For over 20 years, Growthink has helped hundreds of thousands of entrepreneurs and business owners create business plans to start or grow their companies. In this article, we’ll explain to you a) what is a business plan, who needs a business plan, and c) how to easily create a great business plan for your business.
What is a business plan?
A business plan is a document that describes they type of business you are starting or operating and your growth plans for the future.
Who needs a business plan?
Business plans are roadmaps that guide winning strategies and drive growth. Therefore, you need a business plan…
…if you are running a business
If you are running a business, a business plan will help you set goals, establish priorities, plan for cash flow and revenue generation and stay focused.
When you’re running a business on the day-to-day, you can lose focus on the big picture. A business plan will keep you and your core management team rooted in what you set out to achieve. Reviewing it once every month can help you design strategies that are focused on the end goal and right size focus on more minute issues.
…if you are applying for a business loan
All financial institutions, especially banks, require business plans when reviewing business loan applications.
…if you are looking for equity financing
Investors use business plans to understand the components, risks and prospective rewards of each business investment. The more detailed and realistic the business plan, the better investors can conceptualize how their capital will be put to work.
How to create a great business plan?
A few preliminary steps will help you best prepare to create a stellar business plan.
Do your research
Research your competition, target audience, ways of generating revenue and your primary expenses. By knowing your industry, target markets and competition inside out, you will be better positioned with statistics and information to make better strategic decisions.
Define your purpose
Focus on achieving the purpose of your business plan. For example, if you are creating your business plan to gain funding, your plan will focus on ROI (return on investment) scenarios and outcomes. Alternatively, if you are creating a plan to align management around core organizational outcomes, your plan may be more process and strategically oriented.
Include the key business plan components
A good business plan includes an overview of the company and its vision, mission, and goals, as well as marketing strategies and descriptions of the people running the business. Business plans also provide historical financials and/or projections and help to bring clarity on how profitable an investment into the business might be.
Specifically there are 10 business plan components you must include in your plan as follows:
- Executive Summary: provides an overview of your business, discusses your success factors and gives an overview of your financial projections.
- Company Overview: provides background information on your business and past accomplishments if applicable.
- Industry Analysis: offers an overview of your industry and market trends and specifies your relevant market size.
- Customer Analysis: identifies your target customers and their needs.
- Competitive Analysis: identifies your direct and indirect competitors and explains your areas of competitive advantages.
- Marketing Plan: discusses your, products, services, pricing, promotions and distribution plan.
- Operations Plan: identifies your key operational processes and milestones you expect to accomplish.
- Management Team: specifies your key management team members, identifies gaps in your team that you’ll fill and identifies any board members you have.
- Financial Plan: discusses your revenue model, provides highlights of your financial projections, identifies your funding requirements and how they will be used, and if applicable, discusses your exit strategy.
- Appendix: provides any information that supports your business plan.
This business plan template provides additional information regarding what to include in each section of your plan.