Every company needs a business plan. This is a legal document that describes the goals of the business, as well as the means to achieving them.
Business plans are created for a variety of purposes. They can be made for bankers, venture capitalists, individual investors, or for companies that want to do a joint venture with you.
Whomever your business plans are for, this post will help you understand the various stages of the creation process.
Read on to find out all you need to know about creating business plans.
Tips to create the perfect business plan from scratch
Employ the latest business planning tools
Gone are the days when people created business plans with pen and paper. Now, there are numerous online tools that help to create professional-looking business plans.
These tools show you exactly what a business plan is supposed to look like. It shows you what is included in the different sections and how to arrange them. Most are even available for download online, which means you can easily copy and modify them to fit your business needs – like a fill-in-the-blank template.
Common examples of business plan templates include the SCORE Business Plan Template and the ones from Bplans.com and Rocket Lawyer.
Besides templates, there is software that helps you to improve the overall outlook of your business plans. The Venngage business plan builder is a tool that brings simplicity and ease of understanding to your business planning. Offering hundreds of customizable templates, Venngage’s easy-to-use drag and drop editor lets you link key elements of your plan together using images, charts, shapes, text, and links. See an example below:
Understand your target audience
Who are you creating the plan for? An angel investor? A bank? Team members?
The form that a business plan takes will depend on the target recipient.
The kind of business plan you send to a bank will be different from the one you create when you’re trying to bring workers and team members on board.
Knowing the target audience of your business plan will help you to keep the information inside both relevant and appropriate to the reader.
For example, if you’re creating a business plan for your startup team, it is important to state clearly how you intend to execute certain operations and processes. However, if the plan is to be sent to an investor, you want to emphasize business viability, costs, market research, etc.
Conduct adequate market research
All information that goes into a business plan starts with market research.
Market research involves several processes, including:
Market strength analysis
This is where you perform a detailed analysis of supply and demand on the market, and find out whether there is an untapped business opportunity within the target industry.
Share your findings with your team and potential investors using visual communication techniques such as data visualization and infographics.
In this stage, you identify who your target audiences are, where they are, and what they really want.
Often, this might require you to create a survey (online or offline), sample people’s opinions (neighbors, colleagues, friends), or have over-the-counter discussions with people at coffee shops, restaurants, and so on.
It is also essential to find out about existing competitors, as this is the only way to develop your own unique value proposition (something that helps you beat them).
Your market research should also contain a study of industry trends, purchasing behaviors, and consumer habits.
Estimate the cost of all expenses
Costs and estimates are another vital part of the process. To understand the amount of funding required to execute a business project, the owner needs to go out in the market and get quotes from suppliers.
Before doing that, though, the business owner has to make a list of all the resources required: rent, gas and electricity, bills, material, furniture, stationery, cleaning and maintenance, insurance, staffing costs, accountant and lawyer fees, training costs, marketing and advertising, communication, traveling expenses, etc.
It is upon these costs and estimates that the financial aspect of the business plan will be compiled.
Considering the number of items and resources you’ll need to get costs for, it’s sometimes advisable to bring all hands on deck so that you can have sufficient support to get the best price quotes. To make team collaboration easier and more effective, you can use project tracking tools to allot tasks, track time, and communicate between team members.
Anticipate everything that could go wrong
Nobody wishes for bad stuff to happen. But when it comes to starting a business, a lot can go wrong. That’s why it’s important to always anticipate these things beforehand.
For example, it could take longer than you expect to execute certain aspects of the business. If you’ve made your plan thinking that this won’t happen, you may forecast an impossible launch date. This can impact your trustworthiness and reputation in the eyes of banks or investors.
It is always best to anticipate that time, money, labor, and resources may turn out insufficient. As such, it’s always good to create room for allowance.
Always have proof to back up your claim
A business plan is a statement of fact. Therefore, every piece of information it contains has to be backed by fact. For example:
- If you claim that your products will take the market by storm, you have to support this statement with evidence.
- If you claim that your team is qualified to execute all the business processes, you must ensure their resumes demonstrate the experience needed.
- If you claim that you can get more agency clients than your average competitor, you need to state HOW you intend to do that.
In short, ensure you have the right proof to back up any claim you make in the plan.
This will help prove your seriousness and credibility in the eyes of investors, bankers, and even your team members.
State how you intend to reward investors
If you’ve designed your business plan for investors, you need to create a section about payout options.
As you may well know, some investors want nothing to do with the daily runnings of the business; some may want to have a place on the board; some may desire a stake in the company. But no matter what, investors expect to be rewarded for the risk they’re taking on your business.
Therefore, you need to provide a detailed description of how you intend to reward their involvement.