Not all business ideas are good. For example, someone once came up with the idea of making a cell phone that can also be used as a paralyzing weapon. As you can imagine, it is not the best product to launch.
Many people have business ideas, but the important thing is to find out if those ideas are good or not. Precisely for that reason, if you try to carry out a business from one of your ideas, it will be useful to create a business plan so that you can develop your concept in detail and check if it can really work, from a logistic and also the financial point of view.
What is a business plan?
A business plan is a living document that establishes the details of your business. It covers all kinds of information, which includes what your business will sell, what its structure will be, what the market will look like, what your plan to sell the product or service will be, what the necessary financing will be, what your financial projections are and what permissions, rentals or other documentation you will need.
In essence, a business plan helps you demonstrate (to the rest of the people and yourself) if your business idea is worth it or not. It is the best way to take the necessary time, observe your idea in an integral way and solve problems that may arise in the future even before starting this journey.
This publication offers you tips for writing a good business plan, as well as a summary of what you should include and examples of other business plans. Let’s start with some basic and general tips before delving into the details.
Tips for writing a business plan
Clearly define what makes your business different from the rest.
Before you start developing a business plan, think carefully about what makes your business unique. For example, if you plan to launch a sportswear business, you will have to differentiate yourself from the rest of the sportswear brands that exist in the market.
What aspect of your business makes you distinguish yourself from the competition? Do you plan to sell clothes for specific activities or sports, such as yoga or tennis? Will you use ecological materials? Will you allocate a certain percentage of your earnings to charities? Will your brand promote a healthy body image?
Remember that you will not only sell your product or service, but you will offer a combination of product, value and brand experience. Think about these questions and develop the answers before delving into the details of your business plan research.
Make sure the plan is short.
Currently, business plans are shorter and more concise than before. While it may be tempting to include all the results of your market research, individually develop each product you plan to sell and describe exactly what your website will look like, none of this will help you develop the format of a business plan.
While it is good that you know all these details so that you may be able to use them at some time, you should only include the fundamental elements in your business plan. Otherwise, you could lose the attention of your readers.
Make that format allow a quick glance.
Your business plan should not only be easy to read, but readers should also be able to take a quick look. This is where the format plays a particularly important role. Use headings and bullet points, highlight or use bold letters to highlight the key lines or metrics that you want the reader to observe and, even, you can attach tabs with different names to the text (either on paper or digital) for easy reference.
You can (in fact, you must) modify it on the fly.
Remember that your business plan is a live and dynamic document. That means you can update it if things change. For example, you could update future plans if you plan to request a new funding call.
These are the key elements that a business plan template must include:
How to create a business plan for your company?
- Executive Summary.
- Company description.
- Market analysis.
- Product or service
- Organization and management
- Marketing and sales plan.
- Financial plan.
Next, you will discover that you include each of these elements in a business plan.
1. Executive Summary
The objective of an executive summary is to offer readers an overview of the company and the market before delving into the details. Professional advice: it might be useful to write the executive summary after you have prepared the rest of the plan, so that you can extract the key points more easily.
The executive summary should occupy a page and cover the following key points (in 1 or 2 paragraphs each):
- Summary: Briefly explain what the company is about, where it is located, what it sells and what its customers are.
- Company profile: briefly explain the business structure, who the owners are and what previous experience or skill they will offer, and who could be the first employees.
- Products or services: briefly explain what your company will sell.
- The market: briefly explain the main findings of your market analysis.
- Financial considerations: briefly explain how you plan to finance the business and what your financial projections are.
Example of a “summary” section of the executive summary:
Jolly’s Java and Bakery (JJB) is a retail startup that specializes in the sale of coffee and pastry in southwest Washington. JJB hopes to capture the interest of a loyal and regular customer base with its wide variety of pastry and cafeteria products. The company plans to occupy an important position in the city market, thanks to the experience in the industry of its partners and the less competitive environment of the area.
The objective of JJB is to offer its products at a competitive price to meet the demands of tourists and residents of the local market area with a medium to high-income level.
2. Description of the company
Next, you must describe your company. This is where you have the opportunity to offer a summary of what your company does, what its mission is, its commercial structure and the data of the business owners, details of the location, the market needs that your business will try to meet and how Your products or services will succeed.
