Many entrepreneurs and small business owners start a business without creating any form of a business plan. Not having a business plan will not hurt your business, but it will make it difficult down the road if you need funding from a lender or want to add employees. Also, having a business plan will help you set short and long-term goals for the business. A business plan will even prepare you to tackle your niche market, because a good business plan with have research and market analyses. Below you will find out why you should create a business plan and what sections your business plan should contain.
PART ONE: Why you must create a business plan
Entrepreneurs have and continue to need business plans for three core reasons:
- To prove the viability of your company
If you have a new business idea, then creating your business plan helps determine the viability of your business opportunity. Think of it this way: If you learn the market size is too small, you may not want to launch the venture. Also, if you discover competitors pose too big of a threat, or the capital requirements of the business are too much, you should consider pursuing a different opportunity.
- To market your company to others
Creating a business plan is the first step to marketing your new business idea. You can show your business plan to prospective investors or lenders who you want to fund your company. Also, you can show your business plan to prospective partners and other companies with whom you can form mutually beneficial relationships. Essentially, it’s impossible to effectively market your company to these key groups without a business plan in place.
- To create a roadmap to follow
A great business plan lays out the direction your new business idea must go to compete in the market place. It also identifies each step you need to reach and creates goals for your long-term successes. Think of your business plan as a way to keep you on track. If you ever think “it cannot work” or “I don’t know what to do next,” just go back to your business plan to remind yourself this is my roadmap to success.
PART TWO: The key sections of your modern day business plan
- Business analysis
The business analysis section of your business plan should start by providing background information on your company. When was it launched? Where are you located? What have you accomplished to date? It should also contain your business’s mission statement. This part of the company analysis section has evolved over time as more companies’ missions include aspects other than profits, such as social and environmental responsibility.
- Industry analysis
Your industry analysis section must detail the industry in which you are competing, its size and trends that are affecting it. You should also explain how you will be different than other businesses in your industry, as well how you will stay relevant and succeed. This section should also consider threats of the industry and how you plan to overcome them.
- Customer analysis
Traditional business plans detail customer needs and target customer demographics. Completing this exercise is critical today because of the rise of online sales and competing with major companies providing a mass of products (Amazon). Online advertising used to be restricted to the keyword searched by consumers. Nowadays, your business can add significant additional demographic and psychographic criteria on your website to attract specific customers.
- Marketing plan
Your business’s marketing plan identifies how you will target and serve customers within your industry. In today’s businesses, it’s common to use new technologies to outsource your marketing (MailChimp to create email campaigns, Facebook ads). You should include these types of technologies in your business plan to show how you will stay or become relevant in your industry.
- Operations plan
An operations plan contains the processes your company will fill and the milestones you hope to achieve and when. With regards to operational processes, today companies can be run much differently than in the past. For instance, major customer service roles may be provided by chatbots. Outbound sales prospecting could be outsourced or streamlined by employing artificial intelligence technologies. And key operational roles can be virtually staffed both domestically and internationally.
- Management team
Use a management team section to document who the key players of you business will be. This can contain the technologies you use for marketing or shipping (if you outsource these components of your business). You can use those technologies to create the best management team at the cost you’re able to pay.
- Financial plan
In this section of your business plan you need to document your business’s financial projections. Document how technology significantly lowers the costs to start and scale a company, which will help drive your sales and profits. Also, add to the section if you have any investors or separate funding from lenders. As a tip, look up KickStart to see if you can gain funding from its’ crowdfunding platform.
- Executive summary
This section of your business plan will actually appear at the beginning of the business plan and summarizes the key points from the other sections. Use this section to excite your readers and encourage them to read the rest of your plan. Also, create this section last because you will probably edit the other sections numerous times before you can create an accurate summary.
That wraps up this post, thanks for checking it out and come back for my future content. Leave comments below and hit the like button if you thought this was useful!
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