How to Craft Your Perfect Business Plan
So you’ve got an award-winning business idea, and all you need to do is convince someone to fund it.
That’s where your business plan comes in.
For first-time entrepreneurs, or even experienced ones, sitting down to write a business plan can be a daunting task. But with the right outline and some best practices, crafting one is easier than you might think.
A good plan will convince lenders and investors that you have an idea worth funding. You’ll need to communicate your vision and how you plan to achieve it.
A business plan can be used when starting your business, asking for new funding, or just in your day-to-day operations. While many people think a business plan involves countless hours and dozens of pages, a good plan is clear and concise, easy for others to read and understand quickly.
Here’s what you need to know to create the perfect plan.
Start With Your Summary
The first step to any business plan is the executive summary.
This is usually one to two pages outlining everything the reader will find in the rest of the document. Start by clarifying where you are in your business journey -- are you a new business, an established one, or are you purchasing an existing business?
Tell the reader the type of business you're running, what makes you unique, and the market you are serving. You’ll also need to outline your key objectives, professional background, and a timeline for what you’re hoping to achieve.
You’ll go on to outline these elements in detail below. Let’s start with your company profile.
Who Are You?
The next step is your company profile. This is your chance to give lenders and investors a clear look into who you are and what you’re hoping to achieve.
Start with a brief description of yourself and your professional background, and tell the story of how you started your business. Outline the history of your business so far, and describe your organizational structure.
What is your product, and why should readers care? You should have a quick and grabby sentence that immediately engages a potential funder and makes them excited about what your company does.
Remember to be clear and engaging. You want your reader to have an easy understanding of who is behind your company, and what you’re hoping to achieve.
What Makes You Unique?
This is one of the most important parts of your plan: Market analysis. It’s a chance to show the reader that you’ve done your research and know your market inside and out. It’s also an opportunity to show why your offering is unique.
In this section you’ll outline your target market, ideal customer and your marketing and distribution plan.
Who are you selling to? Why are they interested in buying your product? What sets you apart from existing offerings? You’ll need to identify segments of the market that you’ll be targeting -- women aged 35 to 50 with an interest in home crafting and young children, for instance. Then map out how quickly each segment is growing, to show that there’s a need for your business.
Discuss trends in your market and how your company is working to address them. Give the impression that you know this area better than anyone, and your business is best positioned to meet its needs.
Finally, outline your major competitors, and why your product will dominate the market. How is what you’re doing different from other organizations, and how will you ensure that you stay relevant to your customers?
What Do You Need?
Now is the time to outline your funding requirements. You’ve got your reader excited about what you’re trying to do, and now you must share your funding request. How much do you need and how are you planning to use it?
This should be a short statement detailing how much money you need to raise and for what purpose. Don’t bother including the terms of the funding -- that will be discussed later during negotiations. This section should describe what you are asking from your reader.
Share Financial Data
Finally, you’ll need to share financial projections for your business. Depending on who you’re sending your business plan to, you’ll need to make slight adjustments.
Let banks know how you would plan to repay a loan, what you’ll do with the money and how it will help grow your business. Let investors know what return they could expect to see, and shareholders know what they can expect from share prices and dividends.
Clear facts and figures are essential for this stage. The best-written business plan in the world is nothing without hard data to back it up. You’ll need to include your business’ net worth, total assets, cash flow forecast, and financial projections for up to two years.