What is a business plan?
A business plan is a written document that describes your business and its future. It includes information such as the company history, products or services offered, target markets, marketing strategies, and financial forecasts. A good plan should include all the details you’ll need to successfully start and run your business explains Peter Decaprio. Even if you don’t want to attract investors right away, writing a business plan can help clarify what you want from your company and how best to achieve that goal. The process of writing a business plan forces you to think about these issues—and doing so will give you confidence when faced with making important decisions along the way.
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Why do you need a business plan?
You may want to write a business plan for several reasons. You might not have the money right away to start your business, but if you can show investors that you have done your homework and created a credible plan for how their investment will be used, they’ll be more inclined to give it to you. Or perhaps you’re itching to expand your company—but if you don’t have enough resources or aren’t bringing in enough revenue now to hire additional staff, then having projections on future growth might encourage owners of capital to help fund your expansion. And even before approaching investors, knowing where your business is headed helps identify problems before they arise so that you can solve them efficiently.
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What information should I include in my business plan?
At a minimum, you’ll need to include some or all of the following:
- Company name and legal status
- The primary purpose of your business (what product or service do you provide?)
- Your business goals for the next one to three years. Be as specific as possible, such as “to earn a 20% on sales.”
- An analysis of your industry and how it’s changing
- A competitive analysis–comparison of your products or services to those offered by competitors
- Market research on who uses your product/service and why they choose it over others
- Product development plans
- Organizational structure
- A budget with financial projections for the first three years of operation
- Your management team’s expertise and experience
- The Market for Your Product/Service
How should I organize my business plan?
A good business plan is clear, concise, and easy to read. For this reason, you’ll want to lay out your plan in a logical format that flows well from section to section says Peter Decaprio. A poor layout wastes time–and could be the difference between getting funding or not. Try using one of these formats:
Chronological:
If you are starting a new company, it might make sense to describe its history first before launching into details about how it operates today since many readers may know nothing about your industry or what you offer. Alternatively, if you are an experienced entrepreneur in the midst of a successful enterprise, then the reverse–starting with how your business operates today and then describing its history–may be appropriate.
Functional:
This format is suitable for companies that have been established for some time but are not yet profitable. It describes what each department within your company does (marketing, production, finance), which may make sense if you’ve recently merged with or acquired another company.
Problem/Solution:
If you want to convince investors to give you money by showing them how much demand there is for your product or service, this type of business plan will appeal to their desire to see a proof before parting with their cash says Peter Decaprio. In this document, show the problem that your product or service intends to solve, follow by the features and benefits of your product.
Business Model:
If you are launching a new company (or if an investor who will be working closely with you thinks it would be helpful), showing how your business makes money–and more specifically, how revenues will grow each year–will help convince them that your company is viable. This type of business plan may also appeal to venture capitalists since it shows where they can expect future returns on their investment.
Conclusion:
Regardless of which format you use, your business plan needs to grab the reader’s attention and convince them that your company is worth investing in explains Peter Decaprio. It also needs to clearly present how you will achieve what you have laid out as your goals and objectives.
