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How to Prepare and Write the Perfect Business Plan for Your Company

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Are you preparing to start your own business but uncertain about how to get started? A business plan ought to be one of the first steps in your entrepreneurial journey because it will organize the ideas that have been spinning around in your brain and prepare you to seek funding, partners and more.

What is a business plan?

A business plan is a detailed document that outlines a company’s goals and how the business, well, plans to achieve those goals over the next three or more years. It helps define expected profits and challenges, providing a road map that will help you avoid bumps in the road. 

Stever Robbins writes in an Entrepreneur article titled, “Why You Must Have a Business Plan,” that a business plan “is a tool for understanding how your business is put together…. Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan.” But, a business plan is about more than just reviewing the past state of your business or even what your business looks like today. 

Robbins writes that a well-written business plan will help you drive the future by “laying out targets in all major areas: sales, expense items, hiring positions and financing goals. Once laid out, the targets become performance goals.”

The business plan can help your company attract talent and funding, because when prospects ask about your business, you already have an articulated overview to offer them. How they react can allow you to quickly understand how others see your business and pivot if necessary.

What should you do before you write your business plan?

Are you preparing to start your own business but uncertain about how to get started? A business plan ought to be one of the first steps in your entrepreneurial journey because it will organize the ideas that have been spinning around in your brain and prepare you to seek funding, partners and more.

What is a business plan?

A business plan is a detailed document that outlines a company’s goals and how the business, well, plans to achieve those goals over the next three or more years. It helps define expected profits and challenges, providing a road map that will help you avoid bumps in the road. 

Stever Robbins writes in an Entrepreneur article titled, “Why You Must Have a Business Plan,” that a business plan “is a tool for understanding how your business is put together…. Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan.” But, a business plan is about more than just reviewing the past state of your business or even what your business looks like today. 

Robbins writes that a well-written business plan will help you drive the future by “laying out targets in all major areas: sales, expense items, hiring positions and financing goals. Once laid out, the targets become performance goals.”

The business plan can help your company attract talent and funding, because when prospects ask about your business, you already have an articulated overview to offer them. How they react can allow you to quickly understand how others see your business and pivot if necessary.

What should you do before you write your business plan?

It might sound redundant, but you actually need to plan your business plan. Business plans can be complicated, and you’ll be held accountable for the goals you set. For example, if you plan to open five locations of your business within the first two years, your investors might get angry if you only manage to open two.

That’s why it’s essential that, before writing your business plan, you spend some time determining exactly which objectives are essential to your business. If you’re struggling to come up with a list of goals on your own, Entrepreneur article “Plan Your Business Plan” offers some questions you can ask yourself to spark some inspiration.

  1. How determined am I to see this venture succeed?
  2. Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?
  3. What’s going to happen to me if this venture doesn’t work out?
  4. If it does succeed, how many employees will this company eventually have?
  5. What will be the business’s annual revenue in a year? What about in five years?
  6. What will be the company’s market share in that amount of time?
  7. Will the business have a niche market, or will it sell a broad spectrum of goods and services?
  8. What are my plans for geographic expansion? Should it be local or national? Can it be global?
  9. Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?
  10. If I delegate, what sorts of tasks will I share? Will it be sales, technical work or something else?
  11. How comfortable am I taking direction from others? Can I work with partners or investors who demand input into the company’s management?
  12. Is the business going to remain independent and privately owned, or will it eventually be acquired or go public?

It’s also essential to consider your financial goals. Your business might not require a massive financial commitment upfront, but it probably will if you’re envisioning rapid growth. Unless you’re making your product or service from scratch, you’ll have to pay your suppliers before your customers can pay you, and as “Plan Your Business Plan” points out, “this cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford.”

How much financing will you need to start your business? What will you be willing to accept? If you’re desperate for that first influx of cash, you might be tempted to accept any offer, but doing so might force you to either surrender too much control or ask investors for a number that’s not quite right for either side.

These eight questions can help you determine a few financial aspects of your planning stages:

  1. What initial investment will the business require?
  2. How much control of the business are you willing to relinquish to investors?
  3. When will the business turn a profit?
  4. When can investors, including you, expect a return on investment?
  5. What are the business’s projected profits over time?
  6. Will you be able to devote yourself full-time to the business?
  7. What kind of salary or profit distribution can you expect to take home?
  8. What are the chances the business will fail, and what will happen if it does?

You should also consider who, primarily, is going to be reading your business plan, and how you plan to use it. Is it a means of raising money or attracting employees? Will suppliers see it? 

Lastly, you need to assess the likelihood of whether you actually have the time and resources to see your plan through. It might hurt to realize the assumptions you’ve made so far don’t actually make a successful business, but it’s best to know early on, before you make further commitments.

How to Write a Business Plan

Once you’ve worked out all the questions above and you know exactly what goals you have for your business plan, the next step is to actually write the darn thing. A typical business plan runs 15 to 20 pages but can be longer or shorter, depending on the complexity of the business and the needs of your venture. Regardless of whether you intend to use the business plan for self-evaluation or to seek a seven-figure investment, it should include nine key components, many of which are outlined in Entrepreneur’s introduction to business plans:

1. Title page and contents

Presentation is important, and a business plan should be presented in a binder with a cover that lists the business’s name, the principals’ names and other relevant information like a working address, phone number, email and web address and date. Write the information in a font that’s easy to read and include it on the title page inside, too. Add in the company logo and a table of contents that follows the executive summary

2. Executive summary

Think of the executive summary as the SparkNotes version of your business plan. It should tell the reader in as few words as possible what your business wants and why. The executive summary should address these nine things:

  1. The business idea and why it is necessary. (What problem does it solve?) 
  2. How much will it cost, and how much financing are you seeking? 
  3. What will the return be to the investor? Over what length of time? 
  4. What is the perceived risk level? 
  5. Where does your idea fit into the marketplace? 
  6. What is the management team? 
  7. What are the product and competitive strategies?
  8. What is your marketing plan? 
  9. What is your exit strategy?

Source: https://www.entrepreneur.com

Department of Management