How to Write a Business Plan? 12 Proved Steps!
A business plan is like the soul of a business. It is prepared to organize your thoughts, ideas, and create a plan to achieve a goal, which is basically to set up your own business. With a business plan, a company has a 30 percent chance to grow faster.
A business plan includes the nature of your business, what services you can provide, what is the product you will create, how and where you will create, or get the product, and then there will plan about how you will get the funding, what your aims are and long-term goals as well. Without a business plan, it will be hard for a new business owner to know the steps they should take from execution, operation, maintenance, and expansion. It’s like a business owner that is just trying their luck, hoping it will be successful, so it is more of a hit and miss scheme.
Just for you to have an idea of why a business plan is important in setting up a business, here are some significant reasons:
- It will help to know whether your idea has a chance of being a good business.
- Preparing a business plan will get you to write your ideas and make it a clearer picture instead of just keeping it all in your head.
- A business plan will show you the loopholes in your business if there are any.
- Provide you with how much is the needed capital and what expenses you have to be ready for.
- With a formal business plan, you can get some funding from a lending company or any investors.
- To be able to show your business plan to your relative, or to any seasoned business owner that you can trust to give you sound advice about the potential of your business – or the lack there of.
To help you in your business ownership journey, you have something like a guideline that you can check from time to time when your business is already booming.
Making a business plan may be worrisome for some soon-to-be business owners as it takes time to write everything about your business. It is not something that you can finish overnight. Some hopeful business owners may think it is just a waste of time, but it will help achieve your goal, eventually.
Here we will discuss the importance of writing a business plan.
Table of Contents:
1. Why do you need a business plan?
2. The executive summary
3. Who are your customers?
4. Evaluate the target audience
5. What are your opportunities?
7. Build a simple financial plan
8. Include an outline marketing plan
9. Plan your operations
10. Get the right people
11. Simplicity is the key
12. Plan your business around your strengths
Step 1: Why do you need a business plan?
Having a business plan gives you an organized preparation that will increase the chances of your business to succeed and for it to earn a profit. It answers to what, when, where, who and how?
It is the easiest way to introduce your business to other people such as investors, banks, an institution for funding, and for other, reasons that have something to do with your business set up. It will also serve as your list of possibilities cause you will also include the plans and goals you have for the business in the future. Do you have plans of going international, or will it just be a local business? Are you planning to add products or services after a few years of setting up your business?
Are you searching for a business plan template? You can download examples – 500+ Free Sample Business Plans
Step 2: The executive summary
Here is where you introduce your business plan. It is concise and direct to the point of describing your goal and aim of the business. There should just be a page or two that directly discuss and summarize your business plan, your company, strategy, its organization, and the financial capacity and needs for funding of your company if any. The Important elements that must be included in the executive summary are the description of your company, market analysis, description of your organization, the management, marketing plan, and the product plan, need for funding, or request for additional capital.
This part is like you are selling or you are pitching your product. Should be concise, easy to read, and remember.
Step 3: Who are your customers?
This part should highlight your target customers. This is where the customers are analyzed and who will be the primary target of your product or service. It answers the questions on where you will market your products and to whom?
This requires some research and investigation so you’ll also know how to market your product and what marketing strategy should be used, so that the target market will be convinced to buy, understanding that they need your product.
This is the reason many companies are successful because they have targeted the right customers and have learned how to make their products more inviting to the said target market.
Step 4: Evaluate the target audience
Here is where research plays an important role. Some information that you need to produce is the age, gender, and social status of the target market or also known as demographics. Evaluating firms, where you would sell your business or services, are called firmographics and requires information about the size of a certain company, its revenue, and what services and products the said company provides to its clients.
Location is important as well cause this will show which town, country, and specific area the product or services will be more successful on.
The profession that you need to target is also significant, whether those who are in the medical industry, lawyers, accountants, or even the military. While the group audience has the same interests or hobbies.
Evaluating your target audience correctly would mean the more successful your product or services will become.
Step 5: What are your opportunities?
Opportunities in a business plan, discuss the future growth of the company. There may be an expansion of the business, like adding branches or bringing it to another location or even bringing it international. Here is where you write the plans you have for your company and how you will go about achieving it. What other products you may add after some time that the business has succeeded.
Although some businesses may start small, there are tremendous opportunities along the way. Many big businesses have started small, some just started in their backyard with one or two people behind them, and now they are included in the list of top companies. As long as the business is handled correctly, there are a lot of ways to make it grow and prosper.
Step 6: Competition
When you write a business plan, you also need to discuss your possible competitors. These companies may be currently in operation, or they may become your potential rivals in the business. We can describe competitors as
Direct competitors – a company that also carries the same product that you have and fulfil the same service for other people.
Indirect competitors – Are companies that also serve the same target market but provide different products and services or in reverse.
