Developing a business plan is an excellent technique for entrepreneurs to organize their business ideas and objectives. However, it is not uncommon for entrepreneurs who are interested in creating business plans to not know where to begin.
6 key steps for creating business plans properly include-
1. Define Executive Summary
Although an executive summary is generally at the beginning of a business plan chronologically, it is often crafted in the final stages of business plan formation. Creating the executive summary last makes sense as it is a condensed review of the other sections contained within the business plan.
Sections commonly covered within the executive summary include-
Company description and mission statement
Financial projections and financial statements
Market analysis and marketing strategy
Business owner or management team specifications
Competitive analysis and market research
Note-: A small business executive summary may only be one page long while a larger business may require additional elaboration.
2. Craft Business Description
The primary objective of a business description is to expand on specifications regarding the product or services that a company will be selling to potential customers. If an enterprise plans to generate its profit selling services, the information provided in the business description can range from legal structure to strategic relationships.
If a company plans to generate its profit from selling products, information ranging from inventory management to manufacturing processes is relevant to note in the business description.
3. Undertake Market Research
Market research and market analysis should ideally be included in every business plan. The main objective of both market analysis and market research is to better understand the specific market and demand for a product or service.
Market research is helpful for understanding if business ideas are worth the time and energy they will require. For instance, during market research, business owners may identify that there is not enough potential customer demand for a specific product type.
Alternatively, a business owner could discover that a new product would be surprisingly profitable through market research. Extensive research is an excellent technique for identifying both potential clients and defining target market specifications.
Market analysis and market research capabilities will vary significantly depending on if a business is planning to release a new product or improve an existing product. If a company is a startup business or lacks historical data for analysis, customer testimonials can be substituted if need be.
Tip-: When a business owner understands the market generally it is much easier for them to identify and sell to their target market effectively.
4. Hire Consciously
A successful enterprise is one that hires both consciously and correctly. A business owner must make sure to provide a company description and business goals that are comprehensive when advertising their open management team positions.
Small businesses may select staff members from people within the business owner's personal network. Alternatively, professionals who are more seasoned in starting business operations may begin scouting top talent by creating business advertisements on professional social media sites such as LinkedIn.
A great business plan will contain extensive information regarding the management team or business owner that will be leading operations. Potential investors are obviously very interested in who will be running a business as well as the unique skillsets, experience, and education these staff members bring to the table.
Management team bios are an excellent opportunity to gain a competitive advantage over other businesses vying for investor attention. Great management team and business owner bios can not only help to secure potential investors but potential customers as well.
5. Extensive Competitive Analysis
When a business owner is creating business plans they have probably already considered the competition at least to some extent. Due to how impactful competitors are on an enterprise's success and profitability potential, competitive analysis should be undertaken as its own business plan development step.
Throughout the competitive analysis, both potential and current competitors must be carefully considered. Identifying both the strengths and weaknesses of these competitor types is essential for business owners to make sure their company stands out.
A great way to begin competitive analysis is through browsing competitor's social media sites and online marketing strategies.
6. Plan Financial Proposal
Every business plan should contain financial projections and financial statements that back up claims made. Potential investors are unlikely to want to fund a business that does not have comprehensive projections established.
At a minimum, financial statements should serve as conservative financial projections for the upcoming three years. Common financial statements provided include a-
Profit and loss statement
Cash flow statement
Financial statements should encompass all startup business costs ranging from the initial marketing strategy to any planned new product development.
Although it may seem intimidating initially, developing a business plan can be accomplished in a few easy steps.
Creating a solid business plan is a great way to gain a competitive advantage over other companies vying for potential inventors and potential customers.