Master the Art of Writing a Business Plan in 2023 | 9 Steps
Some things are unavoidable, like nearly missing a flight or catching a nasty bout of flu; writing a business plan makes it to the list if you are a business owner.
Worry not if you haven’t gotten around to writing one yet and are still grappling with the technicalities.
By the end of this blog, you’ll know how to craft the pitch-perfect business plan to attract investors and grow.
But first, why should you write a business plan?
Well, let this fact blow your mind.
Businesses with a plan are guaranteed to grow 30% faster than those without. To add fuel to the fire, you’re less likely to face risks of cash flow with a business plan at hand.
With this information, let’s dive deeper into the actual steps.
How to Write a Business Plan in 9 Steps
- Start with an Executive Summary
The executive summary is a comprehensive overview of the problem you solve, your target market, product and service details, your team, financials, and your funding needs.
Generally written as a one or two-page document, it’s the first thing an investor will ask for before proceeding with the rest of your business plan.
- Create a Company Description
This section sheds light on your company’s logistics, such as:
- Registered name
- Physical location
- Stakeholders
You can also expand the company description to describe your services or products in detail.
Remember, the executive summary is a stand-alone document and not necessarily a continuation of a business plan.
So, your company description should include all the details you’ve briefly included in the executive summary.
- Conduct Market Analysis
No matter how unique your business model is, it’s highly unlikely that competitors do not exist.
That’s why it’s crucial to perform market research.
Doing this helps you understand the current trends, your standing, and how you can stand out. Use your research findings in the business plan to differentiate yourself from others in the industry.
And if it’s any motivation, target market research brings you a step closer to creating a well-defined sales and marketing strategy.
- Describe How You Will Organize & Manage Business
Creating a business plan is all about defining how you’ll work.
And it’s impossible to run a company without a team. Investors love a great team setup to get convinced about parting ways with their money.
That means you have an excellent opportunity to highlight your management team in this section.
Describe who you started with and your hiring goals for the future. You can also highlight your key members, whether through areas of expertise or years of experience.
If you’re already an established business, you’ll need to offer a sneak peek into your legal structure, location, and history of origin.
As a general rule of thumb, the most common business structures are one of the following:
- LLC
- C-Corp
- S-Corp
- Sole proprietor
- Partnership
If you’re not the sole owner, you’ll also want to include the shares each partner has. It’s the most crucial deciding factor for an investor to consider offering a loan.
- Elaborate on Your Products & Services
If anything can qualify as the meat of the business plan, it’s your products or services. These are the essentials to make a strong case out of your funding request.
You can elaborate on your products or services by answering the following questions:
- How does it work?
- Who does it serve?
- What is the cost?
- Why and how does it stand out from others?
Once you’ve answered these questions, you can conclude the section with your future planning.
For example, what will you need to get your product or service ‘market-ready’?
- Do you have a target date to launch the product or start offering services?
- Are you open to pre-orders?
These are great things to discuss in a business plan and help an investor know your keen business insight.
- Explain Your Marketing & Sales Strategies
Your marketing and sales strategies define your plan to reach the target market and sell your product or service.
Since marketing is all about engaging potential customers, you can include a list of activities and partnerships you think can make your business successful. If you’re into retail and e-commerce, consider including a general overview of how your products will reach the masses, logistics costs, and struggles.
A SWOT analysis is also a good practice to include in your business plan.
Why?
Because when an investor knows you’re better informed about your strengths, weaknesses, opportunities, and threats, it paves the way to a funding decision in your favor.
- Specify Your Funding Needs
Though not a compulsory element to include in a business plan, it’s vital if finding funds is your main goal.
Simply stating that you need funds won’t work. Instead, you’ll have to specify the funding type and capital you’ll use.
Some investors also take an interest in seeing a business’s exit plan. The exit plan gives insight into your future strategy to sell your business, whether to another company or in public.
However, you can skip this part if you’re not seeking angel investors or venture capitalists.
- Define the Financial Projections
Let’s face the elephant in the room.
Your business is only worth an investment if it catches the eyes of an investor. You can make sure it does by offering a financial forecast for the next five or ten years.
For beginners, it can be challenging to deduce their financial standings after a decade.
But the easiest way to do that is by using your current or projected income statements, balance sheets, and cash flow statements to predict the future.
Pro-tip: there’s nothing a graph and pie chart can’t make appealing.
So, while it may seem time-taking, the results are worth it, with the chaotic financial projection becoming crystal-clear.
- Include an Appendix
Another not-so-compulsory section, the appendix, is quite useful if you consider the miscellaneous things you can include.
For example, include it in the appendix if adding employee resumes felt too out-of-place in the team management section.
Similarly, you can add charts, tables, pending patents, or even product illustrations in this part. Once you’ve written the first draft using the nine steps described in this video, it’s time to don the editing hat to trim things down.
Remember, your business plan is meant to interest investors, not bore them to death. So, skip the extensions and create a document that’s easy to read and easy on the eye.
Ready to write your business plan?
Let’s get started.