Opening a business has become more straightforward than ever today. You need to develop a stellar business idea, innovative product offerings, and capital. All this might be enough to get your boat sailing, but what’s your plan?
People starting and forming their company in the entrepreneurial world should have a business plan ready. It acts as a roadmap, an outline, explaining what your business is about and what you aim to achieve. In addition, it also demonstrates the goals of your company, marketing plan, and financial obligations. All in all, it is a document that identifies your business.
Further, you can use this document to pitch your business idea to investors. It will give them a picture of your business model, allowing you to secure funding easily. If you don’t know much about it, don’t worry. After all, you don’t have to be an industry professional to draft a business plan. Here we are revealing a step-by-step guide to making a simple business plan.
Business & Management Structure
Do you have a rough legal structure in mind? Most entrepreneurs kicking off the business as sole proprietors don’t feel the need to define a legal structure. In reality, you must display the organizational hierarchy and shareholding. For this, you have to develop business acumen.
You can read a few articles online or pursue a business degree, such as business administration or entrepreneurship. One of the significant benefits of MBA and other business programs is that they make people familiar with business dynamics. Not only will you understand the hierarchical norms and legal structure, but you get a clear idea of business operations.
Business Goals & Objectives
The second page of your business plan should have a mission and vision statement. It would explain the company’s main focus and a brief description of your product and service offerings. After this, you have to draft an objective statement defining the organization’s goals. You can mention your business strategy in this section to show how you plan to achieve the objectives.
The strategy has to align with your target audience. If you have price-sensitive consumers, stick to the cost-penetration system; otherwise, you can opt for differentiation. Furthermore, if you want to acquire external funding, use this section to explain your needs for financing. Enlighten the investors on how you plan to use the funds and achieve your growth targets. It would build confidence in your company, making it easy to raise capital.
In this section, you can talk about your products and service offerings. Begin by explaining how your product works and caters to the audience. You can even highlight the consumers’ pain points and show how your product solves the problem. Next up, give a layout of the pricing model for your product and service. Justify the expenses and price you are charging to ensure it is affordable for your target audience.
Moreover, create a separate section for your sales and distribution strategy. How will you procure raw material? Do you have production units? All this will determine your dependence on third-party and external vendors. Lastly, explain how your product or service is better than of competitors. For that, you can do a ‘strengths, weakness, opportunities, threats (SWOT) analysis.
Marketing & Sales Plan
Nowadays, a business plan is incomplete without a marketing and sales strategy. So, what do you have in mind? Most entrepreneurs stick to social media to spread the word, but that’s not enough. You should have a stellar website with running advertisement campaigns. Once you decide, mention it in your marketing plan. In addition, address how you plan to persuade customers to buy your products or services. You can also include retention strategies to show how you will develop customer loyalty.
Besides this, give a brief overview of your logistics to ensure timely delivery to the customers. In short, this section would highlight your business strengths and the factors that set you apart from competitors.
Financial Analysis & Projections
As a startup, you won’t have much information on your business finances. If you don’t have any financial statements, determine where you see your business in the next five years. You can create cash flow projections depending on how much money is going out and coming into the business. Likewise, make rough estimates of how many products you will sell in a year. You can add up the costs and expenses and calculate profits.
Further, you can also include ratios in your forecast to better understand financial performance. For instance, you can calculate the current ratio to measure the company’s liquidity and its ability to pay back.
Although there isn’t any regulatory obligation to create a business plan, having one can put things in order. Most entrepreneurs have everything planned at the back of their minds; however, writing it down can make a difference. You get to work in detail on all the sales and marketing plans. Likewise, you can determine the legal structure and hierarchy beforehand. Therefore, if you don’t have a business plan yet, create one to make your company prosper.