So you've developed an idea for your business and you've registered it. Now what?
Before you start grinding away at the day-to-day, you're going to want to sit down and build a plan for what your business is going to look like, not just in the day-to-day operations, but in the next year, three years and five years.
This document will help steer your course, inform strategic decisions about which opportunities you're going to pursue and which ones are distractions. It'll also play an integral role in getting funding.
That document is your business plan.
How do you write a business plan? What should include? What should you leave out? In this article, we break down the essential components and why they're important.
Your business plan is your business’s most important strategic document: it tells your business’s story. It explains how you got where you are, where you hope to go and how you’re going to get there.
Everything in your business plan is building an argument and telling a story of how you will get from point A to point B.
Writing your business plan is an excellent exercise in articulating your strategy. Many business owners have an idea in the back of their mind of where they want to go within the year and in the next five years, but often they don’t sit down and put it on paper.
But what you may not realize is that by putting your plan into writing, you are more likely to get where you want to go and if you don’t achieve your goals, you have a roadmap that you can use to help figure out what didn’t go according to plan.
Like we said, your business plan is also a very useful document to help you secure funding as it shows potential financiers that you’ve thought through the details of your business, established measurable goals and put together a plan to help you achieve those goals.
A business plan will usually have eight sections to it:
Each section has a distinct purpose in communicating how your business will reach the goals you've set out. Here's how you go about writing them.
This is a one-page summary of your entire business plan.
Though it goes at the beginning, it’s the last thing that you write.Your executive summary is the story that you want to tell, so tell it well. It’s what’s going to create a lasting impression for your reader, but more than that, it should create enough curiosity for them to want to go in-depth and keep reading.
Your profile section puts all your contact information in one place and provides basic background on your business.
Marketing tip: Your name, address and phone number (NAP) are instrumental in building up your local Search Engine Optimization (SEO). Track all the instances where they appear, keep them consistent and, if you update one, update them all.
You can also add to this section any social media channels where you are active.
Ultimately, your business profile gives readers all the information they need to get a hold of you. It also will prove a handy place for you to consolidate all of that contact information that you want to make public.
This section is all about what makes your business unique. It tells the story of what you do, who you serve and why you do it in a brief, compelling way.
Your elevator pitch is a quick way for people to understand what you think your business is really about. In a lot of ways, it’s the beating heart of your business, where you share your hopes and dreams and how you will work to make those come true.
It’s important for new and veteran business owners alike to understand the market that they’re in. The competitive outlook section of your business plan helps you think deeply about that.
What’s the industry you’re in? What is the current industry makeup? What are the trends? Who are the major players? Who are your direct competitors and what is the local market?
These are all questions that help you make strategic decisions about how to position your business and how to find new opportunities tailored to your marketplace.
Most importantly, creating your competitive outlook helps set you as an authority in the eyes of prospective financial partners. It shows that you know your industry and that you have a chance to thrive in it.
In analyzing your competition, you want to look at what your competitors are doing well, what they don’t do well, and how you can be better than them or improve what they’re doing.
The competitive outlook shows that you understand your industry, your market as well as the supply and demand chains and that you have identified viable gaps that your business is able to take advantage of in order to provide value.
You don’t want to go to an orchard and sell apples.
When you’re starting out, word-of-mouth is one of the most powerful drivers of new business. While there are steps you can take to encourage your existing customers to spread the news that you exist, you don’t want to leave your entire marketing strategy to the whim and timing of customers.
That’s why you write a marketing plan. This section of your business plan functions as a summary that highlights the most important information.
Your marketing strategy is where you plan how you’re going to leverage your channels to reach new customers and retain their business.
Who needs to do what when? This is the question you’re answering next. You get to go through a typical day at your business and describe what goes on so you can figure out who you need to bring onboard and in what capacity.
Your business ops and personnel section shows that you understand your business inside and out. You know what the day-to-day looks like and who you need to bring in to help you better serve your customers.
The purpose of your financial plan is first to show prospective investors or lenders the capacity for growth that your business has. Secondly, it projects how you expect your business will do, once you sit down and do the math.
The most important rule when you are writing your financial projections is to be realistic. It is not worth your while to blue-sky this section while thinking, “This will never happen.”
If your business has been around for a few years, you can use reports from the previous years to help you make financial projections for the future.
Rather than set and forget these projections until the following year, this is a section that is useful to return to on a monthly basis to update with the actual figures and help you plan properly.
Your business plan is a strategic document that tells the story of your business.
It helps you think deeply, anticipate the issues you will face and plan to overcome them. It is a useful exercise not just for new business owners. And it has tremendous value for potential investors or lenders.
This guide is designed to be a resource for you but still it can be overwhelming. The good news is, you don’t have to do it alone: our business banking experts are here to help you and your business thrive. They would be more than happy to answer any questions that you might have about how to write a business plan that will help you grow your business.