It is necessary to know how to write a business plan for the success of an organization. Every business has its own written business plan in order to provide a roadmap or to grab investors. Before writing a business plan you must be clear on the points like, what a business plan is? Why it is written? Who is your audience? Finally, how to write a business plan? Therefore, before writing a business plan it is mandatory to work out properly and gather necessary input to formulate a perfect one. Gathering information from several business plan examples is convenient for business. In this article we will discuss the following:-
- What is a Business Plan
- Importance of Business Plan
- How to write a Business Plan
- How to write a free business plan
- Tips for Successful Business Plan
What is a Business Plan?
A business plan is a piece of paper that reflects the future of your business. In other words, it provides a roadmap of how and when defined goals will be achieved by the business. The business idea can be beneficial in numerous ways for both who are going to write and read it. Business plans are used for different purposes. For instance, an entrepreneur presents it to a potential investor to seek investment. Sometimes firms use it to attract key employees. Planning a new business deal an organization may prepare one to impress the supplier. Lastly, a business idea is used by the organization internally to manage properly despite external factors.
A business plan is backed by the background information related to your organization and the whole team attempt to obtain defined objectives. It is necessary to fix the information properly in the business strategy so that it may present a clear picture to the reader. A business plan is basically a snapshot of the business, as it starts with the goals and objectives of the business and ends up on the amount of capital required to start the venture. Business strategy is supposed to be prepared in a way that illustrates the problems and constraints you are going to face and solutions to the identified problems. It clearly defines the organization’s structure and responsibilities assigned accordingly. To know more about a business plan, visit Wikipedia.
Who needs a business plan?
- For running a business
A business plan is like a map and a scope for an organization. Without it, a business cannot be able to run a business effectively. It defines a business plan, sets business aims, establishes priorities, and provides for cash flow.
- For applying for a business loan
In order to get a loan from a bank, businesses need to show an actual business plan. This process is beneficial as it gives a better understanding of the business goals. Most banks expect it to be a summary of the industry, with some foreseeable main points.
- For business investment
The idea won’t get you the venture, but not having an idea will means you won’t get investment. Investors necessitate a business plan. They always like to invest those who prove better plan, show all records, market researches, and so on.
- For working with partners
A business plan describes contracts between associates about what’s going to occur.
- For communicating with a management team
- For selling a business
Importance of Business Plan
A business plan has great importance for businesses and entrepreneurs. It is mostly observed that business plan work best for newly forming business but despite that business plan is essential for various purposes few of them are listed below:-
- To raise funds for your business
- To make quality decisions
- To identify weaknesses
- To communicate ideas with all stakeholders
To raise funds for your business
If you are desirous to raise funds for your existing business or you are going to launch a new business. Investor seeks a written plan known as a business plan before lending you money. While you present the business plan it must contain financial working in detail so that the investor gets clear on every aspect. It must be clearly communicated with the support of figures how much money is exactly required.
To make quality decisions
With the support of a business plan, you will be able to focus on the business defined objectives and strategies. Because business plan does not only mean to focus on financial matters rather, it helps in other issues pertaining to human resource management, technology and so on.
To identify weaknesses
The business plan will help you identify weaknesses pertaining to your business. Once worked out with all weaknesses you will try to overcome them by hiring some experts. Or you may share your plan with professional to seek advice from them regarding identified weaknesses.
To communicate ideas with all stakeholders
The business plan will help you to communicate with all stakeholders you are interested too. It will help if you want to convince people to work with you. To extend the credit terms from a supplier. You may share it with potential clients/customers to attract them. It will help you to raise capital from the market. Hence, the business plan can help in all above-highlighted purposes and many more.
How to write a Business Plan?
There are several business plan format pdf is available on the internet. A business can use this business plan examples to write their own business plan. It is crucial for a business to maintain an accurate business plan format. Business plan format can be divided into the following three main components broadly:-
you will discuss the industry along with your business in detail. Illustrate your products or service (vary from business to business) and how your business plan will be successful.
you will describe your targeted customers in this part. Which factors persuade them to buy your products and a brief overview of your competitors and what is your position among them.
In this portion, you are required to provide the reader to the financial details with the support of projected financial statements.
Based on these three main components further, a business plan has the following seven components:-
- Executive summary
- Business Overview
- Products and Services
- Market Analysis
- Competitive Analysis
- Operations and Management
- Financial plan
An executive summary is the portion of a business plan placed in the top but it is written in the last. Because bits and parts of all the following sections are included in this part of a business plan. Reading an executive summary lead the reader to the overview of the business, desired objectives/goals of the business, a snapshot regarding the organizational structure (title and responsibilities of the human resource including the ownership structure). What are you offering product or services? Have you got any competitive advantage, your overall marketing strategy and finally financial information?
Key elements that should be included are:
- Business concept: Defines the business, its goods and the marketplace it will function. It also finds out the specific location where the product will be sold and who customers of this products are.
- Financial features: Highlights the significant economic points of the industry comprising sales, returns, money flows and profits on a venture.
- Financial requirements: Obviously shapes the money required to start the industry and to enlarge. It should discuss how the money will be utilized, and fairness.
- Current business position: This element Supplies applicable data about the business, its lawful form of process, when it was shaped, the main vendors and key staffs.
- Major achievements: Specifics any growths within the business that are vital to the achievement of the industry. Major accomplishments comprise objects like patents, examples, site of a competence, and so on.
