Business plans are frequently related to securing a loan since investors use them to assess a company’s viability before investing in it. There are, however, several additional reasons why people strive to write the perfect business plan.
A business plan is a document that describes a business, its products or services, how it makes money now or plans to make money in the future, its management and staffing, funding, operational model, and many other crucial factors that will determine its success.
Before you launch a venture, you will need to write a good business plan that will assist you in defining your strategy, seeing potential obstacles, choosing the resources you’ll require, and assessing the sustainability of your concept or expansion plans.
Here are eight easy steps to write the perfect business plan.
1. Write an executive summary
The first page of your business strategy is your executive summary. Consider it your elevator statement.
Your mission statement, a brief rundown of the goods or services provided, and a general outline of your financial expansion strategies should all be included.
2. Describe your business
The next section is a description of your business, which needs to include details like the business’ registered name, the address of the business, and the names of important business figures.
Remember to showcase any special abilities or technical know-how that individuals in your team possess.
Your company description should also specify the legal form of your business, such as a sole proprietorship, partnership, or corporation, as well as the percentage of ownership and level of involvement each owner has in the business.
The history of your business and the current state of it should also be included.
3. State your business objectives
An objective statement comes in third place in a business strategy. The goals you have for the short term as well as the long term should be clearly stated in this area.
This section can be used to justify your need for the money, how the finance will help your business grow, and how you intend to meet your growth objectives if you’re asking for a business loan or outside investment.
4. Describe the goods and services you offer
Give specifics about the goods or services you provide or intend to provide in this section.
You ought to incorporate the following:
- A description of how your service or product operates.
- Your product or service’s pricing structure.
- The average clients you deal with.
- Your order fulfilment and supply chain strategy.
- Your sales approach.
- Your plan for distribution.
5. Make market research
Investors and lenders will be curious as to how your product differs from that of the competition.
Identify your competitors in the market analysis part of your paper. Talk about what they do well and what you can improve upon.
Explain if you’re catering to an underserved or different niche.
6. Lay out your marketing and sales strategy
In this section, you can discuss your strategies for convincing customers to purchase your goods or services or for growing loyalty from your customers.
7. Make a financial study of the business
If your business is still young, you might not know much about its financials.
If your business is already established, you should include income or profit-and-loss statements, a balance sheet that identifies your assets and obligations, and a cash flow statement that illustrates how cash enters and leaves the business.
You might also include KPIs like:
Net profit margin: which is the revenue percentage that you keep as net income.
The current ratio: it measures your liquidity and debt-paying capacity.
Accounts receivable turnover ratio: a gauge of how frequently you collect receivables annually.
This is an excellent place to incorporate graphs and charts that will help readers of your plan quickly comprehend the state of your business’s finances.
8. Put together financial estimates
If you’re looking for funding or investors, this is an essential component to write in any business plan.
It describes how your company will make enough money to pay back the loan or how you will provide investors with a respectable return.
You’ll give projections of your company’s monthly or quarterly revenues, costs, and profits for a minimum of three years, with the future figures presuming you’ve gotten a fresh loan.
Before making projections, carefully review your previous financial accounts because accuracy is essential. Your objectives should be aggressive while yet being attainable.