3. Market analysis
One of the first questions you should consider when evaluating your business idea is whether that proposal has a space in the market. In short, the market will determine the success or failure of your business. What is your target market and why would you be interested in buying your product or service?
Here you must be specific. For example, if you plan to sell bedding, you should not simply include in your target market all the people who sleep in a bed. First, you should focus your focus on a smaller group of clients, such as teenagers from middle-class families. Once you have defined that, you could answer the following questions: How many teenagers from middle-class families are currently in your country? What kind of bedding do you usually need? Does the market continue to grow or remain static?
Include the research analysis that other people have done and also the research you have done yourself, whether through surveys, interviews or other methods.
In this section, you should also include a competitive analysis. Following the same example, we will answer the question: “How many other bedding companies already exist in the market and what are they? Describe the strengths and weaknesses of your potential competitors, as well as the strategies that could give you a competitive advantage.
Example of the “market analysis” section:
Green Investments has identified two different groups of target clients. These two groups of clients are distinguished by their family assets. They have been grouped as clients with family assets of more than $ 1 million and less than $ 1 million. What makes these groups so attractive is their desire to make a difference in the world, making investment decisions that also take into account environmental factors.
The financial services industry has many different niches. Some advisors offer general investment services. Others only offer one type of investment, which could be mutual funds or bond concentration. Other service providers focus on a specific niche, such as technology or social responsibility companies.
Green Investments has segmented the target market into two different groups. The groups are distinguished by the difference in their family assets: more than $ 1 million and less than $ 1 million.
- Less than $ 1 million (family assets): these clients are middle-class people who care about the environment and take personal measures through their investments in shares in companies with an excellent record of economic and environmental performance. Since these people do not have a large amount of money, they choose actions with moderate risk. In general, this group has between 35% and 45% of its equity in shares, and the remaining percentage in other types of investments.
- More than $ 1 million (family assets): these clients are members of middle to upper-class families. They have managed to save more than $ 1 million and are very astute investors (themselves or the people they hire to perform these tasks). In general, these people are concerned about the return on their investments, but they are also interested in the environment.
4. Products or services
In this section, you can develop the details of what you sell and how it will benefit your customers. If you can’t explain how your business will help customers, then your idea is probably not the best.
Start by describing the problem you want to address. Next, explain how you plan to fix it and what role your product or service plays in that solution. Finally, determine the competitive landscape: what other companies already offer solutions to this particular problem and what makes your solution stand out from the rest?
Example of the “products and services” section:
AMT offers computer products and services that are useful for small businesses. We focus specifically on offering network services and systems to small and medium businesses. These include PC-based LAN systems and server-based systems for minicomputers. Our services include the design and installation of network systems, training and technical assistance.
Product and service description
As for personal computers, we have three main lines:
1) “Super Home” is our most modest and economical line, originally positioned by its manufacturer as a home computer. We use it primarily as an economic workstation for small business facilities. Its specifications include [additional details omitted]
2) “Power User” is our main exclusive line. It is our most important system for the main work stations of the home and small businesses of superior quality, since … Its most important advantages are … The specifications include [additional details omitted]
3) “Business Special” is an intermediate system, which we use to bridge the gap between the two previous products. Its specifications include [additional details omitted]
As for peripherals, accessories and other hardware, we have a complete line of necessary items, from cables to mousepads [additional details omitted]
Regarding the service and technical assistance, we offer services in the store or warehouse, maintenance contracts and guarantees on the site. We have not done very well selling service contracts. Our networking capabilities [additional details omitted]
The only way to differentiate ourselves from the rest is to clearly define the company’s vision so that customers consider us as their main ally of information technology. We will not be able to compete in any effective way with the large chains already established. That is why we must offer a true society.
The benefits we offer are our values: trust, security and the peace of mind of knowing that there will always be an expert willing to answer any question and help customers at the times they need it most.
These are complex products, which require great knowledge and experience. Instead, our competitors only sell the products.
Unfortunately, we cannot increase the price of products due to the fact that we also offer services (the market has already shown that it does not accept that concept). What we must do is also sell the service and charge it separately.
5. Operations and management
Use this section to develop the organizational and exclusive management structure of your company (keep in mind that you can modify it later). Who will be responsible? How many tasks and responsibilities will be assigned to each person or each team?
