Starting a new business can be an exciting yet daunting task. Creating a solid business plan is essential for guiding your new venture and increasing its chances of success. Here is a step-by-step guide to preparing a thorough business plan from scratch.
Understand the Purpose of a Business Plan
Before diving into writing your business plan, it’s important to understand why you need one. A business plan serves several key purposes:
- It forces you to formally think through every aspect of your business
- It helps you identify any weaknesses or potential threats early on
- It serves as an ongoing roadmap for managing your business
- It’s necessary for convincing investors and lenders to finance your business
In short, a business plan is an invaluable tool for guiding your new business from concept to launch and beyond.
Do Your Research
Now it’s time to roll up your sleeves and do some research. Every business plan starts with the key details about your company and market opportunity.
Define your products and services
Clearly describe what your business sells. Go into detail on special features, pricing plans, where products are sourced or manufactured, etc.
Analyze the market
Research the size of your target market, growth trends, industry analysis, and information on competitors. Identify where there are opportunities to differentiate.
Describe your customers
Define your target customer segments and ideal buyer personas. Include demographic information, purchasing behaviors, motivations and priorities.
Research your competition
Examine both direct and indirect competitors. Study their products, pricing, promotion strategies, and any competitive advantages they may have. Use this to find gaps you can fill.
This upfront information provides credibility for the rest of your plan. Spend time on this research to ensure your analysis is accurate.
Craft Your Strategy
Now it’s time to define the details of how you will operate your business.
Create financial projections
Develop sales and expense forecasts for the next 3 to 5 years. Estimate costs for staffing, facilities, inventory, taxes, insurance, marketing and other expenses. Subtract expenses from estimated revenue to determine your profit potential.
Describe your marketing plan
Map out how you will promote your company to drive sales. Outline your messaging and branding strategy. Select marketing tactics and channels you will invest in like digital marketing, events, referrals or direct sales.
Explain your operations plan
Provide specifics on how you will run your company. Include details on your intended physical business locations, production process, technology needs, inventory management plans, supply chains, and general workflows.
Be as specific as possible on each aspect of how you intend the business to operate.
Determine your business structure and team
Decide if you should structure your business as a sole proprietorship, partnership, corporation, LLC or other option. Outline the key players on your leadership team and their talents that support the business.
Assess risks
Identify any major threats facing your business like new entrants in the market, pricing pressure from competitors or declining industry trends. Develop contingency plans should threats emerge.
Write out your financial needs
If seeking funding from loans or investors, include how much capital you need, how it will be spent, and a funding schedule.
Specify if you intend to use debt or equity financing options. Having this information prepared shows your business knowledge.
Finalize Your Written Plan
Congratulations, you now have a draft of all the key sections for your plan! Here are some final tips for putting the full business plan together:
Organize the information
Structure your document in a logical flow with organized sections, clear headings and concise writing that is easy to scan. Leading with your Company Overview and Market Opportunity helps set the scene.
Format professionally
Use an easy-to-read font like Arial 12 point. Add graphics like tables, charts and relevant images to provide visual interest while supporting key data and information.
Proofread thoroughly
Carefully edit your full plan to fix any spelling, grammar or confusing language. Ask a skilled friend to proof it as well.
Create appendices
Supplement your body content with detailed charts, legal documents, owner resumes and other materials to substantiate your plan.
You Did It!
You now have an actionable business plan document that will guide your decision making and strategy on the exciting road ahead. With your well-prepared plan, you can approach creating your business with greater confidence.
Best of luck as you move forward in making your business dreams a reality!
