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How to Write a Business Plan

 

A Business Plan may be the most important part of planning your business. Regardless of how great your idea is, a good Business Plan will set the direction your business should take and establish a clear roadmap to success. The Business Plan should address:

  • Who your business is and where it intends to go
  • Your products or services
  • A marketing plan
  • The management team
  • Financial statements and projections

Keep in mind that no Business Plan is perfect and it may take several attempts before you have a plan that you are comfortable with. Your plan should also evolve over time and continue to be updated on a yearly basis. Keep it concise, easy to read, easy to understand and take the time to convey the opportunities that lay in front of your business.

The following is a guide to help you write your own Business Plan and should be modified to fit the specific characteristics of your business and industry. At a minimum, a good Business Plan is made up of the following key components:

  • Cover Page
  • Table of Contents
  • Executive Summary
  • Business Description
  • Marketing Plan
  • Financial Statements
  • Appendices

Cover Page: A professional looking cover page is where you make your first impression. Use a company logo, if available, and the date of publication in the center of the page. In the lower right-hand corner, include a principle with an address and phone number. Also, somewhere on the cover page include a confidentiality statement somewhere on the page that addresses the fact that your business plan is not to be shared with anyone not authorized to read it.

Table of Contents: Use the Table of Contents to guide the reader through the plan but make sure that the page numbers are accurate. That is the first way to lose the reader.

Executive Summary: The Executive Summary is easily the most important section of the Business Plan. It should be concise, because it is a summary, and should communicate to the reader your business goals, your business concept, the market potential, the financial highlights and if you are soliciting for investors, the reasons why your business may be a good investment.

Business Description: Start the Business Description with company history including when the business was founded and by whom. Then cover your businesses legal structure, for example, is it a sole proprietorship or corporation. Make sure to include key management personnel in the legal structure with basic background information and potential contributions to the organization on each. If your business owns any copyrights, patents or trademarks, include the date it was protected, the states that it is filed in, details behind the uniqueness of the product or service that is protected and how your business will incorporate the protected product or service into the business. Last, explain the type of operation structure that the business will utilize. Include:

  • Distribution and support channels
  • Sales channels
  • Production Methods
  • R & D strategies
  • Administrative support

Marketing Plan : A detailed, step-by-step guide to writing a marketing plan is available on this Web site by clicking here. The Marketing Plan is a key component of a successful Business Plan. A good marketing plan will help your business to do the following:

  • Identify your target market
  • Understand your industry and the competition
  • Establish your pricing and product positioning
  • Establish an effective marketing concept
  • Identify the most viable, cost-effective means of marketing your product

Here are the major elements of a marketing plan:

Executive Summary: The Executive Summary should be a brief summary of the entire Marketing Plan and include the highlights of each of the following sections to be included in your Marketing Plan. It should include your Business's Mission (or Vision) Statement.

Product Description: The product description is the detailed description of the product that you intend to market.

Market Analysis: The Market Analysis is drawn from Marketing Research and includes:

  • A description of the target market.
  • Distribution channels with any applicable laws or regulations.
  • The unique positioning of the company and its products versus the competition.

Competitive Analysis: The Competitive Analysis is where you identify your competitors, both the obvious and not so obvious, and determine their marketing strategies along with their strengths and weaknesses. This will help you assess your advantages and identify opportunities to position your product as unique in your target market.

Goals and Objectives: Goals and Objectives provide a direction by outlining company goals, marketing and financial objectives and allow you to focus your resources on a clear, measurable target.

Marketing Strategy: The marketing strategy is the culmination of all previous sections of your marketing plan and includes a marketing strategy summary and an action plan.

Again, this is a summary of how to write a Marketing Plan. For a detailed, step-by-step guide to writing a marketing plan is available on this Web site by clicking here.


Financial Statements and Projections: You are in business to make money and it is very important that you develop a plan that is financially sound. The key to a sound financial plan is that your projection to profitability occurs with in the timeframe you have identified for having a positive cash flow.

In this section of the Business Plan, include a summary the financial forecasts, which appear in more detail in appendices. These financial forecasts may include the time frame for positive cash flow and the anticipated growth in sales and profits.

The appendices should have more detail: balance sheets, income statements (the most important projection) and cash flow projections for a three- to five-year period.

The most significant aspect of the forecasts is the set of assumptions supporting your numbers. Make sure your discussion sufficiently communicates the basis of your assumptions -- they must be realistic, logical and attainable.

Credible financial forecasts are very important. Balance Sheet* and Income Statement* templates are available on this Web site but if you're not familiar with financial statements, you should seek help from an accountant or other reliable source.

* You will require WinZip® and Microsoft® Excel to open these spreadsheets. Right click on the link and select Save.


Appendices: The appendix should include all supporting financial and marketing material that is referenced throughout your business plan. It is also the place to state any assumptions and conclusions contained in the plan. If you reference third party material in your plan, make sure that you include the source details here.

Before you present your Business Plan to the outside world, let trusted associates such as your attorney and accountant review it and offer advice. Are your goals attainable based on the information you provided and does the plan present a business opportunity worth investing in are the key questions to ask.