It includes brief biographies of each team member and highlights any relevant experience and training to justify the reasons why these people are ideal for their positions. If you have not yet hired staff for the necessary positions, it does not matter; just make sure you identify those functions and explain the responsibilities that employees who occupy those positions will have.
Example of a “personnel plan” of the “operations and management” section:
The staff of the DIY Wash N ‘Fix company will be a small group. We will have a part-time general manager who will be in charge of relations between companies and corporate responsibilities. In addition, we will employ three certified mechanics/managers and their tasks will consist of the daily operations of the company. These tasks are grouped into two categories: administrative and operational. Administrative duties include programming tasks, inventory control, and basic accounting. On the other hand, operational tasks include safety and regulatory issues, customer service, and repair advice.
In addition, we will also hire customer service employees to perform basic tasks, such as customer service and maintenance. DIY Wash N ‘Fix will have a single general manager who will coordinate all external business associations and activities. Business relationships include accounting services, legal advice, vendors and distributors, maintenance providers, banking, advertising and marketing services and investment services. Laurie Snyder will occupy this position of general manager. Snyder received a master’s degree in business administration from the University of Notre Dame in May 2001.
The main mechanic will be responsible for the daily administration of the business. Although DIY Wash N ‘Fix is not a full-service repair shop, it is expected that certain customers will attempt repairs that they do not know enough and need some advice. Therefore, we plan to hire three fully certified mechanics. Mechanics will not be authorized to work on a customer’s vehicle, but they will be able to observe the car to assess the problem. To reduce our responsibility for incorrect repairs, we believe that only professional mechanics should advise customers. The main function of the mechanics will be customer service and administrative responsibilities.
6. Marketing and sales plan
This is where you can develop your comprehensive marketing and sales strategies, which should include how you plan to sell your product. Before you start working on your marketing and sales plan, you must first have fully developed your market analysis and selected your target buyer (that is, your ideal customers).
As for marketing, you must answer the following questions: How do you plan to introduce your company to the market? How will you do to boost the growth of your company? What channels will you focus on to carry out the distribution? How will you communicate with your customers?
Regarding sales, you must answer the following questions: What is your sales strategy? What will be your sales team and how do you plan their growth over time? How many sales calls will you need to make a sale? What is the average price per sale? Since we mentioned the average price per sale, keep in mind that this is where you can analyze your pricing strategy.
Example of a “marketing plan” section:
The goal of Skate Zone is to be the first-in-line roller hockey center for fans in Miami, United States. Due to the incredible growth of inline skate hockey throughout the United States, the company’s promotional plans are available in different media and in a wide variety of marketing communications. The following is a list of the means currently used.
Public relations. Press releases are sent to both technical newspapers and important commercial publications, such as USAHockey Inline, INLINE skating magazine, PowerPlay, among others.
Tournaments Skate Zone will represent its services in competition tournaments held annually in the United States.
Print advertising and publication of articles. The company’s print advertising program includes ads in the Yellow Pages, Miami Express-News, Skate Zone emails, school brochures, and in-line hockey magazines.
Internet. Currently, Skate Zone has a website and receives several inquiries there. A plan for updating the site is in progress so that it is more effective and professional. In the future, we hope this is one of the main marketing channels of the company.
7. Financial plan
Finally, develop your financial model in detail, which should include your initial cost, financial projections and a financing request if you are looking to attract investors.
The initial costs refer to the resources you will need to start up your business (and an estimate of the cost of each of those resources). Will you rent an office space? Will you need a computer? One phone? Make a list of these needs and how much they will cost, and be honest and conservative when making your budget. The last thing you want is to run out of money.
Once you have developed your costs, you should justify them with a detailed report of your financial projections. This is particularly important if you are looking for investments for your company. Make sure your financial model is absolutely accurate to boost your opportunities to convince investors and loan sources to support your business.
Example of a section “financial projections”:
The following table represents the status of the estimated results of Markam.
Finally, consider finishing your business plan with an attachment. The annex is optional, but it is an excellent way to include your curriculum and that of the co-founders, and also any type of permits, rentals or other legal information that you want to add.
That’s it! We hope this guide has helped you to have a more complete idea about how you should build your business plan. Now is the time to realize your business idea. Good luck!