A business plan is a written document that clearly describes a business, its development direction, and its development plan. The business plan also explains the financial goals of a business, and how the business positions itself on the competitive map in order to achieve its goals. In addition, a business plan is an important file to attract investors. This article will guide you in creating a business plan.
Step
Method 1 of 3: Preparing to Write a Business Plan
Step 1. Decide what type of business plan you want to write
While all business plans have an explanation of business objectives and structure, market analysis, and financial forecasts, there are several different types of business plans that you can write. There are at least three types of business plans that are commonly written, including:
- Simple business plan. This business plan is less than 10 pages long, and serves to gauge investor interest in your business, explore business concepts, or serve as a starting point for a more complete business plan. For beginners, this business plan is suitable for writing.
- A complete business plan is an extension of a simple business plan, and serves to explain (without emphasizing) how a business works. This plan will be used by entrepreneurs as a compass in running their business, to achieve their targets.
- The presentation business plan is intended for individuals other than owners and business actors, for example (prospective) investors or bankers. The content is the same as a complete business plan, but with emphasis and an attractive style of language to be presented, also with the right business terms and language. Although a complete business plan is created for the personal use of the owner, a presentation business plan must be made in a way that investors, bankers, and the general public can understand.
Step 2. Know the basic structure of a business plan
No matter what type of business plan you want to write, you need to know its basic structure.
- The business concept is the first major element of a business plan. Focus on writing a description of the business, market share, product, organizational structure, and management structure.
- Market analysis is the second major element of a business plan. Your business will serve a specific market share, so it's important to understand the demographics, wants, and buying patterns of your customers, as well as your competitors.
- The third component of a business plan is financial analysis. If you are just starting a business, write a plan for the flow of funds, capital expenditures, and a cash book. Also write down an estimate of when your business will return on investment.
Step 3. Ask for help from the appropriate party
If you're not very business or finance savvy, ask an accountant to write a financial analysis.
The sections described above are only a large part of a business plan. These sections will be broken down again into seven sections, which we will write about later. The seven sections are company description, market analysis, organizational structure and management, products and services, marketing and sales, and funding requests
Method 2 of 3: Writing a Business Plan
Step 1. Format the document correctly
Write section headings in Roman numerals (I, II, III, etc.)
While the first section of a business plan is commonly known as the "Executive Summary," and contains a brief overview of your business, it is generally the first section to be written last because writing this section requires information from the entire business plan
Step 2. Write a company description at the beginning of the business plan
Describe your business, the market needs for your product or service, the core customers of your business, and your plans for success.
For example, if you are starting a small cafe business, you might want to write a description like this: "Warkop DKI is a small cafe that serves fresh premium quality coffee in a comfortable environment. Located near a well-known campus, Warkop DKI strives to provide a comfortable environment for students, lecturers, and local residents to study, socialize, or rest. Warkop DKI is different from other cafes, with a focus on comfortable situations, easy-to-reach locations, premium products, and top-class customer service."
Step 3. Write a market analysis
A market analysis is written to show that you know your business's market share.
- Include information about your market share. Answer questions such as "Who is my target market for?", "What are their needs?", "How old are they?", and "Where are they?".
- Make sure you do an analysis of your competitors, and write down the results. Write down the strengths and weaknesses of competitors' products, and the effect they have on yours. This section is very important, because competitor analysis will show how your business is taking advantage of competitors' weaknesses.
Step 4. Describe the organizational structure and management of the company
In this section, write a detailed profile of the core personnel of your business, namely the owners and management team.
- Discuss your team's capabilities and the team's decision-making process. Emphasize the experience or success of the owner or management team, if any.
- Also include an organization chart if applicable.
Step 5. Describe the products and services you offer
What goods or services do you sell? What are the advantages of your product? What are the benefits if consumers buy your product? What are the advantages of your product over competitors' products?
- Also discuss the age of the product. Are you developing a product prototype, or trying to register a product copyright? Keep track of the product-related activities you are currently doing.
- For example, if you're writing a cafe business plan, include a detailed menu that describes all the products you offer. Before writing a menu, write a summary of the advantages of your menu over other cafe menus. For example, you could write "Warkop DKI provides five types of drinks, namely coffee, tea, juice, soda, and hot chocolate. The types of drinks provided by Warkop DKI are a business advantage, because other cafes do not offer drinks as complete as Warkop DKI."
Step 6. Write a sales strategy
In this section, describe how you will penetrate the market, handle business development, communicate with customers, and distribute the product or service.
Explain the sales strategy clearly. What strategy will you use to sell? Will you use salespeople, billboard ads, flyers, social media, or all of them?
Step 7. If you are going to use a business plan to apply for capital, write a capital request on the business plan
State the amount of money you will need to start the business, and write down the details of the expenses. Also create a timeline for funding.
- To complete a capital request, include a financial statement. To make your financial statements more accurate, you may need to hire an accountant, notary, or other professional.
- Your financial statements must include all past financial data (if your business has been around for a long time) or shadow data, including estimates of incoming and outgoing funds, cash book, cash flow, profit and loss calculations, and proof of capital expenditures. Write monthly and quarterly financial reports for a year, and financial statements for the following year. Make the financial report that you have written as an attachment to the business report.
- Include cash flow projections for a minimum of 6 years or until a steady rate of growth is achieved, and if possible, a valuation calculation based on discounted cash flows.
Step 8. Write an executive summary
The executive summary serves to introduce the reader of the report to your business. Write down your company's vision and mission, product or service overview, market share, and your business targets. Place this summary on the first page of the document.
- If your business is already established, include historical information about the business. When did you start your business concept? Is there any business growth worth highlighting?
- The executive summary for a start-up business should focus on industry analysis and funding targets. Explain the company structure, funding requirements, and shareholding to investors.
- It doesn't matter whether you're just starting out in business or are already working your way through, show the salient achievements of your business, major contracts, current or potential clients, and a summary of future business plans in the executive summary.
Method 3 of 3: Completing a Business Plan
Step 1. Include attachments
The appendix is the final section of the business plan, and is intended to provide additional information. Prospective investors may want to see the information in the appendix before investing. The documents you include in the appendix must support the claims you wrote in the business plan.
- Include financial reports, credit reports, business licenses, legal documents and contracts (to show that profit estimates are based on existing contracts), and biodata/resume of the core team.
- Describe the business risk factors. There should be a dedicated section that describes the risk factors affecting your business and their mitigation plans. This section lets readers of the business plan know how prepared you are for any unforeseen contingencies in the future.
Step 2. Revise and edit the plan to find typos and grammar mistakes
Make a few edits before deciding on the final version.
- Rewrite content to make it easier to read, especially if you are creating a business plan to present.
- Read the document aloud to detect any mismatched sentences. Also, reading aloud will make it easier for you to spot grammatical errors.
- Make a copy of the document, and give it to a friend or colleague for feedback. To protect your business idea, you can include a confidentiality agreement.
Step 3. Create a cover to make the document more recognizable, prettier, and more professional
Covers also help your document stand out.
Include a capitalized and centered "Business Plan", company name, logo and contact information on the cover. The simpler your document cover, the better
Tips
- In addition to making use of this guide, use the SBA's Create A Business Plan guide for more information.
- The municipal or provincial government may provide further information on small and medium enterprises. Contact the nearest Kadin in your area.
