An effective business plan is an integral part of any entrepreneur or corporate manager looking to turn an idea into reality. From attracting investments, uniting teams or providing direction – having one in place can make all the difference.
A business plan typically contains an extensive description of a product, target market, marketing strategy and expected financial performance projections. Furthermore, research should also be performed into competitors, industries and environmental considerations.
Define Your Purpose
An effective business plan is an indispensable document for any company seeking investment or financing from lenders or investors, but it can also serve to motivate your team towards meeting long-term company goals and objectives.
A carefully written business plan will demonstrate that your product or service fills an identified market need and will continue to remain viable into the foreseeable future. It also includes financial projections as well as an analysis of competitors that shows how you intend to differentiate it from similar offerings on the market.
A business plan should also contain the resumes of your management team members as well as any necessary appendices that would help potential investors or lenders understand your company. A typical 15-page double-spaced business plan should suffice. A shorter and leaner version may be more engaging for readers; this ensures they stay engaged throughout.
Define Your Audience
If you plan on approaching investors, lenders, or partners for funding or partnership purposes, they will want to see an outline of your business plan that clearly describes who your audience will be and their objectives. Investors typically look for businesses with an innovative concept which have potential for expansion and profitability.
Your target market and audience should not be confused; each are distinct entities. Your target market refers to all those likely to purchase your product while target audience refers to a subsection of that group.
Deliberately selecting your audience allows you to tailor creative messages and campaigns that resonate with their interests and values, as well as narrow your marketing efforts so that money isn’t wasted on people unlikely to purchase your products or services. Furthermore, targeting an audience allows you to identify gaps in the market so you can fill them with something unique to offer them.
Define Your Goals
Your business plan’s goals section should outline short and long-term objectives for your organization that can be measured against a timeline, with clear numbers to help set expectations.
Example: Say your sales will increase by a certain percentage within two years. This gives potential investors a clear picture of your company’s progress over time and helps ensure investors see it too.
Set realistic goals when setting goals, both internal and external. Unrealistic goals could have a devastating effect on employees or investors if they become unachievable, leading them to abandon your company altogether. Conversely, realistic goals motivate teams to work harder towards meeting objectives more easily while assuring investors your investment is smart. Ultimately, your aim should be creating documents which inspire action from individuals or audiences.
Define Your Strategy
A business plan provides the framework for your company. It sets goals, milestones and contingency plans against uncertainties. Your operations can use it as a guide; many private investors and lenders consider your plan before investing. GoBusinessPlans can lend a helping hand to those who are passionate about their company business planning.
A solid business plan includes an overview of your products or services offered, with clear definition of who your target audience is and how you intend to attract and keep them. Furthermore, it includes market analysis that highlights your industry standing as well as anticipated consumer demand.
The revenue stream section outlines how and where your company will generate money (direct sales, membership fees and selling advertising space are among many channels for doing so). Meanwhile, the management and organization section addresses who’ll run your business, its legal structure as well as whether you plan on becoming an S- or C-corp, limited partnership or operating as sole proprietorship.
Define Your Financials
Financial section must present a complete picture of your company finances. This should include a profit and loss statement that details revenue and expenses over a specific time frame; cash flow projection; and balance sheet that details current assets and liabilities.
An effective business plan relies on accurate financial information. Potential investors want to know that your concept is viable and will generate a high return when exited – thus making the financial section one of the most critical components. You should provide accurate future projections that give investors an idea of whether your business deserves funding; this will allow them to assess whether their money should be put towards your venture or elsewhere.
Define Your Market
Market analysis is an integral component of your business plan. It provides an estimate of how large you think the target market for your product or service is and includes sales projections over certain time frames. Conducting thorough research will reassure investors and boost confidence as you work through your plan.
Target market identification is crucial when running any business; your products and services don’t cater to everyone, and so focusing on those most likely to benefit is necessary for success. You should also identify any indirect competitors – companies who sell similar services that fulfill similar needs – so as not to alienate potential clients or customers.
Your market analysis should address how you will reach your audience, including pricing strategy. Furthermore, outline any special programs or discounts designed to attract new customers such as discounts or promotions.
Define Your Competition
Be it to attract investors or to unite your team, an effective business plan will set you apart from competitors. An effective plan should detail your market, competitors and points of differentiation as well as demonstrate your competitive edge.
Locate and identify direct competitors – companies offering similar products or services as yours and potential substitutes – as well as indirect competitors – companies selling in similar markets but serving different customers or providing different distribution channels.
Management and Organization Section – When writing your business plan, the management and organization section should include information about your leadership team including resumes and experience. This section can be especially important when seeking investment – investors want to see that the team you have assembled possesses sufficient experience and connections for success. Furthermore, this section should detail legal structures of your business.
Define Your Management Team
As your business expands, adding members to your management team may become necessary. Doing so allows you to delegate higher-level tasks to others while freeing up time to focus on growth strategies such as sales and marketing efforts.
Include a detailed account of the various roles you need to fill, such as managers for sales, accounting and other functions. Also detail their responsibilities within your overall business plan.
As part of your company goals, it is vital that each manager’s position within it be clearly established in order to avoid confusion later. Doing this will reduce conflicts among members, improve project execution, employee satisfaction and meeting company goals more easily while attracing investors who may be looking at your leadership structure or management capabilities as crucial steps toward expanding your business.
Define Your Marketing Strategy
An effective business plan is an invaluable asset that helps your company plan the right course. Additionally, lenders and potential investors will see this document as proof that your team is organized, well prepared and capable.
Keep your business plan current by regularly reviewing market, competitive environment, and internal strengths of the company.
Marketing strategy is an integral component of any business plan. It outlines how a company will position itself within the marketplace, what products and services it will offer, as well as ways to reach target customers through channels like social media, email campaigns or web ads. With this knowledge in hand, future marketing decisions will be easier and customer acquisition will increase resulting in higher brand value, market share and ultimately sales.
Define Your Revenue Model
Determining your revenue model is one of the cornerstones of a sound business plan. It outlines how your company will make money and provides sufficient capital to cover production costs, employee salaries and operating expenses.
Selecting an optimal revenue model involves understanding your product’s value to consumers and how best to deliver that benefit in an appropriate manner for your audience. Furthermore, it’s crucial that you consider how all your revenue streams fit together and could shift over time as you optimize distribution, marketing and financial models.
Although many professional consultants and software vendors claim they possess the “secret sauce” for creating an effective business plan, much of the hard work will fall upon you — as an owner-operator– to complete.
