How to Write a Business Plan
by Chris Angelopoulos
In order to succeed, every business needs to know itself. That entails understanding core strengths and weaknesses, external opportunities and threats, where to invest, how to get funding, how it creates value, and where it is headed. A business plan is an attempt to answer all these questions from the perspective of what is likely to happen over the next few years.
The purpose of a business plan is to combine evidenced-based tools of analysis with a vision of what the business is now and were it is headed. Toward the goal of providing both, a business plan should be stated as succinctly and directly as possible while also including all of the necessary components. The sections of a business plan may vary somewhat from company to company, but are largely comprised of several key categories.
This section sums up what the company is about and where it is headed. This is the elevator pitch that attempts to encapsulate why the company exists, how it makes money, and why investors and customers should be interested. It should explain the strategic vision including the overarching company goals that drive decision making at every level. Although it comes first, it is still a summary and must align with the business plan sections that will appear after the executive summary.
This section can add some detail to the brief company snapshot provided in the executive summary. It should include exactly what the business is and what it does. It can also include aspects of the company such its history and structure. The company mission, what it intendeds to do and why, is another important topic. The business environment that the company exists in, the competition it faces and how it approaches the world differently from its competitors, and present or future opportunities or threats round out the picture.
This answers who the business thinks its customers are. Essentially, this is a summary of the company’s market segmentation and targeting analysis. It specifies which particular customers are available and likely buyers of the product or service in question. Since customers exist in a business environment filled with competitors, this may also paint a picture of how the company intends to overcome the limitations imposed by competing products or services in order to reach customers.
The analysis of competitors in the same market segment can also be listed in a dedicated section. Key competitors can be profiled in order to understand their capabilities and identify any openings that would allow the company to exploit these opportunities to increase market share.
Organization and Management
This section needs to show at least two details about the organization and management. The first is what the company structure look like. If this this a modern company with a purposefully flat organization structure to empower employees to take ownership of big opportunities, it would make sense to highlight that fact. The second important aspect to cover is company leadership. If the company believes it has star players at the highest levels who are ready and willing to take on challenges, it is important to profile their competencies and ability to lead the company in the coming years.
Service or Product Description
The products and services offered by a company are its reason for existing. The superiority of what is being offered in comparison to competing products or services is the key to pretty much everything from securing funding to attracting top talent to continuing to exist. This should include a detailed account of what the company is selling and be able to identify what core attributes make it superior to competing offerings.
Marketing strategies build on the market analysis. Once a business has determined who its customers are, it must think about the mechanics of reaching them. This deals with many aspects of sales. What are the key features of the product? How much will customers pay and for what optimal level of quality? What are the attributes and habits of customers and how can that knowledge be used to best gain their attention and reach them. What is the best way to deliver products or services to the target customer?
Funding Request and Financial Projections
Many new companies need startup investment in order to effectively create and offer products or services for the first time, and to bridge the gap between eventual expected returns and the costs of the initial investment required to start doing business. In order to convince investors of the wisdom of funding the company, a business plan must sometimes include projected financial costs and returns along with a request to make up the difference of what is likely needed to succeed.
Because of the formal structure of a business plan, it often makes sense to start the process of writing by creating the sections necessary to form the backbone of the plan. Speare makes it easy to create each area of focus, write sections individually, organize content easily, and output a completed plan that is properly formatted with little to no effort.
Writing a business plan may seem like a good deal of work, but it represents a vital part of one of the most important activities for any business: planning. Having the right tools can take some of the pain out of this upfront investment and encourage smart business planning as a key part of every business venture.