknesses.
The purpose of this section is to give an overview of the industry and market. It should describe the current size and growth rate of your specific marketing target, your competitors position within the market, and facts to support the strategies you have pertaining to marketing, production and distribution.
In this section you should first describe the industry including information on projected growth and expected changes in trends and/or consumer demands that could affect the product. Next you should describe your target market aka customer. First by addressing what need it is that you are going to meet with your product or service. Then figure out what specific demographics you are aiming for. What is their age, sex, income, geographic area, maybe even weather trends depending on the product, etc. Then describe the size of your primary market. If the market is shrinking you will need to provide information supporting a prediction for growth again in the future. Obviously, if it is already growing then there will be a lot of support for entering this market.
This section should also contain information on your pricing structure, as it pertains to how your company will have an advantage in the market or what changes you can make to give your company an edge compared to others. Finally, you should include a competitive analysis in order to identify your competition and assess certain characteristics about them. This part should include size of
the market share, their strengths and weaknesses, what barriers they have over you entering the market, are there indirect competitors that might hinder your success, etc. This will help you to develop strategies to have an advantage over them and reach the highest success in that market.
Researching marketing strategies will enable you to become very familiar with all aspects of the market you are going to enter. There are four general subsections of this, first being penetration of the market. How do you plan to enter the market initially? Then comes growth, which is once you are in the market what are your plans for growth of not only the product but the company itself. How it might be able to grow into other markets, franchising, etc. Next is to analyze your channels of distribution in order to generate increased sales. This could include a sales force team, retailers, internet, etc. Finally, address your communication strategy. This is the communication between your company and the consumers, i.e. how are you going to reach them? Discuss promotions, advertising, printed material like catalogs, flyers etc. And keep in mind about your public relations. This section of the business plan will allow your investors, future customers, etc. to see exactly what your plan is to get the word out and reach a large customer base, because customers are the lifeline of any business. How will you not only get their attention, but keep it?
Design and Development Plan
The purpose of the design and development plan section is to address the product or service itself. Explain how it will compete with others that are the same, how will it fill the customers’ need, and how it can grow within itself for the future. This section will focus on the design and development of the actual product or service, giving investors a clearer view of the product itself, beyond market, finance, management, etc.
Operations and Management Plan
The operations and management plan is where you will explain how the business is run on a daily basis and by whom. It should contain information of the organizational structure to show that you know exactly who is doing what for the company and nothing is left for chance. It will also contain ownership information which lists names and perfect of ownership, forms of ownership, management team, employment, number of years with the company, info on the board of directors, if any, etc. It is basically all the information on who is running the company, what they do for the company, how long, and their qualifications and background.
Financial data is always at the end of the business plan. It is still a very crucial part of the business plan. This should include an estimate of your startup cost, projected balance sheet, cash flow statement, and income statement for the upcoming year. What are the fixed costs of the business, i.e. rent, utilities, etc.? What are the variable costs? This section should discuss financial projections of the future of the company and be able to have supported data to back it.
If you need funding, you will have to provide supported data for financial projections. Here are some things you will want to put in your financial request. You will want to include your current funding requirement, future funding requirements for the next 5 years, how long you intend to use the funds, and any financial plans for the future (i.e. a buyout, debt repayment plan, etc.)
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Category: Business plan