Are you new to the business industry and have dreams of running your own business? Running a business can be challenging and frightening, especially if it is something you have never done before. Creating an effective business plan will allow you to execute your goals and smoothly run a successful business. If you are interested in how to write a business plan, grab a pen and paper and let’s get started.
What is a Business Plan?
A business plan is a thorough outline of your business’s financial goals and expectations. It explains how you will reach these goals and expectations and all of the important actions that are necessary to get you and your business to the destination you have dreamed of. Your business plan should include specific details regarding your business’s goals, services, finances, and products.
Why is a Business Plan Important?
A business plan is important because it provides you with a road map that can lead your business to success for many years. Essentially, it’s a guide to use as a resource throughout yout journey as a business owner. Additionally, it can be used as s reference for when investors or potential partners become interested in your business and want to get involved.
You don’t want to enter the business industry without a plan. While it’s not impossible to become successful without a business plan, the chances of becoming successful are higher when you have a business plan, and a roadmap to follow. When taking a road trip, you most likely have a destination in mind prior to leaving, and a plan to get from point A to point B. The same goes for starting a business. Here’s how to create a business plan that is effective and efficient. The steps will go as follows:
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- Write an overview of your business
- Describe your business
- Determine your business goals
- Describe what your business offers
- Do your market research
- Outline your marketing plan
- Perform a financial analysis
- Consider money flow
- Add critical information and considerations
Write an Overview of Your Business
Ask yourself: Why am I opening up this business? Your answer should not revolve around the idea of making more money. Sure, it is nice to have an additional source of income, however, businesses do not thrive when this is the primary reason for starting a new business. You should have an increased interest or passion in the services or products you are offering.
With this information, create an overview, or summary that best describes your business. Write your business overview like it is a piece that investors will be reading when deciding if your business is worth the risk or not. Include a mission statement, a description of your services and products, and a summary of how you expect to financially grow. You may find yourself revisiting this part of your business plan throughout the planning process.
Describe your Business
You have determined what your company stands for. Now, how can clients and customers reach you? Consider how businesses are displayed on Google and set up a Google My Business account. The following information should be included:
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- The registered name of your business
- The address of your businesses location
- The phone number of your business
- The names of the owners and co-owners of your business
When describing your business, you should take note of who has ownership of the company, what percent they own, and their position within the company. Additionally, you should write about the history of your business and how it is currently running, or where it currently stands in terms of business growth.
Determine Your Business Goals
Once you have confirmed your business’s information, and what it stands for, you can identify what your business goals are. This is also known as an objective statement. This is where you pinpoint your goals. What do you want to accomplish this month, year, and 2 years from now? How will you reach these goals and what will you need?
For example, if you are opening a restaurant, answer the following questions:
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- What do I want to accomplish within the next two years?
- How many customers will I need per day to reach my goals?
- How will I financially reach these goals?
- What are my monthly expenses?
The listed questions are just examples to help you determine specific, realistic goals. These allow you to reflect on how far you have come, and what more could be done to reach your goals. Additionally, they give you a timeline to execute your goals.
Describe What Your Business Offers
Though you already know what your business offers, it’s important to write down the services and products your business has for future endeavors. You can quickly reflect on this part of the business plan when creating marketing campaigns, flyers, websites, blogs, and proposals.
Here is what your business offer section of your business plan should include:
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- An explanation of your products or services
- Why your products or services will benefit clients and customers
- The type of customers and clients you typically serve – is your services and products suitable for anyone and everyone? (Age, gender, etc.)
- The strategy you use for supplies and orders – Do you receive shipments once every 3 days? Do you have to pick up supplies?
- The sales strategy you use – Do you need to hire people? How are you marketing your products or services?
- The distribution strategy you use – Do you ship or deliver? Do you order products based on sales?
There are many things to consider when describing your services, and how exactly you sell them to your customers.
Do Your Market Research
Market research is crucial for business growth and allows you to determine what your business is doing well, what it is lacking, and how well it may perform in the future. Determine your competitors and what sets your business apart from theirs. If you can’t seem to find how you are different, explain how you can set your business apart from others. Additionally, if competitors are doing something well, take note of that and determine how you and your business can do better. Furthermore, it is important to consider the market, and how market changes will affect your business.
Outline Your Marketing Plan
Of course, a marketing plan is important for the growth of your business. How will you persuade customers to choose your business over others? There are hundreds of ways you can influence customers to choose your business, here are a few marketing ideas:
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- Creating an effective website
- Social media marketing
- Offering discounts
- Offering loyalty programs
- Campaigns
Marketing plans are very important so customers don’t forget about your business, and so your business is exposed to new customers.
Perform a Financial Analysis
Financial analysis can be intimidating, especially if you are new to the business game. Chances are, you will be spending more than you expected. Regardless of where you are at on your business journey, having a financial analysis is extremely important. Here are some financial components to track and record:
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- Rent and supplies
- Business loans
- Employees
- Products and services – how much you paid for them vs how much you are charging
- Net profit margin – the amount of revenue you will keep as net income
- Current ratio – the measurement of your liquidity and if you can repay debts
- Accounts receivable – how much you are collecting on receivables per year
Consider Money Flow
Money flow essentially determines if you will be able to maintain your business. It outlines if your business will make enough money to pay off business debt, and leave you with a return on investment. If you are a new business owner, carefully invest in your business and make decisions that will benefit the growth of your business. If you have had a business for over 3 years, use statistics from previous years to monitor money flow and how well your business is performing.
Add Critical Information and Considerations
Last but certainly not least, consider any information or key points that will affect your business in any way. This may be licensing, employee requirements, permits, receipts, business credit history, payment method, etc.
Recap
Easy is a word not many business owners use. Running a business is a huge commitment and requires a lot of time, consistency, and patience. With a thorough, detailed business plan, you should expect your business to run more smoothly. It’s easier to have a plan to reflect back on than to just wing it. Here is what your plan should entail:
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- A business overview
- Business description
- Business goals
- Business offer description
- Market research
- Marketing plan
- Financial analysis
- Money flow considerations
- Critical information and considerations
While creating a business plan for your company, you will learn a lot about how running a business works, and the methods business owners utilize. Even if you end up taking a different business path, or your business doesn’t follow your business plan, you will learn a lot about the industry and resources that can help your business grow.