Are you kickstarting a business? Every entrepreneur indulges in extensive planning before beginning a venture. Besides products and service innovation, they define business goals, recruit a team, conduct industry analysis, and describe the business structure.
Even though all this comes under planning, they don’t have anything in writing. That means there is no physical evidence or proof of how the business will function and its vision.
Here, drafting a business plan can come in handy. It will help clarify your strategy and decide what resources you need. In short, a business plan is a document defining a business and its product offerings. It also reveals how the company will earn money, leadership, team, financing, and other details.
Further, investors and lenders also count on the business plan. It helps them analyze the business potential before providing financing, ensuring it has repayment potential if you haven’t made one for your business.
Here we have outlined six steps for creating a successful business plan.
- Define Your Business
Your business plan should start by defining your company. For this, you must answer two primary questions – what do you plan to do, and who are you? It will explain why you are in business and how your company will serve customers. You can also put some of the intangible elements of your business, such as your ideals, principles, and philosophies.
Defining goals and clarifying minor details requires business acumen, meaning you should have solid business knowledge. If you lag in this regard, opt for short courses, or pursue higher education. If you live in Florida, look for FGCU online degree programs specializing in entrepreneurship. Florida Gulf Coast University has various programs for aspiring entrepreneurs, helping them learn the ropes.
Once you obtain sufficient business knowledge, classify your business objectives. In addition, talk about your business history or tell a story about how you came up with the business idea.
- Outline Team & Management
This section of your business plan will tell investors who run the company. It will include the legal structure of your business. Begin by outlining if you will incorporate the business as an S corporation, a partnership, a sole proprietor, or a limited liability company. Each structure varies from one other and has its pros and cons. Once you finalize your structure, outline the team.
You can draw an organizational chart to demonstrate the company’s internal structure. It should display responsibilities, roles, and relationships between your staff. In addition, include who reports to whom to have a well-defined hierarchy. Lastly, this section will cover how each team member will contribute to your business’s success.
- Perform a Market Analysis
Believe it or not, targeting the wrong audience can break your entire business model. Therefore, you must choose the correct market for your company. You have to ensure there is a demand for your product and that customers are willing to experiment with new brands. For this, you must perform a market analysis. It will be the key section of your business plan, giving an insight into the target market.
Moreover, the market analysis will analyze your business’s position while giving an overview of the competitor’s landscape. It will determine how much market share you can acquire and the size of your market. Lastly, understand the ideal customer profit. If you target millennial consumers, find government data related to that group. You will find out the number of millennials in your region and the projected changes in your target age over the next few years.
- Create a Financial Plan
Currently, you might need more information on your financials. So, why not create a financial plan? No matter how much capital you invest in the business, determine if it is utilized correctly or not. You must make a cash flow statement highlighting the inflows and outflows. Based on that, you can draw future projections. For instance, you can show a 5% annual revenue increase. After all, sales will grow as your business progresses.
Likewise, create financial statements – income statements and balance sheets. You won’t have many expenses or assets to cover, but at least it will reflect where your business stands. It will be a valuable tool for investors to determine your potential and see where the company is heading.
- List Products & Services
As your entire business model is based on the product and service offerings, they will feature in different areas of the business plan. But it is essential to allocate a section to outline product details for interested readers. If you offer a single service, dig into the details. Talk about its features, pricing, and benefits it provides to users. Likewise, explain its functionality and how it solves an existing problem for users.
If you sell multiple items, include general information for every product, brief enough for the readers to understand your product. Once you have covered your current product offerings, describe the new products you plan to launch. Most importantly, explain how your product offerings contribute towards business profitability.
It is also crucial to highlight where your products and their raw material come from – handmade crafts, in-house production, etc. To remain eco-friendly, you must ensure no specie is getting harmed for producing your products.
- Describe the Operational Structure
The operational structure is what makes your business a reality. Hence, this is an essential part of the business plan. It would be best to cover all aspects of your planned operations here. Start by highlighting your suppliers. Do you source products? Do you have a production facility? After all, investors want to know what’s happening at the backend. Similarly, talk about the facilities – where your team works, is there a clean and hygienic office space?
Further, list down the tools and technology you will use for running the business. It could be accounting software, cloud storage, or robotic process automation services. It will signal to investors that you have a solid and technologically- advanced operational structure, giving your business an edge in the industry.
In today’s saturated markets, creating a business plan is inevitable. It will help in defining business goals while communicating its values. Even if you don’t plan to pitch investors right now, a business plan can unfold gaps in your model, helping you overcome them beforehand. Therefore, make sure to create a business plan before starting operations. You have to highlight goals and your management and perform an analysis. It will go a long way in improving your business model and setting your company up for success.