Creating a business plan may seem complicated and time consuming. However, if you intend to become a part of the business world you cannot endlessly postpone or ignore this activity because the existence of a well-structured business plan, based on solid research can be crucial to the survival and the development of your business.
Here are the 10 most important tips that will help you create a business plan that will take you one step closer to the success you so desperately crave:
1. Adapt your business plan to your target audience
The starting point of any business plan is the audience: Who will read your business plan? What is the purpose of the business plan: to obtain a credit, to attract an investor or to find a new business partner? Although the key elements and financial forecasts remain unchanged regardless of the audience, the business plan must be adapted in accordance with the needs and expectations of every target group: for example, a private investor will be more interested in seeing how he or she will receive the invested money and how much profit will he or she be able to gain. A banker will be more interested in finding those that suggest you are able to pay back the bank loan.
2. Do a solid market research
Investors are extremely interested in seeing whether you know and understand the market in which you company will operate. Therefore, market research is essential in creating a solid business plan.
The market research should focus on these aspects:
The business: To clearly determine what your company is doing or what is sets out to do through management, organization, production flux, and correct use of resources. To understand and get to know the industry and its trends so that when you are going to talk to investors or other entrepreneurs you will be able to show that you are well-versed in your field.
The market: What are the main characteristics of the market in which your company will activate? Who is the target audience? Where are they located? What do they want? What is their purchasing behavior? Who are your competitors? etc.
Funding: Are you able to meet the needs and requirements of potential clients and still see a profit? What is the profit margin in the field? What are the involved costs?
The main information and data sources are:
- The previous experiences of the entrepreneur: the knowledge acquired as an employee, the observations he or she made as a client, etc.
- Various information from public sources: specialized media, the Internet, activity reports of other companies active in the same field, statistical information, reports from market research companies, etc. These will offer a broader and clearer image on the industry, the market evolution and the consumer profile.
- Primary research conducted through interviews with clients/potential clients, suppliers, competitors and experts in the field. Start your primary research when you have gathered enough information from public sources to have a solid knowledge base when you are talking with your interlocutors. This type of research will ensure the completion of the real image behind public information, which anybody can access.
The market information included in the business plan must be detailed and show that you grasp and understand the opportunities and the threats present in the sector, which involves knowing both the strengths and the weaknesses of not only your company, but also yours as an entrepreneur.
3. Identify your competitors
To have a better understanding of the market of which your company is a part of, you must know your direct and indirect competitors – who are they, what are their strengths and weaknesses and what the implications for your business are. All businesses have competitors, whether direct or indirect. It is up to you to show in the business plan that you know who they are and that you have a clear and solid strategy to compete with them.
4.The devil is in the details
The business plans must be well-structured and offer enough information so that the readers can have a clear image of what your business does. The business plan must convince the readers that you are professional and capable to succeed in what you aim to achieve. Therefore, avoid at all costs, typos, unrealistic expectations, exaggerated numbers and forecasts.
Both the content and the form are extremely important for the ones that will read the business plan: the design of the plan must be attractive, the content must be “allowed space to breathe” and easy to follow, the pages should be numbered, a table of contents that also has the page numbers appointed to each chapter should also be present, the title page should contain all important details: the company name, contact information, the logo, etc.
5.Place emphasis on the opportunity given for potential investors
If you’re looking for funding, make sure that you describe the opportunity in a clear fashion: why would anybody be motivated to invest in your business and not another one? What are the elements that will differentiate your company from your competition? What is your Unique Selling Proposition? Why are clients motivated to buy your product and not that of your competition?
The business plan must answer all these questions in a detailed and clear manner.
6.Don’t omit relevant aspects of the business plan
Normally, the business plan must include information about: purpose and objectives of the company, products or services your company offers, clients, competitors, managing team, organizational aspects, financial aspects. Each of these elements plays a part in creating the full picture of your company. If you omit one category because you find it too difficult to create or because you do not have the necessary information, this may have a negative impact on the people that will read the business plan.
7.Offer correct and detailed financial information
The financial aspects of a company are at the top of the list of any investor. Thus, they will be in the spot light. The cash flow must be accurate and the sales forecasts must rely on real information. Although the costs are easier to determine than the sales, both of them must be included in the business plan.
8.Make sure the executive summary is convincing
Without the shadow of a doubt, the executive summary is the most important component of a business plan because most people that will read that first in order to see the key elements of your business. The executive summary plays an important part: to convince the reader the business is both interesting and a good opportunity.
The executive summary must present the general idea of the business; describe the uniqueness of the business, the benefits offered by your product or service and to present the key aspects of the business so that the reader is motivated to read the whole document.
Although the summary should be presented at the beginning of any business plan, it has to be created once all the other chapters are finished so that this part will include information present in the business plan.
9.Seek a second opinion from a business consultant
Once you created a draft of the business plan, seek the help of an independent consultant that will offer his impartial insight while also coming up with improvement propositions or aspects that need modification. For this activity you could search for an accountant or a business consultant that has created business plans relevant to the field in which your company will operate. This type of analysis conducted by a person that isn’t directly involved in the project can offer new directions your company could take. Also, they could lend a helping hand with sections that you haven’t described in enough detail.
10.Use the business plan
First of all, a business plan is a tool meant to guide the strategy and the development of your company, while also helping you evaluate the registered success levels. It must contain specific objectives, deadlines and a clear distribution of responsibilities to make sure that the business is focused on reaching its set goal. Another important aspect refers to the fact that the plan must be periodically revised and edited in accordance with the changes that appear down the road, whether it’s market related or company structure related.
Even the best written business plan is useless if it’s not put into practice. That is why it is essential you use it as a business planning tools and not like any other document that can land you funding.
We hope you found this article useful and we wish you good luck in writing and implementing your business plan.