How to Create a Business Plan: Lesson for Beginners

Intro

Every startup business needs a viable plan before beginning their journey. A business plan is a powerful tool in every business and a requisite for those looking for investors. Working without a business plan can hurt the longevity of your business and struggle to reach clear goals.

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What is a business plan?

A business plan is a description of all the information and goals of a business compiled into a document, this serves as a roadmap that provides direction to the business as well as explaining to those looking to invest what the financial projections are. They can be externally focused or internally focused.

Externally focused business plans are must of the times a must when looking to get investment from banks or financial organizations

Internally focused business plans cover the development of plans for the business future with reachable goals and a list of factors to reach them. 

These can be confused with operational plans or strategic plans, the difference relies in that business plans state much more than strategies or specific goals, focusing more on the big picture of the business future.

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Why make a business plan?

Now we know that business plans are, why should any startup write one. Besides being a requisite for most banks or venture capitalists , business plan help your organization keep focused on objectives. 

• Businesses with a business plan are a lot more likely to grow and get investment from investors. They can easily move from the startup phase and increase team performance.

Harvard Business Review stats show that::

• The “most successful entrepreneurs were those that wrote their business plan between 6-12 months after deciding to start a business. Stating that this “increased the probability of venture viability success by 8%.”
• Chances of success rose by 12% for those that spent no longer than 3 months on their plan. With any longer proving futile.
• Startups chances of venture viability rose by 27% if the plan was created in the sweet spot when founders were talking to customers and preparing marketing.

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How to create a business plan

A good business plan must describe the company’s projects accurately so others can support and invest. It must present the company’s current status, description of the company values and purpose, products and services it offers and the target audience of that product. Apart from that the plan must also describe the plans to market, and operate in an area, as well as financial plans and the management of operation resources. It must also convey in a convincing fashion what the company can achieve in the future for investors.

All business plans are different, but here we compile the most important sections of every business plan:

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Executive Summary

• The executive summary serves as an introduction for the business plan, it holds ideas from all other sections.

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Company Description

• Within the company description you must include the company’s history, objectives and the mission statement.
• The description will help others get the bigger picture of your plan letting everyone know the purpose of the company

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Products and Services

• The product description describes the perks and benefits of it, how it is used and how it is produced.

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Marketing Plan

• For the marketing plan you must outline and be clear of your potential customer, as well as the medium of reach for those customers to find you.
• For this description you must be as specific as possible to accurately know and explain your reach to investors

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Competitive Analysis

• Competition rules the market, so you must have a description of your competitors and the difference between your products
• This research should highlight financials, operations and marketing.

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Management & Organization

• In this section you will identify and describe your team members and how their position help the company grow
• You should have into account the financial part of hiring experts for operations

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Financial Plan

• If your business is just starting you might not have financial data but is still important to create a plan for investors to crunch the numbers for your business
• Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets

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Appendices

• In this section, possibly the final one include every piece of extra information for your reader to reference
• This includes permits, certification and patents that might help others get into context

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Summary

Business plans are a lot more simple to write than you think, and they play a very critical role in the launch of your company. Data states that business plans are a pillar for startups to succeed and secure funding for investors.

Nowadays we can find templates online that help us streamline the process of creation, afterwards it’s advised to find an expert to review your plan before presenting it to investors.

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