An effective business plan outlines all necessary components required to help establish your business as well as support its overall growth and success.
Starting a business without a plan is like travelling without a map. Therefore, the development of a well-defined written document which includes various key elements such as your business concept, product/service offerings, target customer profile(s), revenue generation methods and future development goals and objectives, will enable you as an entrepreneur to develop a more detailed understanding of the necessary steps required to achieve successful long-term growth for your new business.
By reading through this article, you will be able to easily create your own business plan.
Before creating a budget, read how to manage personal finances wisely.
Step One: Create an Executive Summary
The executive summary is the first section of your business plan; therefore, it provides a short description of the business and really is a summary of your complete business plan. Although this is the first section, many people actually end up writing it last as it provides a summary of the entire plan.
- Business name
- Business address
- Type of product or service
- Business goals
- Mission Statement
Short description of the market in which you operate
Example:
“Hamza Tech Solutions is a digital based company that specializes in website design and online marketing to serve small Kenyan businesses.”
Keep this portion concise and professional.
Step Two: Business Description
This section will provide a detailed description of your business.
In this section you will discuss:
- What your company does
- Industry type
- Business structure
- Your Vision and Mission statement
- Target customers for your business
If you would like, you can also discuss:
The reason(s) you started the business
The problem(s) which your company solves
What makes your business different from your competition.
Example: “Our business allows for small businesses to have a very professional website at an affordable price.”
This section helps readers to understand your business concept on a greater level.
Step 3: Research the market
Doing market research is a huge part of getting to know your customers and who your competition is.
You will want to uncover:
- Who your customer is
- What the customer is looking for.
- Who your competition is
- What trends are taking place in your target market.
- What is the average price for your products or services?
Asking the following types of questions will help you do market research.
- What type of problems does my customer have?
- What types of products are currently selling well?
- What is my competition doing well?
- What can I do better than my competition?
Doing a thorough amount of market research will assist you in making intelligent business decisions.
Step 4: Define your target audience
Your target audience is the group of people that will most likely buy your product or service.
- You will want to have an understanding of:
- The age group of your target audience
- The gender of your target audience
- The geographic location of your target audience
- The interests of your target audience
- The income level of your target audience
How your target audience typically makes purchases
Example:
“If you sell school supplies, your target audience may include students, parents, and schools”
Knowing your target audience will allow you to develop better products and marketing strategies.
Part 5: Explain The Products or Services You Are Selling
Describe what it is that you are selling.
An explanation of:
- The Product or Service
- The Cost of the Product or Service
- What Are The Benefits Of Using The Product or Service
- Why Should The Customer Choose You?
When describing your product or service, you should focus on the value that you are bringing to the customer.
For Example:
“We sell web building services at an affordable price. All our websites are mobile optimized and we offer very fast customer support.”
If you already have plans to produce future products or services, you may want to include these as well.
PART 6: CREATE A MARKETING PLAN
A marketing plan will provide a framework for how you are going to reach potential customers.
A marketing plan should include:
Methods of Advertising
Methods of Utilizing Social Media
Methods of Utilizing SEO
Methods of Utilizing Email Marketing
Methods of Utilizing Word-of-Mouth Advertising
Methods of Utilizing Content Marketing
Ways to Advertise Your Business:
- TikTok
- Blogging
- Google Ads
- YouTube
You should also include an explanation of your Branding Strategy and how you are going to earn Customer Trust.
Step 7: Create Your Operating Plan
The operating plan details how the business is going to operate each day.
Your operating plan needs to include:
Physical location of the business
Equipment required to operate the business
Staff required to operate the business
Planned suppliers to provide materials, etc.
How product will be delivered
Day-to-day requirements for the business
Developing this section of your business plan helps to align your operating procedures appropriately.
Example of Operating Plan:
“Our online business will operate from home and will utilize laptops and internet service as well as tools used for digital marketing.”
Step 8: Create Your Financial Plan
The main purpose of the financial plan within a business plan is to provide the financial forecast of the business.
This section is to include:
- Your start-up costs
- Your expected income
- Your monthly expenses
- Your expected profits
- Your projected cash flow
- Your projected savings/ investments
Your cash flow statement should identify:
How much money you are going to need to start your business
How much money you expect to earn
How long it is going to take your business to make a profit
It is important to be realistic with the numbers you provide.
Example of Start-Up Costs:
Laptop
Internet Service
Office Space Rental
Marketing
Business Registration
An effective financial plan will assist in your ability to manage money efficiently and effectively.
Step Nine: Establish your business objectives.
A business requires a set of well-defined objectives to function successfully.
These objectives must:
- Be concise
- Be attainable
- Be quantifiable
- Be time-bound
- Short-Medium range objectives
- Source customers (first ten)
- Construct a website
- Create social media accounts
Long-range objectives
Expand into additional locations
Hire personnel
Grow profitability
Open more locations
Objectives provide an ongoing motivation for keeping your business focused and on track.
Step 10: Evaluate & Reassess Your Plan.
A business plan is a living document that needs to be evaluated and modified frequently.
As your business expands:
- Modify your objectives
- Adjust your strategies
- Explore changes within the industry
- Revise your budget
Having a flexible business plan allows your company the ability to be adaptive and successful.
Common Pitfalls to Avoid.
Many entrepreneurs commit mistakes when developing their business plans.
Some of the errors to prioritize avoiding are:
- Setting vague objectives
- Disregarding research of competitors
- Setting unrealistic financial projections
- Poorly managing your budget
- No plan for expenses/ongoing needs
- Imitating another company’s business plan
An effective business plan must be unique, clear, and achievable.
Advantages of a Business Plan
Creating and implementing a good business plan can have many benefits for your business.
Here are a few examples of how it can benefit you:
- Keeping organized
- Making better decisions
- Reducing risk
- Attracting investors
- Monitoring progress
- Managing financial resources
- Growing your company faster
Research shows that businesses that plan appropriately typically achieve higher levels of success than those that do not have a plan.
In Closing
Developing a business plan and following it through will give your new business direction and assist you in making mistakes as you develop your business and increase your chances of success.
Starting with a simple plan, being realistic with what you expect from your business plan and constantly improving over time is what will allow you to continue taking action toward and achieve the goal of developing a successful business.
You will be able to create a successful and profitable business through consistent discipline, following your plan and continuously learning.