Are you ready to start your own business? Whether you plan to sell a product or service, a business plan is a vital part of the process.
If you are wondering where and how to begin, we are here to walk you through what you will need to create a solid business plan.
Creating the Business Plan Document
While you can certainly create a business plan from scratch, using a template can get you off to a great start. If you set up the document yourself, there are several sections that you should include. You must also be sure to format the document in a way that is organized, easy to read, and looks professional.
However, if you use a handy template, the sections and formatting are there for you. This is a convenient way to ensure that you include the necessary information and have a well-designed document.
Another good reason to use a template is that some business plan templates include tips that assist you with the details needed for each section of the plan.
Whichever way you decide to create your document, you should include the sections below for a complete, presentable business plan.
Table of Contents
The table of contents is not a necessary piece; however, it adds to the overall readability of your business plan. This handy table allows investors, loan officers, and others to go directly to specific sections. It also provides a professional appearance.
If you are using a business plan template, many include a table of contents. Additionally, you can use a specific table of contents template if you are creating your plan from scratch in Microsoft Word.
Many suggest that you write the executive summary last. This method allows you to complete your plan and then highlight the most important pieces in the summary. This is similar to how some writers create their introduction paragraph or even their title after the article is complete.
You should include an optimistic description of your business, what you will do or sell, how you intend to do it, and what you see as the future of your company. You can also include specific objectives and obstacles you plan to overcome, if applicable.
Be enthusiastic and clear. Remember, the executive summary is the introduction to your business. So, it is crucial that you make it professional and concise.
Description of Business
The business description section is where you will delve into your company’s details. You can make this section as thorough or itemized as necessary for your business. The key is to keep it organized and descriptive.
Be sure to include these items at minimum and as they apply:
- Legal form of ownership.
- Business location.
- Hours of operation.
- Products or services.
- Goals and objectives.
You can also include the following optional items:
- Your business philosophy.
- Your view on the industry.
- Your company’s strengths.
- Your background as it relates to the business.
Team and Organization
Depending on the size of your business, you may or may not need an organizational chart or details for your team. For example, if you have a sole proprietorship, you can include your own industry experience, business background, and intent to hire others in the above business description section.
If your business does have a team, then it is helpful to have this as a separate section. You can include a visual organizational chart, a table with titles and names, or a brief paragraph for each team member. You can also use a combination of these tools for a complete picture. Just remember to include details for your team as they relate to the business.
Products and Services
What are you selling? Whether you have an innovative product or much-needed service, you should include all of those particulars in this section.
Describe your product or service in detail. Then, include pricing information and any applicable fees. You can list advantages over competitors, what makes your product or service unique, and why you see a demand for it.
If you are selling a product, you should include details for inventory control, security system needs, or if an audit plan will be in place. You can include manufacturing, supplier, and ordering details as well.
Regardless if you are selling a product or a service, you will need a plan to market it. This section includes details surrounding the industry, competition, analysis, and target audience.
You should consider using graphs and charts to show market growth and segmentation as part of your analysis. This allows you to provide a clear view showing the demand for your product or service now and in the future.
You can also use a visual tool to describe your target audience. Then, explain how you plan to reach them and what the various demographic factors include.
Next, you should add in competitor details. Describe who else is doing what you intend, what their strengths and weaknesses are, what share of the market they cover, and how you expect to compete.
Optionally, you can add any promotional or advertising details that you have planned. You might describe promotional campaigns, progress tracking, and the advertising budget.
This section shows your strategy for implementing the plan. An important piece of this area is a clean display of your intended milestones. Use a nice visual tool that outlines each milestone, start and end dates with duration, and any costs involved.
Additionally, you can include production, location, equipment, personnel, legal, and credit policy details as they apply. Think of this section as the area where you will explain how you intend to carry out your plan.
Your entire business plan is important; however, the financial section is one of the most critical pieces. Most any business plan you see, whether a template or completed plan, includes at least the following financial items. Be sure to take your time, be accurate, and be realistic.
- Startup expenses and funding — Include fixed and monthly costs along with assets and grants.
- Sales forecast — Show forecasts for both short and longer terms (3 years, for example).
- Profit and loss projections — Clearly lay out income and expenses.
- Cash flow — Display inflows and outflows of cash per month or year.
- Budget — Show starting and ending dates, budget amount, and overages per business item.
- Balance sheet — Accurately display assets and liabilities.
- Break-even analysis — Include fixed and variable costs with break-even points in units and dollars.
Similar to the table of contents, an appendix is not a required piece of a business plan, but it is a helpful one. This section should contain your supporting documents and other items referenced in your plan.
Here are the types of items you should include:
- Advertising materials.
- Contract and lease copies.
- Letters of reference or support.
- Business location photographs and blueprints.
- Credit reports and financial statements.
- Miscellaneous relevant documents.
To reiterate why you need a business plan, take a look at these statements from the U.S. Small Business Administration:
Creating a business plan is one of the most important steps you will take because the plan serves as your road map for the early years of your business … A well thought out plan also helps you to step-back and think objectively about the key elements of your business venture and informs your decision-making on a regular basis.
Are You Ready to Create Your Business Plan?
Starting a new business can be both exciting and overwhelming. But, having a business plan can keep you on track and house the items you need for attorneys, accountants, and loan officers. Even those with a current business can use these plans for growing their company.
Hopefully, these tips will help you start on the right foot with your business plan. If you have additional advice or questions, we’d love to hear from you!
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