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While you might be tempted to get started right away, you might want to wait a few months before writing a business plan. A 2018 Harvard Business Review study found that businesses that waited between 6 and 12 months to write a business plan were the most likely to succeed. You need to be flexible during the first few months of your new enterprise and a business plan can get in the way.
Follow these steps to draft a traditional business plan.
The executive summary is traditionally a one-page overview of your business that acts as an introduction to your plan. Since it should include information on each of the following sections, you might want to save this for last.
In addition to summarising the business plan, it should also explain what sets your business apart from the competition and why that particular audience might be interested.
This section should go into detail about your company and how it works. This should include information like:
Describe the product and service that your business provides. The product research section should contain:
This section is where you describe the market you intend to serve. You might want to include:
Underestimating the strength of your competition can often lead to business failure. You should research the competition thoroughly so that you can find ways to gain a competitive advantage.
Your marketing and sales plan should be a description of your strategy to increase sales specifically aimed at your target market rather than the general buying public. Your business plan should also include sales strategies and promotional activities that you're planning to undertake to increase sales.
Outline the financial details of your business clearly. This section should include information about:
Provide an explanation for any numbers rather than just listing them.
Depending on your identified financial needs from step 6, it might be useful to break down your business funding plan. List out your planned funding sources and where that money is going in supporting your business.
Business loans are a common and dependable choice for funding your business. Depending on your spending, using business credit cards is also a viable choice for funding aspects of your business.
This section is particularly important for when you're applying for funding as a new business. It should cover the following details for the next three years:
Briefly describe the process you went through to come up with any forecasts and try to be as accurate as possible. Being overly optimistic can backfire if it doesn't seem realistic to your funders.
If your business is too new to write a full traditional business plan, you still might want to have a one-page startup plan to show to potential investors and lenders. There are several different ways to approach a one-page plan, but you might want to include some or all of the following information:
From backing up your claims to telling a story, here are a few tips for writing your business plan:
From being too wordy to not knowing your numbers, here are a few pitfalls to avoid when writing your business plan:
A business plan is often required when you apply for a loan or pitch to investors. But even if you aren't looking for financing, a business plan can help keep your business organised and on task.
It should be a living document — as your business grows or shifts directions, update your plan to reflect those changes. Having an up-to-date business plan on hand also makes it easier to apply for financing and be prepared for lender interviews.
A business plan can make a huge difference in getting funding for future projects. And it can keep you and your employees focused on the big picture. Once you have a business plan, you might want to start thinking about your business's marketing strategy.
You can learn more about how business financing works by checking out our guide to business loans.
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