All successful businesses start with great planning. Business plans can be a daunting challenge for some, because of the effort you have to put to craft one. As daunting as it seems, business plans are necessary as they provide the roadmap for where you want to take your company. In other words, a well thought-out business plan is a vital requirement for any entrepreneur or business seeking to increase chances of survival.
But how do you write a good business plan?
Figure out what needs to be there and what doesn’t
Start off with a basic outline that will make sense to investors or whoever it is you are offering your business plan to. Write about your understanding of the market, the unique selling propositions of your product or service, the business model, and data that proves there is demand for whatever you want to create. If possible, show that you have the team and resources to help you in this business journey. If you don’t, write down what resources and how much money you need to be able to reach your destination.
You can build off the above with more sophisticated aspects, such as:
- Company Analysis
- Industry Analysis
- Competition Analysis
- Customer Analysis
- Marketing Plan
- Management Team
- Operations Plan
- Financial Plan
Research, research, research
Now that you know what needs to be included in a business plan, you need to start doing your homework. Find and curate as many resources as possible, monitor your target market on a regular basis, and keep track of competitors’ new launch or strategy.
Investors reading your business plan will want to see that you’ve thought long and hard about the potential of starting or expanding your company, along with the challenges ahead and how to rise above them.
For entrepreneurs who intend to use their business plan to get an investment, you also need to research your potential investors. Understand the way they work, take a look at their portfolio, and see whether there are any similarities with your business.
Have proof to back up every claim you make
Want to know why research is so important for business planning? By conducting thorough due diligence, you will have proof to back up every claim you make.
Let’s say you claim in the business plan that your product will be the leader in your field by six months to a year. You will need to detail why you think so. If you say your management team is fully qualified to make the business a success, you should make sure their resumes demonstrate the needed experience.
Be realistic with available time and resources
What’s most important about a business plan? Whether or not the steps and content can be implemented. So more than being a document to win over investors, a good business plan needs to be doable.
Don’t be overly optimistic about time and resources, it’s a common error of entrepreneurs. Be realistic, as it will give credibility to your plan. Always assume things will take 15% longer than you anticipated. If you anticipate that a certain process takes 20 weeks, write 23 weeks instead.
The success of business planning is all in the details. Make the plan concise, but include enough details that a reader will have sufficient information to make educated decisions. A business plan should reflect a sense of professionalism, with accurate content, realistic assumptions, credible projections, and no spelling mistakes.
A version of this article was published on our sister company blog here.
This article was written by Funding Societies, the first peer-to-peer (P2P) financing platform in Malaysia. We provide working capital financing for small and medium-sized enterprises (SMEs); we also offer investment opportunities with returns up to 14% per year. To learn more about us, click on our website here.
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