Writing a business plan is the first step in transforming your business from a couple of thoughts to an actual strategy. As you launch your business, a solid business plan will help you get it off the ground and running.
Even if your business is not brand new, revisiting your previous plan and updating it to ensure your goals and strategies align with your current direction is smart. If the idea of a business plan is brand new or you need a memory refresh, let’s discuss what it entails and why companies should care about having one.
What is a business plan?
A well-crafted business plan provides a clear roadmap and shows how all aspects of your business align and work together. Think of it as a checklist to ensure your company is headed correctly. From research and finances to marketing and goals, it’s your #1 guide to support your business trajectory. It can consistently be updated to adapt and change as your business does.
What does a business plan matter?
A business plan is essential for leaders to have a sense of direction, employees to feel motivated, and investors to bid to raise capital. It is also a solid backbone to refer back to and remind you of your business objectives when making big decisions. You can’t commit to any deals or accept any funding without a plan in action.
What key elements are in a business plan?
When writing your business plan, there are a few elements you should consider adding.
Executive summary
The executive summary is a brief opening to introduce your business and its purpose. The goal is to share how it will be or has previously been successful. Keep it short and sweet.
Business description
A business description is where you dive deeper into what your business does, what solution it offers, and how it diversifies itself against the wider industry. This is the section where you will want to include its vision and values. Researching the industry is crucial so you can be as specific as possible about your product or service and which consumers you are targeting. If you plan to appeal to investors, including how much money you hope to raise and what percent investors can buy in is an intelligent choice. Additionally, if you’re using cutting-edge technology or inventing something nobody else has pioneered, this is the perfect spot to include it.
Company structure
In the next section, explain the company structure you plan to implement. Are you a sole proprietor running the show, working in partnership with someone else, or working to be a corporation? Whichever option you choose, make it clear how it’s operating and how it’s affecting the amount of people on your team. Share a little about who you have on your team if you’ve brought talent on. Are they contractors? Employees? This section should have historical information about how your business has developed, who is a part of it, and where it’s headed.
For startups, it’s good to have details outlining how long it will take to start operations after funding and at what cost the business will break even and become profitable. In comparison, for more established businesses, it’s better to have a clear month-to-month plan of how long it will take to execute any changes that need to be made.
Market analysis
With the layout of your business outlined, you’ll next research and develop an analysis of the marketplace in which your business is competing. This is where you’ll look into the strengths, weaknesses, opportunities, and threats of your product or service in the market. You should have a clear understanding of how your product or service will benefit customers and what results you are expecting to achieve with it.
Looking into target demographics — age, location, buying habits — and creating customer profiles is a great way to gain perspective on who you are trying to appeal to. It’s crucial to clearly understand the marketplace and identify the key advantages your company offers that you can showcase in your advertising and marketing strategies.
Competitive analysis
Depending on the industry you’re going into, the market may be saturated or present opportunities for entry. Some markets will be more challenging, but the key is to assess what your competitors are doing and determine how you can stand out— whether through minor tweaks or significant innovations — to capture customer interest. In the competitive analysis section of your business plan, clearly outline the threats current competitors could pose and ways you can beat the pack with your product or service.
Marketing plan
Once you’ve researched the market and conducted a competitive analysis, using that information to guide your plan is much easier. A comprehensive marketing plan will help you scale your operations and share your product or service offerings with your stakeholders and employees. Research and evaluate how your competitors market themselves to see how you can stand out from the noise.
At this phase, you’ll want to develop consistent branding and messaging different from what’s already in the market so customers will recognise and remember your business. Then, focus on your digital presence—strategise your digital channel plan, develop your Google Business Profile, and make sure you have a fully functioning, well-designed website.
With a marketing foundation and digital presence set, you’ll outline promotional strategies, how to attract your ideal target audience, and ultimately, how to retain customers who will keep coming back. As you push campaigns out, record and track how your target audience reacts and what entices them. Test multiple strategies and see what works and what doesn’t.
Financial plan
In your business financial plan, it’s vital that you lay out your spending and provide thorough details of what’s previously been spent and how you’re projected to perform. This will benefit your stakeholders and help persuade investors to support or refrain from investing in your business.
These documents are recommended to add:
- Income statement: measures net profits or losses.
- Cash flow statement: details the capital required to launch or grow operations.
- Balance sheet: outlines financial liabilities and assets.
- Funding plan: specifies the amount of money needed, whether it’s negotiable, and how it will be repaid (e.g., equity, partnership, or loan).
A company with clear financials is taken more seriously by funders and financiers.
Tips to create a great business plan
While you want to be detailed in every section, often, less is more. Be compelling, clear, and concise, but avoid overselling, distracting, or using overly technical, jargon-heavy words.
Investors want to know the hard facts and accurate information, so don’t be afraid to provide supporting documents (resumes, target audience profiles, campaign plans, etc.) and reference the objective data (the good and bad, so they know you’ve researched it all). It’s essential to be realistic about your business, how you provide value, and what differentiates you from your competition. Yet, don’t forget to let your passion shine through and share why someone should care.
As you write your plan, make sure you understand its purpose and who you are writing it for. Tidy the grammar, review the spelling, and understand that it’s a living, breathing document that can be changed as needed. When it’s ready, share it with your intended audience and keep an extra copy close so you can refer back to it when moving forward.
Get your business off and running
With a strong business plan, stakeholders, investors, and employees will all understand what your business stands for and what direction it’s headed in. At Melbourne Connect Co-working, we can help you achieve your business plan goals and connect you with potential investors.
Develop new ideas in a creative space. Our community workspaces increase team communication, and our thoughtfully designed conference rooms improve workflow. Learn more about our coworking space here.