When starting a business, having a comprehensive business plan is essential. A business plan outlines the goals and strategy of a business and serves as a guide during the startup and operational process. Having this vital document in place provides a number of important benefits, such as:
- Help you focus on your objectives,
- Clarify your business strategy,
- Ensure progress toward objectives is tracked,
- Attract potential investors, and
- Help secure financing.
Despite the importance of having a business plan, many business owners don't take the time to develop one or they miss essential components that can make or break the success of the plan. It is important to understand the differences between successful and unsuccessful business plans in order to create a stand-out business plan that sets the foundation for long-term success.
Gather Necessary Information
Before you can begin to craft a business plan, you need to know all the necessary information that goes into it. Gathering the right kind of information is the first step to make your business plan stand out. Here are some tips to get you started:
Research Your Industry
Knowing your industry inside-out is essential when pushing your business plan forward. Research up-to-date trends and data quickly to better understand the landscape you’re entering. This will allow you to identify new opportunities, understand competitors, and make your business plan stand out.
Calculate Startup Costs
Every business has upfront costs associated with getting the business up and running. Calculate the cost of the items you need to jumpstart your business, such as licenses, equipment, materials, and so on. Keep in mind, that certain items may have different costs across different markets, so take time to analyze the data accurately.
Inventory Your Business Objectives
Once you have an understanding of the market, the next step is to establish your business objectives. What do you want to achieve with your business? Develop a list of your goals and the actions you need to take to close the gap between where you are now and where you want to be in the future. Take the time to inventory your objectives thoroughly to ensure your business plan stands out.
Choose the Right Format
When it comes to creating an effective business plan, choosing the right format is just as important as choosing the right content. Different types of business plans may include a standard business plan, a Lean startup business plan and a modified traditional business plan. Let’s take a closer look at each one.
Standard Business Plan
The standard business plan is the most comprehensive of the three types and includes the following sections: executive summary, business description and overview, market analysis, product or service venture, marketing, management and financial statements. This type of business plan is used to show potential investors and lenders why they should put their money into the business. It should outline a company’s goals, values and objectives.
Lean Startup Business Plan
The Lean startup business plan is geared towards entrepreneurs who are looking to start their business with minimum resources. It is typically less comprehensive than a standard business plan, allowing entrepreneurs to focus on their ideas and the innovative aspects of their businesses. The Lean startup business plan typically includes executive summary, product venture, marketing strategy, financials, operational strategy, management and risk factors.
Modified Traditional Business Plan
The Modified traditional business plan combines the traditional and Lean startup business plan models. It is ideal for entrepreneurs who have more resources and an idea to grow their business. It typically includes an executive summary, business information, financial projections, marketing analysis, product venture and operational strategy. This type of business plan is also used to interest potential investors and lenders in a business.
Whether you choose the traditional, Lean startup or modified traditional business plan will depend on your business goals and objectives. Whichever format you choose, make sure that the content is thorough, accurate and realistic. A business plan should accurately depict your ideas and forecast the future success of your business.
Create an Executive Summary
As the name implies, the executive summary is designed to give readers an overview of your business plan. It is important to make this as detailed yet concise as possible; interesting, clear and easy to understand. An effective executive summary should include the following points:
Explain How You'll Differentiate Your Business
Your executive summary should explain the unique traits of your business. What is the unique value you offer your customers and how does that set you apart from the competition? Explain the services you provide, how you will deliver superior customer service, and the benefits of why customers should choose you.
Focus on Long-Term Goals and Success
The executive summary should include your vision for the future of the business and provide a clear plan for how you will bring it all together. Describe the short-term and long-term goals, and articulate how you plan to achieve those goals. Your executive summary should provide an overview of the expected future successes of the business.
State the Problem and How You'll Solve It
Finally, it's important to provide information on the problem you are solving, and how your business will solve it. Describe the current trends or specific industry problem, and how your business can provide a solution. Explain what you have done to research and analyze the issue, and demonstrate your understanding of the competitive landscape. This will help set you apart and show that you are serious about solving the problem.
Do Market Research
As part of your business plan, market research is essential to understanding the current and potential industry. By taking the time to do market research, you can increase the likelihood of your plan standing out against the competition. Here are three important steps to consider as part of your market research:
Identifying competitors is an essential part of conducting market research. Taking the time to understand who your competitors are, what products and services they offer and how successful they are can give you a greater understanding of the market and potential customers. Knowing your competitors can also help you develop a competitive advantage that can set you apart from the crowd.
Predict Customer Needs
In addition to learning from your competitors, you should take the time to consider what your customers’ needs and wants may be. This will help you create a product or service that is uniquely tailored to your customers’ needs. You should also consider what marketing tactics they may be most receptive to, as this can help you effectively reach them.
Analyze Industry Trends
By analyzing industry trends, you can get a better understanding of the current state of the market. Tracking the successes and failures of competitors, as well as keeping an eye on new technology and services, can help you anticipate potential changes and position yourself to take advantage of any opportunities that may arise. This knowledge can be used to your advantage when developing your business plan.
Obtain Financial Statements
Before you can make your business plan stand out, you need to obtain accurate financial statements. Financial statements provide a clear overview of a business’s performance. Accurate and up-to-date financial statements are an essential part of any business plan and can make all the difference in whether or not you stand out amongst the competition. Here are a few ways you can use financial statements to make your business plan stand out:
Create Profit and Loss Forecasts
Creating a profit and loss forecast is an excellent way to make your business plan stand out. This allows you to predict how your business will perform over a certain period of time and gives potential investors a better understanding of the financial resources and potential of your business. By taking the time to develop a detailed and accurate forecast, potential investors can gain insight into your business’s future success and make a well-informed decision.
Detail How Investments Will Be Allocated
When businesses decide to invest in a company, they want to know how their investment will be used. This is where detailing how investments will be allocated in your business plan comes in. Make sure to include specific information and goals for each asset and how the funds will be used throughout the period. This will ensure that potential investors understand exactly how the money will be used and will make your business plan stand out.
Explain Expected Return on Investment
Investors need to know that they can expect a return on their investment. Providing details on how much return on investment they can expect in the short-term and long-term is an excellent way to make your business plan stand out. You should also be prepared to provide clear and concise explanations of the factors that will influence the return on investment. This will help to demonstrate that you have an accurate understanding of the financial situation and potential of your business, making your business plan all the more attractive.
Although creating a business plan can seem daunting, following the steps outlined in this post can help make the task easier and lead to a plan that stands out. Whether you use the lean business model approach or the traditional business plan approach, there are organized steps to guide a business plan development. Craft a tailored executive summary and lay out a plan for meeting marketing, achievement, financial and implementation goals. Describe a well-rounded product roadmap and detail a strategy to monitor success and implementation of the plan. Additionally, consider ways to make your plan stand out, such as tackling potential risks, exploring potential deterrents, and using visuals to make content easier to understand.
To recap, key points from the business plan include:
- Crafting a tailored executive summary
- Laying out a plan to meet marketing, achievement, financial, and implementation goals
- Describing a product roadmap
- Monitoring success and implementation
- Considering potential risks and deterrents
- Using visuals to simplify understanding
By taking these steps, you can create a business plan that stands out and provides your business with well-defined objectives and strategies to successfully meet them. After creating a thorough business plan, the next step is to start implementing it. The key is to stay flexible, adjust when needed, and evaluate your progress to ensure successful implementation.
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