Do you want to learn how to develop a business plan? If the answer to this is yes, then you are in the right place.
Here, every important thing you need to know about business plans and how to develop one would be discussed.
So, make sure you stick with us to the end to get every important information that will be shared here.
Let’s get right into it…
What is a Business Plan – How to Develop a Business Plan
You cannot develop what you do not fully understand.
This is why the first thing you need to know when it comes to developing a business plan is what it is.
So, what is a business plan?
In a nutshell, a business plan is written documentation of a business’s goals and the steps that have to be taken to achieve them.
This plan can be considered the skeleton of a business.
It is what details where the business is at, how it got to that point, and how it intends to move forward.
Therefore, a business plan can also be seen as a business’s roadmap.
When anyone reads your business plan, they should be able to understand the core of your business.
And this can only be possible if the plan is written properly.
Luckily, you’d be learning how to properly develop a business plan in this article.
Why You Need a Business Plan – How to Develop a Business Plan
Planning is a very vital part of any business.
If you fail to plan, then you would be setting yourself up for failure down the road.
This is because you will be heading blindly into unknown territory with nothing to guide you on the way.
It’s tempting to forgo making plans; this is especially true if you have already started your business and everything is already going well.
But not making plans can be very detrimental to your business.
That being said, here are important reasons why you need to have a business plan.
Serves as a Roadmap for Your Business
Perhaps, the most important reason why you need a business plan is that it serves as a guide.
It is what lets you know how far you have gone in actualizing your vision.
It also directs you and shows you the steps and paths you need to take to get closer to your goal.
Helps You to Know Your Customers Better
A business plan covers all aspects of your business.
This means it will also help you have a better understanding of your customers.
And this is very important because if you do not know your customers, how do you intend to make sales?
Understanding your customers will help you know how to serve them better.
It’ll make it possible for you to offer them top-notch services and products that will satisfy their needs.
It will also help you generate more sales because you will know the proper marketing campaigns to employ to reach them.
Gives You a Better Understanding of Your Competition
One of the steps involved in developing a business plan is analysing the competition.
You will always have competition, regardless of the kind of business you want to run.
And understanding the competition is a very crucial factor in business.
This is because by doing this, you get to identify the competitive edge your business has over your competition.
And if there’s no edge, you can think of ways to gain one.
Helps You Determine the Viability of Your Business Idea – How to Develop a Business Plan
If you are just starting the business, then one stage you have to go through is testing your business idea to see whether or not it is viable.
And developing a business plan can help in this regard.
When developing a business plan, you’d need to properly analyze every aspect of your business.
You will get to analyze the competition, your target audience, and several other things that can help you determine the viability of your business idea.
Read this article to learn more about testing a business idea.
To Get Investors – How to Develop a Business Idea
When you are looking for funding for your business, you need to be able to convince potential investors that your business is worth investing in.
They need to know that your business is viable before they can put their money into it.
A proper business plan can do all of these things effortlessly.
It will answer all the questions investors have to ask.
Serves as a Reference
Your business plan will typically contain a clear definition of your business and the things you wish to achieve soon.
This is what makes it a great reference.
Whenever things are going differently than envisioned, or perhaps you run into some challenges along the way, you can refer to the plan.
This can motivate you to keep going on despite the challenges.
Your business plan will keep you motivated and inspired to keep you going because you can look ahead and see your goals becoming a reality if only you overcome your challenges.
Helps You Operate Your Business Better
Because you have taken your time to properly analyze your business and the market, you will know how to operate your business better.
You would be able to spot opportunities in your niche/industry.
And you can use them to scale your business.
Because your goals are documented, you can easily make decisions and take steps that will help your business grow.
To Show the Seriousness of Your Business
When you have a business plan, you show people that you are serious about what you are doing.
Potential investors, partners, employees, and even yourself would see your seriousness with the business.
They would know you are committed to your business because you have taken your time to properly document everything about it.
Elements of a Good Business Plan – How to Develop a Business Plan
A good business plan needs to contain certain key pieces of information.
Here, we will look at some of the most important parts of a good business plan.
The Executive Summary
The executive summary is the first thing on any business plan.
Do not get confused by the name; an executive summary is simply a summary of the entire plan.
It will give anyone that picks up your business plan a rundown of every important thing inside the plan.
It should contain your mission statement, a concise description of your services and/or products, and a summary of your goals and growth plans.
The next thing your business plan should have is the company’s description.
Your company’s description will include every necessary information about the company.
It should contain your goals (both long-term and short-term), target audience, and what differentiates your business from other companies in your industry.
Another important thing your business plan should contain is a description of the structure of your business.
Here, everything organizational should be detailed including managerial roles and their job skills and responsibilities.
Products/Services – How to Develop a Business Plan
Next, you need to talk about your products/services.
You cannot run a business without offering products and/or services.
So, a rundown of these is also an integral aspect of your business plan.
Ensure you are as detailed as possible with your description.
Include all the important details of the product/service like its benefits and features.
Analysis of the Market – How to Develop a Business Plan
Market analysis is a part of your business plan that is a result of the market research done.
It is an indication that you have properly studied the industry you chose and you are now familiar with every nitty-gritty aspect of the industry.
This is what gives you a clearer understanding of the industry; where it has been and how it is projected to go.
You’d get to understand the past and current trends of the market.
And in the market analysis part of your business plan, you’d show how you intend to help your business fit in with the market trends.
Competitive Analysis – How to Develop a Business Plan
Your business plan should also have a competitive analysis.
