how to write a business plan

how to write a business plan

How to Write a Business Plan

1. Introduction

That is why this article has been designed in a way that explains what goes into the writing of a business plan, and in the order in which it appears. People often mistakenly think of a business plan as a document for getting financing. The form of the business plan (to present to someone) is a decision to be made by the writer. On the other hand, the internal or operational business plan, which is a leaner document, is not designed to impress someone with the venture’s potential. It is designed to detail the nature of a business, and why and how it will be successful. Writing a business plan is an opportunity to carefully think through every step of starting your company so you can prepare for success. This is a great opportunity to find any weaknesses and to decide truly the right way to run your business. It is a chance to ensure you have a detailed and feasible plan, and also show if the business idea is a dud. With a solid plan, a company can take off with minimized risk, and a plan is absolutely essential for the long-term survival and success of a company. Whether the plan is to obtain financing for the venture or not, this is a vital point.

2. Executive Summary

Note: Your executive summary should be completed last, after you have written the rest of the plan. This is simply because an executive summary needs to ‘summarize’ the plan, and at over 20 pages, it’s just too long.

What to Include: – A description of your company, including your products and/or services – Your mission statement – Your business’s purpose – A brief description of the products and/or services you offer – Basic information about your company’s organization – Goals: i.e. a sales target, a new product objective, a source of capital, etc.

Your executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals. Read these tips about what to include. The executive summary is often considered the most important section of a business plan. This section briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful. If you are seeking financing, the executive summary is also your first opportunity to grab a potential investor’s interest. The executive summary should highlight the strengths of your overall plan and therefore be the last section you write. However, it usually appears first in your business plan document.

3. Company Description

The company description of your business plan describes the vision and direction of the company so potential lenders and partners can develop an accurate impression about who you are. The company’s vision is to provide a better and more convenient way to find a missing pet. It is our belief that the more easily obtainable it is to find information on a lost pet, the more it will increase the awareness of pet owners everywhere. Offering a convenient website, an e-commerce store for buying pet products, and a 24-hour pet finding hotline, Pet Detectives will take the next big step towards improving the safety of pets around the world. Using the latest technology available, Pet Detectives will help lost pet owners everywhere reunite with their best friends. With global deployment in mind, Pet Detectives has plans to provide safety and assistance to all pet owners in varied locations. The concept for Pet Detectives was first developed in 2005 with a school project titled “Inventions”. One of the best friends and business partners of the founder had developed a fake brand for a pet collar and created a mock website. The two discussed how many of their friends and family members had lost pets and how such a service would be an amazing convenience. In 2006, the founder had attended a John F. Barnes Myofascial Release seminar, where he learned that his instructor had lost his dog in the city. This was a turning point in his life, when he gained the motivation to prevent such depression that a pet owner feels when they lose their pet. He devised a simple plan to make lost pet searching a more convenient and fruitful task, but it was just the first step towards a much larger scheme. In 2009, when the founder was struggling with job positions, the pet detective concept came back to mind as a way to bring something new to the world. He realized that a business was meant to be developed and a company was meant to be founded. A few recent and local pet losses have helped to shed some inspiration and motivation towards today’s Pet Detectives.

4. Market Analysis

This section is also easily defined through analysis of the ‘rat race’ era. Businesses trying to cut costs and the high rate of business start-ups often leads to ventures that do not last very long. This concludes with the statistics mentioned above, high failure rates for both products and businesses. A product aimed at new businesses or existing businesses looking to move ahead could be quite successful, with higher availability of venture capital and loans being outweighed by fear of further failure in an unsure economic climate. A niche for the product can be formed through homing in on specific problems faced by businesses at different stages of the small business life cycle, or by differentiating problems faced by businesses of differing sizes and industries. Further analysis is required to determine the exact nature of problems and which markets are best to enter. This information can then be used to test the feasibility of various product ideas.

Market Need

Trends in the business industry can be relayed through information derived from the recent boom and bust of the US venture industry. As expressed by Auster and Mcloughlin, a large amount of capital available to a variety of businesses meant a strong marketing-driven era. This created an environment of saturation, where start-up companies found it hard to differentiate their products in a cluttered marketplace. This is highly relevant to the current global economic state, where Western nations are recovering from the global financial crisis. It is generally harder for businesses to succeed in times of economic hardship, as consumers decrease spending and investors shy away from high-risk, high-reward ventures. This could lead to a ‘rat race’ scenario, where businesses are cutting prices in order to provide the best value proposition. A product that assists in the formulation and execution of plans could be very successful in this era, where businesses are seeking methods to streamline processes and make themselves more efficient, in an attempt to increase viability in an economic climate with decreased spending.

Market Trends

5. Financial Projections

Financial projections are the last part of a business plan. They are an estimate of how the business will do financially in the future. The projections are achieved by using the data that the business has collected from when it first began to its current date. The findings from the data are used to create facts and figures. The most common method in the data for finding the financial projections of a project is using the past financial data of the product or service in which the business is going to offer. Though financial plans have a degree of uncertainty, it is important that the reader of the plan knows that the business has done a reasonable degree of assessment by using facts and figures as a forecast. This may involve making the sales forecast and then creating the other elements of the plan in reverse order of what is going to be achieved in the plan. Given the degree of uncertainty with a new business venture, the use of probability and statistics to estimate various possible financial outcomes can be very helpful. With the sales forecast as the starting point, the assumption can be made that a certain number of units of various products or services will be sold. With this information, tallying the revenue from sales and estimating costs will be much easier. If the past data for a product or service is unavailable, then the business will have to assume the cost, in relation to the profit expected, taking into account the resources required to deliver the product or service. All information obtained at this stage should be documented to provide a clear picture of estimated costs, and how they were derived. This is important for comparing the actual financial outcomes of the business with the original projections.