How To Write a Proper Business Plan – Introduction
Starting a business is a dream shared by many, but it can be a challenge to get yourself to take that first step. Even if you can’t stand your current job the steady, reliable wages (known to many as golden handcuffs) may be enough to keep you going back. The uncertainty that comes with entrepreneurship might be a hurdle that you’re having difficulty getting over.
However, if you’re tired of putting in endless hours at a job that you don’t like, starting your own business might just offer the freedom and satisfaction that you’re looking for in life (see our blog Why Become An Entrepreneur). There’s no guarantee of success but that’s part of the thrill. A failed business doesn’t make you a failure, the more optimistic entrepreneur will use this to set themselves up for more success in the future. So why not give it a shot?
If you’re struggling to come up with an idea, check out some Gotiggo tips here.
Of course, you can’t just turn a great idea into a successful enterprise overnight. There is indeed preparation and hard work that must be done. Many brilliant business ideas have prematurely run out of steam before they really managed to make an impact and this is through a lack of planning.
While it would be easy to skip the planning stage and plow on with the excitement of setting up a business, it’s advised that you consider some of the elements outlined in most business plan guides. We don’t want to stifle any momentum or advise slamming on the breaks and examining every detail down to a t but it’s advised to consider some of the key elements that will help you to succeed in the medium to long term.
With that in mind, before you decide to jump into the world of self-employment, it’s important that you draft a solid but actionable business plan that is designed to help you succeed. This is, of course, easier said than done.
Fortunately, this introduction should get some of your brain’s cogs turning.
What do we mean by proper business plan?
“A document setting out a business’s future objectives and strategies for achieving them” – Oxford Languages
A business plan should serve as a guide to describe the general idea of your business as well as outline your goals, vision, and mission, and explain how you plan on achieving them.
No two business plans are alike, and you don’t have to follow any specific template in order to succeed, however, it is important to organize your ideas and to have some sort of structure to the document.
Some common things you might see in a business plan include (not exclusive to):
- Executive Summary – A brief section that summarizes the content of your business plan. After reading the executive summary, someone should have a general idea of what you are trying to accomplish.
- Company Description – A synopsis of the details of your company, including size, location, mission, what you do, and how you plan on doing it.
- Products and Services – An explanation of the products and/or services that you are planning on offering.
- Market Analysis – An in-depth look at the market or markets that you are planning on entering. This describes the industry, demographics, needs, and entries to barrier as well as regulation and competition that exist in the space.
- Company Structure – How you plan on building your company from an organisational standpoint. You will introduce your management and ownership teams here and describe how operations teams will be assembled.
- Marketing Plan – This is where you will outline your plan to bring your product to market and explain your sales strategy. The “5 P’s of Marketing” apply here – Product, Price, Place, Promotion, and People.
- Financial Outline – Every company needs funding and sound financial planning. The financial outline will help determine if your idea is realistic and may draw investors into the mix.
Visit Entrepreneur.com for some further reading that goes into the detail about each step of the business plan in the encyclopedia of business terms.
What are business plans for?
A proper business plan has a variety of purposes.
First and foremost, it allows you to get your ideas down on paper and to build the foundation for your business. Without a plan, your business is just an idea floating in the ether. Putting it together will help you identify strengths and weaknesses and should give you an idea of what to expect in your first year.
From a commercial standpoint, you will use your business plan as a way to sell your idea to investors. Anybody who is going to finance your operation will be very interested in seeing how you plan to make things work. Think of it as the resumé for your business.
When thinking about securing funding from places such as banks, you will want to ensure that your business plan is as sound and well thought out as possible, this is because your business plan will make up part of your application. The bank, or lender, will evaluate the information in your business plan in order to determine the risks associated with your business and ultimately if your business is worth the risks to achieve a return on their investment.
Why are proper business plans important?
While you may be able to simply set up shop and start selling your product or service, it is not likely that you will experience long-term success with this approach. Your idea may garner great interest in the first few weeks and then fizzle out and fall flat within a year. A business plan is important to prevent this from happening.
With a well thought out business plan, you will know what to expect in the first year and what you are trying to accomplish for the future. You’ll have back up ideas in place in case certain concepts fail, and you’ll be more prepared to absorb the losses of an unexpected drop in sales.
