Essential tips and advice on how to write a business plan to grow your business
Inspiration has struck—and you’re ready to start a business! Before the excitement wears off, you think to yourself, “Where do I start?” You need to write a business plan.
A business plan is your roadmap for success, a valuable tool that will help you secure funding, pitch to investors, share your vision with potential customers, and keep you on track with your goals. But it can also feel overwhelming trying to figure out what should be included, and how detailed the plan should be.
This series is a step-by-step guide for how to write a business plan, a framework that will develop as your business model evolves. Once you have completed each step, you will have a strategic plan that helps you:
- Define measurable goals for the next three to five years.
Answering: What does success look like for your business?
- Demonstrate what makes your business unique.
Answering: What is your competitive edge in the marketplace?
- Determine the legal entity of your business.
Answering: Which structure aligns with your business goals?
- Develop the ideal management structure.
Answering: What does your current or future team bring to the table? Are there gaps that need to be filled?
In the first part of this series, we outlined the first four essential steps to writing a business plan to give you a better understanding of the product or service that you will offer, which business structure is best for your business, and how your team will operate efficiently. Part 2 will help complete your pitch with the marketing, financial, and resources sections.
Step 5: Create a marketing plan.
The purpose of the marketing plan is to validate your expertise of the industry, explain how you will attract customers and introduce the competitive landscape of your market.
Divide the marketing plan section into four segments:
1.) What will you sell? Outline the products and services, or revenue streams, for your new business. Present each product and service with a set of features and benefits. Many pitch decks and business plans effectively communicate this section visually with a chart or spreadsheet.
2.) Who will buy it? Understanding the customer is one of the most important aspects of marketing your business. Provide customer details to include age, geographical location, and purchasing trends that may impact your business. A comprehensive view of the audience will answer the following questions.
– What is the size of your primary target market?
– Why does your potential customer need your product?
– Do they already use a similar version of your product?
– How will your product or service make their life better?
– Does your customer have well-known buying behavior or purchasing habits?
– How do they consume information?
– What (or who) influences their purchasing decisions?
3.) How does your business stack up? Illustrate the level of competition in the marketplace by listing companies that rival your business model or provide similar services to the same audience. Include their strengths, weaknesses, products, pricing, and key differences. In this section, it is key to explain your winning difference and include context to how you will differentiate yourself in the marketplace.
4.) How will you reach your customers? It is a crowded market out there so your promotion strategy should be well thought out and practical. Your goal should not be to produce “viral” content but to reach the right customers in the right places. As a startup, your resources are limited so consider where you should be spending your efforts. Which promotion channel(s) will be most fruitful for your business? Detail the ways customers will learn about your business like online search, referral programs, paid advertising, partnerships, signs, website, social media, trade shows, and networking events.
Pro Tip: When writing your business plan, focus your narrative to include specifics. For instance, if you are starting an eCommerce business that sells coffee cups online, do not just provide the history of coffee cups. Focus specifically on the aspects of selling coffee cups online
Step 6: Include a financial plan.
A financial plan section will help the reader evaluate the profitability of the business and understand your request for funding. If you are in the early stages of starting a business, there might not be a lot of financial data to support your request. This section will evolve as your business grows and you can incorporate a variety of projections and statements depending on the fine points of your funding request. It is wise to consult an accounting professional or consultant familiar with your business before finalizing this section.
If you are unable to produce financial statements with meaning, provide a narrative to how your company will make and spend money. At a minimum, you should detail the amount of funding required to start and run the business.
Listed below are common items often referenced in the financial section of a business plan:
– Startup expenses
– Revenue stream(s): How will your company make money?
– Profit and loss, or P & L statement
– Financial milestones: At what point(s) will incoming revenue begin reducing the amount of risk to investors?
– Break-even calculations: When will your calculations break even?
– Cash flow statement
– Intended use of capital: Where will the funds be allocated?
– Detailed financial projections that match your funding request(s)
Pro tip: Do not forget the ask! Now that they have taken the time to read your business plan, what action are you asking them to take?
Step 7: The resources and references section.
The final section of your business plan will include an appendix that includes documents, studies, surveys, licenses, and research referenced in the rest of your business plan. The content of the resources and references section will vary based on your business plan or pitch deck. The information included in this section should only be necessary information that supports the rest of the business plan.
The resources and references section might include the following items:
– Your personal and business credit history
– Legal documents (leases, contracts, purchase orders)
– Location maps
– Market research studies
– List of assets to be used as collateral
– Press releases
– Trademarks and patents
– Business licenses
– Regulatory licenses
Step 8: Review your business plan and write the executive summary.
Once you have completed each section, review your business plan for consistency and cohesiveness. Take the compelling pieces from each section and include them in the list for the executive summary page. At this time you can revisit Step 1 of “Writing a Business Plan” to summarize the most critical points in one succinct page that quickly engages the audience.
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Ready to write a business plan? Taking steps to start a business and write a business plan can seem like a lot of work—but now you have the structure to transform your brilliant idea into a viable business plan! Download our business plan template to get started.