Creating a business plan is the first step towards starting any business. It is highly important that a business plan is created before starting a business as it provides required direction during the implementation of the business activities and during the operational activities of the business are carried out. While the business plan provides direction for the business activities, it also helps the business owner attract investors or request financing from financial institutions. When the business proposal is strong and convincing, the investors and financial institutes are inclined to provide assistance. Therefore, it is important that an effective business plan is created for your business. Here are 5 key steps you should follow to create an effective business plan.
1. Build Your Product/ Service
The first step to any startup is to build your business or service. You may have an idea of what you want to sell. But it is important that you develop this idea to a sellable product or service, where customers would want to spend money on and purchase. When you are building on your idea, the type of business you want to implement may undergo a number of changes. Based on the research you do, the data and information you gather at different points of your business implementation and outcome from trial and error sessions will determine what the final product would look like. But it is important once the final product is finalized that your properly document the type of business that you will implement.
2. Pick a Suitable Layout
There’s no right or wrong way to create a Business Plan. But it is important that your Business Plan includes all the vital information required. Following are list of items you should include in your Business Plan.
- Company description – Describe what your business does
- Market analysis – Research on your industry, market and competitors. A SWOT analysis can be done at this point
- Organization and management – The management structures of your business
- Service or product – An overview of the service or product you are offering
- Marketing and sales – What is the marketing strategy including marketing methods used to market your product or service to reach the customers
- Funding request – How much money you’ll need for next 3 to 5 years
- Financial projections – Based on the current market conditions and the capital, what are projected financial figures. Supply a balance sheet.
3. Do Your Research
It is important that you conduct a thorough research on the market conditions and how you can sell your product and service. Identify whether there is a requirement in the market for your product of whether you can create a requirement by using marketing strategies. Also it is vital that you research about the industry you are going to be in. Are there any competitors and who are they? How can I win over the competition? If there are no competitors, then why haven’t any player entered into this industry yet? Is it B2B or B2C sector? What are my restrictions; government rules and regulations? Also it is important that you research about the demographic you will be offering your product to. Likewise, there are dozens of areas you have to research, think and evaluate before starting your business and document them clearly in your Business Plan.
4. Build Your Marketing Plan
One of the most important aspect when building your Business Plan is to give specifics of how you are going to target your audience, how much of your capitol you are going to use for your marketing campaign and bring sales to your business. It is important to identify that for the amount you spend on marketing, you at least get twice of that as sales in your business. Creating a marketing plan and identifying all that will help you realize whether you are taking the correct path to gain the customers. Once the marketing strategies along with the marketing expenses are finalized, document it in the Business Plan. This area is one of the important areas your potential investors will look into to identify the feasibility of your business idea.
Read more about marketing tips for startups.
5. Plan Your Finances
No business can start without any funding. It is important in your Business Plan to clearly state the required funding you want to start and run the business. It is always better to plan for the worse. You may or may not be able to earn profits from the first day or week or month or year of starting your business (depending on the type of business). Therefore, plan for the worse and give a clear picture of how much of funding is required, what are the forecasted revenue and forecasted profit after costs in your business plan