In my conversations with small business owners, I discovered that most don’t have a business plan. So, I wondered why are people neglecting this important task? Isn’t it a primary requirement when starting a business?
In this blog post, we’re going to discuss about business plan. Why is a business plan needed even if your business is just small or operating from home? And how to write a business plan following a simple outline.
What is a Business Plan?
According to Wikipedia…
If you’re planning to start a home business, make a business plan first. It will allow you to see all the tasks you must accomplish before your business is operational.
It is important to plan, if you want to succeed in your home-based business. You may think your business is too small to have a business plan, but every business, no matter the size, can benefit from strategic planning.
One of my favorite quotes says…
If you don’t have a business plan to follow, how will you know you’re right where you should be?
Like in navigating waters, a business plan can be your map in doing business. You will know your current position, make changes with your actions, or maybe make changes in the plan itself.
With a good plan, you will be able to get where you want to go.
The Importance of a Business Plan
Having a business plan is so important as if your success depends on it.
See your business as a ship and your business plan as your map. And it’s not just an ordinary map, for it contain other important information about the ship as well.
Your business plan contains information such as funding, credit from suppliers, operation including promotion and marketing.
Outside investors, and sometimes lenders too, demand for your business plan before they give you money. A complete business plan shows whether your new venture has the potential to make a profit.
But success with your business still depends on what you put into action and how you implement it. It’s just a tool to help you turn your dream into reality.
Theoretical may it seem, at least you have a guide. It’s your job to follow through with your guide or make adjustment accordingly. It can be you adjusting to the guide, or adjusting the guide.
How to Write A Simple Business Plan?
A business plan is a written document that outlines everything about your business. It orients other people about your business, and it guides you in your operation.
- What is the need that you want your product or service to serve?
- Who are your potential customers?
- How will you reach your potential customers?
- What assistance will you need?
- How much money your business need to get off the ground?
Once you have done your research, you need to put them in writing.
It is important that you are specific with the time coverage of your business plan. The usual coverage is one year but there are lenders and investors who usually ask for a 5-year coverage.
Standard Business Plan Format
The first page you should create is the cover sheet containing the company’s name and the date the plan was written.
Organize your business plan in a way it has table of contents that lists major subject and headings, and the page where each topic beings.
- Summary Statement
- Company Analysis
- The Product or Service
- Industry Analysis
- Market Analysis and Strategy
- Management Analysis
- Expansion Goals
- Financial Analysis
- Schedule of Implementation
Let’s discuss them one by one…
1. The Summary Statement
This is the brief description of your business and the key elements in the business plan.
2. Company Analysis
This gives the reader an overview of the overall aspects of your business including the description of your product or service, the business format, marketing, and your business objectives.
3. Product or Service
Detailed description of your product or service including its USP or Unique Selling Proposition. You can also include here your sales projection, and a simple comparison with its closest competitor.
4. Industry Analysis
Describe the industry your business belongs, when it began and where it is today. Make a projection of your industry’s growth for the next five years.
5. Market Analysis and Strategy
This should give the reader information about your potential base of customers and how will you conquer them.
Sample business plan created by students.
6. Management Analysis
This should contain your resume, your business experience, and the people on your team.
This section should contain information about you and your business partners, your history of business experience, and your company’s legal status. Attach here a copy of your business’ legal documents.
8. Expansion Goals
Describe where you want your business to be in three to five years.
9. Financial Analysis
Estimate the amount of capital you have to work with and its source. Include your budget, estimate for sales, and the minimum profit to cover your business expenses.
10. Schedule of Implementation
This section demonstrates your solid grasp of the needed actions for your home-based business. Lay out timetables that list the steps you plan to take with your home business:
- For inventories, show when you will order items, when you expect delivery, and when will you take your first order.
- If you are in the service business, provide details when you graduated from school and your licenses.
- If you plan to remodel an area in your house to be used in business, state when the renovation will start and when will y you open for business.
Some Things to Remember
In making and presenting your business plan, include supporting documents like tax returns, financial statements, bank statements, and other important information. These things are important for a small and medium enterprise, but may not be required for a home-based business.
When writing your business plan, keep only topics that are appropriate for your business. Make sure all the entries are accurate and correct. Spend most of your research time on marketing, cash flow, and your break-even point.
Last but not the least, write your business plan with the readers in mind….
Yes, a business plan can be a guide for you and your management team, but if you are writing a business plan with the purpose of convincing others and obtaining funds, it is important that you write your business plan for your readers.
Most small business owners neglect writing a business plan for the reason they don’t know how to write one. But along the way, as the business grows especially when you come to the point that you need funding, you will realize you need to have one.
If you intend to write them by your own, the things that we discussed here will help you. I have shared them here to serve as a guide for you. You can also take courses to learn more about this skill, and there are also software available online to help you do the job.
If you don’t want to be bothered by these, you can hire someone to do the job for you. Tap the talent of professionals and freelancers online that are experts in writing business plans.
Gomer Magtibay a.k.a. Coach Gom blogs about home business ideas and answers questions (free coaching) about starting or growing a home-based business. If you would like to learn more about him or connect with him, click here.