This portion begins with the brief history of the industry in which you operate. To start with the explanation includes the position of the overall industry as compared to others in a broad perspective. Discuss the current situation of the industry also has an overview of the future happenings. Quote references if necessary from where you have gathered data. Provide accurate facts and figures to the readers avoid assumptions from your own end.
After industry overview provides necessary information regarding business. Locate your business in which sectors it falls, whether it’s new or established. Mention the status of the business whether it is a sole proprietorship, partnership or a company. After that inform the readers regarding a segment of customers your business is actually targeting. In which market your products will be launched and finally how you will distribute and market the product/services.
This introductory section of the plan section should include:
- Company Overview: This section consists of the name of the company, its location, kind of legitimate entity, tenure, significant resources, and revenues of the organization.
- Mission statement: This part describes the goals and objectives of the organization. A mission statement is a short declaration of an administration’s determination, classifying the area of its processes.
- Company goals and objectives: It is necessary to define business goals to meet business objectives. Appropriate objectives and purposes point a new trade in the correct direction
- The way of operation: This section describes the way of operation and finds out the appropriate approaches that are beneficial for the growth of the business.
Products and Services
After business descriptions move on to product and service description. Make it clear to the reader about your idea actually what you are talking about. How the targeted customers will use your product or services. What features differentiate your product or services from your rival’s products? Work out on the competitive edge and explain how your business will attain a competitive edge over your existing competitors. Provide the reader to the reasons why your business will be profitable.
Depending upon the nature of the business, list down the products and services you provide along with key features and benefits. If you have got any competitive advantage must include in this part to impress the reader.
If you are a new entrant in the market or you expand your product line. You have to seek information from the market. In return, it will help you to develop an accurate pricing strategy accordingly. During the research, you will know the promotional strategies of the prevailing competitors and set yours accordingly.
Based on the market analysis you will let the reader know what market share your products will get in the market. Be optimistic total market share is 100 % and no one gets total of it. Therefore, figure out the estimated market share your product attains based on your research. Marketing analysis consists of several sub contents.
- Target market: This section gives specific Detail market demographic with their wants, leanings, and development.
- Positioning: This element of the business plan helps to answer the following question about where the location of your market and where do you intend going?
- Marketing mix: Feature the proposed marketing mix through distribution strategy, product strategy, pricing strategy, promotional strategy, and market research.
In this part, you will list down your direct and indirect competitors in the market currently and in the future. Group the competitors and analyze which marketing strategy they use. Try to find out the strength and weaknesses of the competitors this will help you to identify in which specific area you will have a competitive advantage over them. Readers will come to know about your target market, nature of your market. And how you will be set apart from your competitors and finally the main reason why you will be successful.
Operations and Management
This segment will vary contingent on the nature of the industry but some the more general items that can be obtainable comprise:
- An explanation of the functioning cycle that defines what the organization will do to distribute its facility or make and sell its item for consumption
- An explanation of where all the required abilities and materials will be found
- What will be subcontracted, what relations are in place and how those relations will be achieved
- The cash expense cycle of the industry
According to experts, this is considered the most important part. This part takes much time in writing a business plan. In this part, you need to provide the reader with at least three years of projected financial statements. Projected financial statements include an income statement, balance sheet, and cash flow statement. Not all readers have expertise in the relevant filed therefore you have to summarize each in easy to understand sentences so that the reader may understand easily.
- Start-up expenses and capitalization: an explanation and clarification of what it will charge to run the industry and where you guess to get this cash
- Twelve-month revenue and loss forecast (month-by-month) and a 3-year revenue and damage forecast (quarter-by-quarter)
- A Twelve-month money-flow prediction and a 3-year cash-flow forecast (quarter-by-quarter)
- A predictable balance sheet at startup and at the end of years 1 to 3
- A break-even calculation
How to write a free business plan
There are several business plan examples are available on the internet. Using samples of the existing business plan format pdf can be a beneficial approach for business. Here are a small number of tips to get the freest business plan.
- Find an idea from an alike industry to your business
- Use the business plan examples for inspiration and concepts
- Write a business plan format that’s correct for your business
Tips to write a successful Business Plan
Keep it short: when writing a business plan try to keep it as short as much you can. A reader is not interested to read a lengthy business plan of 100 pages or even more than 40 pages. The second reason to keep it short is that business plan once prepared it needs to be updated after intervals of time. If the plan will be too long no one can update it and will become useless after once used.
Provide authentic data: Anything which is part of your business plan must be supported with facts and figures. For instance, if your business plan claims that you will reach at breakeven after six months from the commencement of business. There must be complete justification and working which supports the claim to enhance the confidence of the readers.
Know your audience: while writing a business plan you have to keep it as simple as your reader easily understands it. For instance, if you prepare a business plan for a layman who doesn’t know technical jargons will not understand the theme. Therefore, it is mandatory to know the taste of the audience and adapt them.
It is concluded that business plan is a critical piece of paper, for new ventures, it is basically the base and for existing businesses, it is used as a counter check to compare the objectives and goals defined in the business plan have met or not. Keeping in mind the importance it is mandatory while making a business plan format pdf put all the efforts to generate a good one. All the information needs to be gathered from different sources in order to write an authentic business plan format. Your expectations will not meet if your business plan will be based on assumptions and inaccurate information figures. Hence, the necessity of how to write a business plan is inevitable. Business can use several samples of a free business plan for writing their own business plan.