Perhaps even more important is that you will define a structure under which your company will operate. You won’t just be heading to the shop and guessing who is going to work on which project. You’ll give roles and responsibilities to different individuals, including yourself. This will help to spread the workload evenly and to delegate certain tasks to specific workers.
A business plan keeps you organized and prepared to take on the inevitable curveballs that will be thrown your way when running your company. You can’t succeed on good ideas alone – you need to build a solid foundation behind them.
How to write a proper business plan
You now know why you need a business plan and you should understand the basic elements of a completed plan. But knowing is only half the battle. If you have a viable idea, you need to get started on your business plan before you should even consider bringing this idea to market. This is where many people freeze – they simply don’t know where to begin. It can be overwhelming to think about putting a business plan together but if you break the process down stage by stage it’s a lot easier to think about and work on.
If you ask an entrepreneur about their business ideas and how they will achieve them at a dinner party, you might struggle to get a word in edgeways, your written business plan is essentially writing all of that down. Hopefully in more of a modest way than ‘barry the wanna-be billionaire’.
Outline what you want to achieve
Having a great idea for a business isn’t enough. Before you put together your formal plan, you need to describe what you hope to achieve. This could be as simple as a financial goal for the first year, or it could be more complex, such as introducing the world to a revolutionary new technology. In fact, it could be both. These hopeful achievements will eventually make their way into your final plan.
Your outline doesn’t need to be perfect, or even highly professional. But it should lay the groundwork for your formal business plan. In the long run, putting your plan together will be much easier if you have a solid outline to follow.
Perform market research
You need to know if you are going to be able to compete in the industry that you are entering. Look into other companies that are offering similar products and services and see if you can get any information on their financials. Visit actual stores as well as online stores and forums boards to see what you can learn about the potential competition. You will need to know if your idea has already been tried or if there are any barriers preventing you from competing in the market.
Your analysis should consist of your primary competitors, their strengths and weaknesses, product lines, and the prices that they currently charge. This will help you determine if you can provide ample competition and if you have the funding to go up against them. It is extremely important to understand the key players in your market so that you can learn from their mistakes and improve upon their strengths.
For more information on how to flesh out this section, check out the Gotiggo Researching Your Business Idea blog.
Filter your final products and services
If you only have one product to start with, this step won’t be as tedious. But if you are planning on offering a variety of products and services, you will really want to analyze which ones can bring success and which ones can be dropped. As a startup, you probably won’t have the funds or bandwidth to focus on auxiliary products or services. You will want to stick to your core competencies and focus on your best ideas.
This can be a bit of a nerve-wracking experience, as you might fear that you are cutting the wrong products or ideas. You can’t spend time thinking about the what ifs, however. Make your decision and be confident in it moving forward. Here are some tips for getting past the freeze that often happens during this step.
How much is it going to cost to get started? Will you need a storefront, a warehouse, and/or an office? Or can this all be started from home? These are all questions that you need to ask yourself before you can seriously consider starting a business. Try to come up with a realistic figure that you can put in your business plan in order to secure funding from investors and lenders. If it seems way too high, maybe it’s time to re-evaluate your core products.
This can be one of the more difficult stages of developing a business plan, especially for those who are more “idea people” rather than financial gurus. Numbers and projections can be intimidating, but they are necessary in order to set yourself up for success. If you find yourself struggling, get some tips The Balance’s How to Write a Financial Analysis article.
Sales and marketing strategy
Your idea may just be the next big thing, but without a sound sales and marketing strategy, nobody is ever going to hear about it. Formulate a plan to get the word out about your product or service, both in your local area and online. It is essential that you highlight the ways in which your idea is going to be better than the competition. Potential customers are not easily swayed, so you really have to put all of your effort into selling.
Gotiggo has more in-depth information in our Marketing Basics and Sales Basics blog posts. You’ll learn about target markets, messaging, and marketing channels as well as sales funnels and consideration.
As you’ve learned, a business plan is a vital part of survival for any new business owner and can be used as a tool throughout your journey. It is going to take some hard work and planning, but it will be worth it in the end. Without a plan, you are simply somebody with a great idea. With a solid plan, you are building the foundation for your company to succeed and paving your own road towards financial freedom.
Final words – Don’t stress, It doesn’t have to perfect first time around, nothing is ever concrete and can be changed further down the line.
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