This is where you write down things based on your research of the market competition.
It should describe the competition.
It should also give detailed information about your business’s position when compared with your competitors (both direct and indirect).
Not only will the competitive analysis give you ideas on how to tackle the competition to stay above them, but it will also let anyone else reading your business plan know that you know what you are up against.
This can help put you in the good graces of potential investors.
Marketing Plan/Sales Strategy
When developing your business plan, you need to analyze your business and market and come up with a marketing plan that would suit both.
This means you need to research your target audience.
You have to identify where they are; both physically and virtually since digital marketing is a very common marketing strategy employed by businesses in today’s world.
Then, you need to come up with strategies on how to reach them.
You need to study both their socioeconomic and psychological characteristics (psychographics and demographics).
This will help you discover their purchase trigger and how you can market your products to them in a way that will trigger them to buy your product.
This brings us to the next big thing you need to include in your business plan; sales strategy.
You have to be able to turn your marketing effort into real sales.
Be specific and detailed with your sales strategy.
Put out figures that will help you know what exactly you are doing.
Your financial goals are another important thing that you have to document in your business plan.
Remember your business plan can also show the viability of your business.
This is one way it achieves that.
By documenting the anticipated revenue for your business according to market research, you will be showing that your business can make a profit.
Tips on How to Develop a Business Plan
Knowing the components of a properly written business plan is typically not enough.
You need to know how to develop the plan for it to have all the above components.
So, let’s now discuss 7 tips on how you can develop a business plan.
Every piece of information on your business plan has to be factual and top-notch.
You cannot develop a business plan based on just sentiments.
This is why you have to carry out thorough research before you start developing your business plan.
You have to know all that you can about the industry and how these things relate to your business.
While thorough research is necessary, it does not mean you have to put every tiny detail of your research in your plan.
The thorough research is to make sure you are factual and right with everything you are saying.
So, don’t dump unnecessary details into your plan; ensure you keep it straight to the point at all times.
2. Know the Why of the Business Plan
Your business plan will typically be tailored to fit the purpose you are writing it for.
Remember, there are many reasons why businesses develop business plans.
So, why do you need to develop a business plan?
You need to know this purpose before you start developing your plan.
Do you need the business plan as a guide on how to run your business?
Or perhaps, you need to present it to a potential investor; or maybe you need it for both reasons?
The purpose of the plan can be anything.
So, ensure you find it out and make sure the purpose is clear and specific.
When you know why you need the business plan, you will know the people that would be reading it.
This will help you know the information that should or should not be included in it.
3. Make A Company Profile
A company profile or snapshot can help you sell your plan to whoever would be reading it.
This snapshot or profile is meant to make a reader understand what your business is all about.
Think of those short yet insightful paragraphs that you find about businesses on their official website.
Yes, that’s what a company profile is.
At the end of the day, the reader may not remember everything they read in your business plan, but they should at least remember your company profile.
4. Be Transparent – How to Develop a Business Plan
When writing their business plan, some people often write just the good aspects of their business.
This is especially true when they are looking to get funding with the plan.
They feel doing this would make their business look more attractive and viable to potential investors.
But sometimes, this does not turn out to be the case.
Investors know that businesses come with risks and challenges.
When you leave out the cons in a bid to look more feasible, your potential investors will know.
So, it is usually better to just be transparent about everything.
Ensure you include both the good and bad parts of your business in your plan.
Talk about your strengths and also talk about your weaknesses.
But do not stop there, also talk about how you intend to tackle these weaknesses and turn them to your advantage.
When your business plan is this transparent, investors will appreciate it.
And this may get you in their good graces.
5. Consider Having Various Versions of Your Business Plan – How to Develop a Business Plan
Remember, business plans often have specific purposes and this also means they have a specific audience too.
You can’t give your employee the same business plan that you gave an investor.
This is because an employee has no business knowing some of the things an investor needs to know.
So, when developing your business plan, you can think of different purposes for the plan and write out different versions of it while you are at it.
Ensure you first understand the people you are writing the plan for.
And then, tailor it to fit the target audience.
6. Have a Marketing Plan – How to Develop a Business Plan
Before you start developing your business plan, you need to find out how you are going to market your products.
You should already have a marketing plan before you include it in your business plan.
The marketing plan will cover vital areas like where to market when to market, and the amount the product/service will go for.
Once you have a marketing plan, you can then infuse it into your business plan.
7. Your Business Plan Should Contain Your Motivation
Your motivation will serve as an indication to your readers that you will keep pushing on even in the face of challenges.
It will show the reason why you are willing to go through all the effort and work to make sure your business succeeds.
It is what would serve as a driving force even in dark days.
Your motivation should not just be money-oriented.
It should go beyond that; it should be your mission.
Running a business is not a day’s job.
There will be days when you will feel like giving up.
On days like this, you need something to keep you going.
So, think long and hard about what motivates you and then include it in your business plan.
Visit here to learn more about identifying and using your motivation.
Conclusion on How to Develop a Business Plan
A business plan can serve several purposes and it all depends on what you need it for.
You can use it to get funding for your business, or you can simply have it as a roadmap for your business, and even as a source of motivation or reference.
Regardless of what the purpose is, one thing is certain; you need to know how to develop a business plan as a business owner.
The tips shared in this article will help you do this.
Just keep in mind that business plans often vary from one business to the other.
So, that yours does not look like that of another business does not mean you have not done it right.
As far as it contains all the necessary components that have been discussed in this article and it also serves the intended purpose, then you are good to go.