The most important document when starting a business is a business plan. This narrative document outlines the complete operational and financial outlook of the business. Startups will use their business plan as a guideline to opening their business. Lenders will use the business plan to determine if the business is a viable financial risk. By understanding how to create a new business plan, business owners can take their idea and create an actual working business.
Find a mentor. New business owners often avoid creating a business plan because of the amount of research required to produce the necessary financial estimates needed for the business’s financial reports. Mentors help by providing business knowledge and advice. They also provide an outsider’s view of the business and can help uncover weaknesses in the plan before they can cause problems. Organizations such as SCORE and the U.S. Small Business Administration (SBA) offer free mentor and business plan training programs to assist new business owners in the creation of a business plan.
tep 2Create an Executive Summary. This chapter describes the business’s financial goals, development goals and company ethics in the form of a company mission statement. Executive Summaries outline the reasons why the business will succeed.
Related Reading: How to Create a Simple Business Plan
Step 3Write the Company Summary business plan chapter. This introduces the business and its principal owners to the reader. It outlines the business idea and describes the product or services offered by the company. This introduction also includes a brief description of the industry and its potential growth opportunities. The Company Summary also contains the business startup summary with budgeted costs and outlines the company’s location and the facilities required to run the business.
Step 4Research and write the Products and Services business plan chapter. This chapter provides an in-depth analysis of the products and services that will be provided by the business. It also contains a competitive comparison of other businesses that offer the same types of services or products. Business owners must discuss how they plan to market their business, identify vendors, describe equipment and technology needs and identify future lines of revenue.
Step 5Compose and research the Market Analysis Summary chapter. This section of the business plan requires research on demographics, advertising campaigns, market costs and identified market trends. The chapter is broken down into sections such as Market Segmentation, which gives an in-depth description of the business’s average customer. The section called Segment Strategy describes ideas on how to attract those customers to the business. The Market Needs section identifies why the customer needs the product or service, while the Market Trends section reviews future market growth and current competition.
Step 6Write the chapter called the Strategy and Implementation Summary. This chapter begins with “the value proposition” explaining why the business idea is a better plan compared with its competitors. The rest of the chapter is broken down into the Sales Forecasting and Pricing Strategies sections, which contain information supporting this theory. Other sections are Promotion Strategy, describing the advertising plan; Sale Programs, explaining programs for increasing sales; and Sales Strategy, describing how the business plans to sell its products.
Step 7Compose the Management Summary. It includes information on the business’s organizational structure, descriptions of the management team and the personnel plan. Business owners must provide explanations supporting their choices and provide a plan for hiring employees along with an employee financial budget reflecting the business’s employment costs.
Step 8Gather all financial data and write the chapter called the Financial Plan. This chapter starts with an introductory section discussing the assumptions used in compiling the financial spreadsheet reports. The financial reports must provide financial information on the business. The Financial Plan reports include the spreadsheets for the Break-even Analysis, Projected Profit and Loss, Projected Cash Flow and a Projected Balance Sheet.
Both SCORE and the SBA provide templates to help small businesses create these reports. Or owners can purchase business plan software that often completes these spreadsheets during the writing process.
Keep all references. At the end of the written business plan, it is important to provide the bibliographies of the research references used, resumes of the principals of the business and any required or supporting documents needed to start the business, such as Internal Revenue Service tax forms, licensing applications and building plans. Save the business plan in an electronic form for email and a printed form.