Explaining your unique selling position or your point of difference from other competitors and what makes you stand out. Here, you should discuss your advantages over other companies and how competitive you are over the other firms.
Step 7: Build a simple financial plan
A simple financial plan is required in every business plan and must be easy to comprehend, must include the following:
• Determine the expenses to make or buy your products.
• The cost should include expenses for raw materials, labour, and manufacturing.
• What are the costs required to pay your employees or staff?
• Expenses to market your product and how to distribute it.
• What is the amount required for your fixed and variable overheads? There should be a set amount for emergency expenses required in the business.
You can get an accountant to take care of this aspect and get advice, or just purchase accounting software that is simple to use.
Step 8: Include an outline marketing plan
This section includes the following significant factors in a business plan.
Product and its price – there are many points when referring to a company’s product and it is, its function, appearance, warranty, quality, and of course, its price. What good is your product to me/customer should be answered and how it can help to make the life of the client or customer better?
Promotion – is the activity on how you can make your product known and for it to reach many people. It is a good thing that we now have the internet making the promotion of a product effortless. It includes advertising, PR, and sponsorships. Promotions may cost you, and you should be able to decide whether the promotion is worth it at its price. There is a positive outcome of having your goods or products advertised as it reaches many people around the country.
Positioning – This will answer the questions; Where you are planning to place your product? How should your product or service fare in the market, how will it get noticed, what you have to do for it to be recognized?
Place – where are your products positioned, where are your shops?
Profit – this is the yield you get from the product you are selling or services that you are providing. In this section, you should indicate the profit you are expecting to make.
Step 9: Plan your operations
This is highly important in every business because you need to plan how you will operate your company. In this part, you need to include the method on how you will come up with the product, such as manufacturing and how you will package it
Not just the manufacturing and packaging part of the business, but also the sales, customer service, human resources, procurement, etc.
Step 10: Get the right people
You need to hire the right people for your business to succeed. This can make or break your business because if you just hire someone without knowing their background and what skills they can bring to the company, this can lead to a negative effect on your business. It is important that you interview, ask for references, and look beyond their CVs.
Hire the right person with the exact talents that you need. Another important decision you need to make is to choose people that are trustworthy, hardworking and persevering.
Some company’s success also depends on the people behind them or those that work for them. If they have workers who have positive attributes, this will reflect as well on the company.
Step 11: Simplicity is the key
Don’t be too complicated when writing your business plan because potential investors don’t have the time to read unnecessary information on your business layout. Your plan has to be clear, precise, direct to the point, and full of sense.
Don’t write or prepare a business plan where it is 30 pages long cause no one will read that after the first five pages and would soon lose interest.
Step 12: Plan your business around your strengths
The business that you should diversify on must be something that you have knowledge of and the level of expertise as well. This is important in getting a successful business to happen. As you write your business plan, stress on your expertise, and discuss this as well in your layout, this will give the investors or those who will fund your business to believe in what you are selling (your business proposal).
This will give them confidence and the big chance that the business you are proposing can be realized.
So, why do you need a business plan? It will organize your thoughts and ideas. It should be written and which you can check from time to time, and also for you to make changes to it.
• Important aspects of a business plan include the Executive summary which should include your goal, strategy, and business objective:
• Discussing the customers you will have and who will use your product or services.
• Evaluating the target audience is knowing who will most likely believe in your product.
• Listing your opportunities for future plans.
• Discussing who are the competitions and how you can compete with them with your product and services.
• Including a financial plan that is concise, and easy to understand is important in your business plan.
• The outline marketing plan will discuss ways to market your product, so it can reach a lot of people.
• Another thing to tackle is planning your operation when you already have the business.
• Getting the right people should also be your priority, you need them to run your business.
• Target writing a simple business plan, but should be formal at the same time.
• Planning your business around your strength is knowing where your strength lies and this is what you should also put in writing when making a business plan.
Writing a business plan takes a lot of strategy and method cause you should know how you can present your business plan not just to your friends or family who are interested to know about your business venture plan, but you need to polish your business plan when you need to show it to your investors and those who will finance your business. It is better to write it expertly, make it easy to understand, and should be concise.
Think of the investors as your clients, and you should know how to present your product to them just in the form of a business plan. Your success can also depend on how you treat your business plan, prepare it as professionally as possible, and the investors will look at you in the same professional manner.
The business success rate will depend on how you set it up and where it is located. There is also the financial risk of establishing your own business, but as long as you work hard and you have the drive, plus determination, there is no way but up.
Setting up a business in the Philippines is an excellent idea and should be well planned as well. The paper works and completion of requirements are not for the faint of heart because you need to complete it before you are allowed to get the permits you need to open your business. But the success rate is high, with having nearly 90 million people living in the country, there are just so many business opportunities waiting to be discovered.
The process that we have lined up above can now be obtained, in just a few days, with the government asking the different agencies that handle business licensing and permit provision to hasten the process to benefit soon to be business owners.