How to Write Your First Business Plan

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I am presently drafting the business plan of a friend’s fitness company. I thus decided to introduce in this article what a business plan is and give you tips on how to write one.

What is a business plan?

A business plan is THE document that explains everything about your company. Its size depends on the nature and the maturity of your business. If you have been running a small company for a little while now, at some point you may need to get financing, attract investors and business partners, or you may just need to reassess your business strategy. In all of these cases, a business plan is the main medium you will use to communicate with external parties.

When to write a business plan

Not everybody needs to write a business plan at the inception of a company. If you went through the first steps of materializing a business idea, then you already have a 2-5 page document that describes your business. So if the company can be run by a couple of people at its early stage, that short document should be enough. However, after acquiring some experience and knowledge of the industry, eventually you will be more equipped to go after creditors and investors. That is when the business plan comes in. 

How to write your first business plan

In order to answer the main questions potential creditors, investors and partners will ask, a business plan will generally include the following sections:

1.       The Executive summary: (I won’t read the whole document; pitch me in 5 minutes!)

The executive summary is a two-pager that summarizes the content of the whole document. It is thus written at the end. This section is particularly useful for readers who need a broad perspective of your business in a short period of time. Therefore make sure anyone too busy to read the whole business plan finds the main information in the executive summary.

2.       Business overview: (Who are you already?)

The business overview describes your business. You can also write a bit about yourself, your team and what made you launch the business. People may be more inclined to invest in your company if they relate to your story and adhere to your company’s vision. When writing this section, ask yourself what brought you in this business in the first place. What is your objective? What is your company’s mission? Information about the company’s ownership and legal structure should also appear. For example, explain in which jurisdiction you are operating (tax, intellectual property rights and patents). Is your company a sole proprietorship, a limited liability partnership or a corporation?

3.       Products and services: (So what are you selling?)

In this section you should give relevant details about the products or services that your company offers. For example, if you own a cosmetic brand, you should list your products, their features and benefits, as well as explain how and where they are made. Describing what makes your products unique is also very important. For example they could be made out of vegan ingredients or a precious extract from Africa.

4.       Industry overview: (Who’s going to buy from you?)

In this section you should describe the industry your business is in and the different market segments. For example if you own a dietary supplement store, you could explain that the supplement industry is a 70 billion-dollar-industry spread over a hundred countries. Market segments include food, beverages and vitamins. You could also describe what demographic, economic, social and cultural factors affect the industry; who are the major players (suppliers, distributors, clients); what external factors may affect the trend of the industry (e.g. government regulation or upcoming technology).

Showing to your audience that you have a keen knowledge and understanding of the market both at a local and international level really boosts your credibility. Include statistics, graphs and figures that are easy to communicate. Finally, you should describe your target market. Who are the people you will be selling to? How many are they? How old are they? Where do they live? How much do they make? Why do they need your product? Make sure you mention accurate references for every data you provide. While gathering all of this information, its a good idea to have a Professional Web Design Company at hand to support in the development of your UI and UX so all of these stats can be translated into engaging content which will ideally turn into conversions for your business.

5.       Competitive analysis and Marketing strategy: (Why should we buy from you?)

What is your unique selling proposition? In other words, how are you going to establish your brand as an essential product or service that will make customers buy from your business instead of your competitors? For example you own a cupcake store in an area already filled with dozens of bakery shops. However contrary to your competitors, your cupcakes are cheaper, you offer more variety of flavors; the clients can customize the ingredients, you offer a generous reward program or you make discounts in exchange of referrals. Also talk about your marketing plan. For example, it may be based on traditional media, internet social networks, trade shows or multi-level marketing. Finally, you should include your SWOT (Strengths, Weaknesses, Opportunities and Threats).

6.       Operations and management plan: (How does your company operate?)

In this section, you should write about your company’s human resources (management, key employees, training, etc), your office locations, lease details, technology, R&D and day-to-day operations.

7.       Financial plan: (how much money have you already made and how much will we earn if we invest in your business?)

In this section, you should make a realistic three to five-year projection of your financial statements. Include your company’s financial performance as well as historical and projected information on sales, cost of goods sold, expenses, income statement, balance sheet and cash flow budget. You’ll want to know how much you get from your business and how much you are willing to spend on things (for example, you might decide to get IT services from a company like Real IT, but obviously you need to budget for that). The longer you will have been running the business, the more reliable will be your growth expectations and the financial information you will publish. Finally, you may have to adjust the financial plan in function of your audience. For example creditors will be interested in how the money lent to your business will be repaid; potential investors will be interested in their return and shareholders in dividends they will receive.

Did this help? Your opinion matters. You can rate this article, leave a comment below or share it on social media. Follow Bobbyfinance for more financial tips.

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