How to write a business plan?

Step by Step guide + templates

You may ask why do I need business plan why can't I just launched my business and get to
the market. The importance of the business plan cannot be understated. First you have to
define your business and how you're going to compete you need to understand the market and
where is your business going to occupy its space in that market versus your competitors,
you'll need to clearly define your product and why your customers should be interested in
it. Once you've defined that product have a good understanding of how you're going to take it
to market. After you've decided how you're going to take a product to market you need to
understand and articulate how you're going to operate that business and create an operating
plan to support those operations now that means you're going to have people and you'll need
a plan for managing your people and the resources that come along with them. You'll also
need to define the administrative responsibilities and how you're going to fulfil them. Once
you've got all that down you'll need to project your financial results and create a clear
financial plan that helps you understand how should the business perform over time. Now
with all of that done you'll need to think through what are some of the major pitfalls that you
could face as you launch your business and make sure you incorporate those into your
plan. Depending on the type of business you're running not all of these elements will be
relevant however these are the major components of business plan and why you need to put
in place. 
The first step in writing your business plan is articulating the problem that you saw. Is
this a problem that people are willing to pay you to fix, you will need to define who has the
problem, is it companies, is it individuals spell out what your typical customer looks
like. Then think big is this problem how does it show up for your customers it's a question of
things are expensive and they have a call problem do they have a time problem is it a quality
issue with the products that they're turning out and you can help them improve their
quality. When you write this problem statement you should be able to take it to your target
customers and they should read it I have that problem please fix that's where the demand for
your product or service is going to come from. As you're writing your business plan having a
clear understanding of the size of the market is going to help you understand how attractive is
the business you're trying to get into. Does the market consists of businesses or a consumer
how many people are in your addressable market. Articulate how does the market organize
itself is organized by product segment by problem organized by geography. Sell out some of
the common characteristics of the customers in that market. Now how big is the addressable
portion of the profits. That profit pool is the dollars that are available in that market and how
much can the problem be solved the dress. Now some ways that you can size the market are
things like looking at market research gathering analyst reports even looking at what some of
your competitors are doing and how they've reported the size of the market. A good market
sizing we'll tell you what you need to do to scale your business it will also help you
understand is this an attractive enough market for me to make a return. Going to be investing
as you build this business you need to know how much market is out there you're going to be
able to capture. Now obviously bigger markets are exciting however each markets can be just
as lucrative. Their markets are exciting however each markets can be just as lucrative. So if
you're writing your business plan articulate what the market looks like and much of it thank
you. Your plan needs to clearly define your product explain the product in simple non
technical terms oh boy US words and also for your audience is completely unfamiliar with
your product. Describe how that product solves the problem and talk about the benefits get a
very concrete way. So if you're writing your business plan make sure your product
description is clear and simple and articulate concrete benefits for your customer. Your
business plan has to spell out your revenue model for your product or service this is a huge
determinant of how successful your business is going to be. How are you going to make
money this is going to be a one time charge or are there recurring or subscription charges
for your products are they going to cross sell or upsell opportunities are you going to sell add
ons that complement the product or service. Our similar products priced in the market what
are your competitors what their revenue model if you're looking for ideas. Also ask what are
your customers willing to pay conduct some pricing market research or looking competitive
offerings and how their price and what is the value of your product and the value it creates
and price as a portion of that don't leave value on the table and your choice of a revenue
model is going to determine how much of that value you're going to capture so when you
articulate your revenue model make sure you think through what's the value you're delivering
and price accordingly. Once you describe market you're going to complete it and the way
your product solves that problem you need to do a swot analysis and describe what you're
going to win in that part it's not good enough to just have a. You need to understand how
you stack up versus your competitors what's your competitive advantage is going to be your
conduct a swot analysis strengths weaknesses opportunities and threats those are going to
highlight the implications for how you're going to approach the market and compete there
Salim doctor slot analysis don't just lead it doing the analysis think through the implications
of the strengths and weaknesses and the threats and opportunities you face and turn those
into a plan for how you're going to keep the fact. This plan needs to spell out a major
customer and market trends are going to face and more importantly how you're going to
react to those trends what are the major trends do they help you or do they hurt. Is the
market growing flat is a tracking is a large fragmented or to consolidate and our people
behaving in that market are you seen acquisitions or divestitures. Who makes the final
decision from a customer standpoint and are those patterns changing at all. Thanks for what
other products and services to your customers want and need order emerging trends what
customers are asking for new say. Some of the sources for this information or things like
market research conducting focus groups doing some competitive analysis for your business
plan articulate what the major trends are any actions are going to take you there to offset the
negative trends or take advantage of the pulse ox. Your business plan should go into great
detail in terms of how your product or service ranks versus your competitors not being
honest about your standing versus your competitors I like to create what I call the moon
chart and that's where you lay out all of your competitors and then articulate how you stack
up birds that. One thing you should never say in a business plan and we have no
competitors that's not believable and it's risky because it's pointing out that you have a blind
spot in terms of the market and where you stand. Now when you create this moon chart
what you're going to do is less all of the competitors across the top and then down the side
you're going to list out all the performance dimensions and how you stack up. And within
each square on that matrix you're going to spell out whether you're the bass the worst or
somewhere in between and again that's compared to your competitors offer. This document
is going to help you hedge your idea and how you're going to searching yourself with your
customers. So when you look at your business fell out those competitors are way out the
evaluation dimensions and then compare yourself on each dimension versus those
competitors then at the end of that section of your business plan spell out the implications of
that positioning in terms of how you're going to. Product or your service to your
customers. Your fellow what threats are to your product one of the biggest threats you'll face
is substitute products. What place your product what can solve the customer's problem just
as easily and do it cheaper. What substitutes are competing for the same dollars that you
are. I remember it may not be a direct competitor to. Be able to articulate what those
substitutes are at why. Your customer is going to change your product versus that substitute
so when you spell out your business plan way out what those competitive offerings are and
what those are and more importantly what you're going to do to make sure the customer
chooses. First the substitute. Your business plan has to spell out your go to market strategy
both in terms of building awareness for your product or service as well as how you're going
to deliver it how are you going to reach the customer what are the channels you're going to
get to market to them as well as deliver are going to go to practice are you going to go
through distribution how you going to build awareness for your product or service looking for
partnership or licensing. I understand the economics of each of those channels so if you're
writing your business plan make sure you articulate both types of channels and understand
the economics involved well. Spell out proposition. What tangible benefits that your
customers going to get from using your. Are there things like all sports. Quality and you need
to quantify these things to the extent that you can. Perhaps you include testimonials in the
business plan one test results if you can't quantify it because you're selling software. There's
an approach that I called what do you have to believe. So you need to articulate your value
proposition for your product or service and to the extent you can quantify in terms of the
benefits your customers going to receive. This plan needs to clearly spell out the points of
differentiation or your product or service compared to your competitors and those points of
differentiation need to be things like your customer cares about. Now the differences need to
be substantial relative to competition by saying you're one to 2 percent faster than your
competitors will get customers attention. 20 percent passer now you have their
attention. Second they don't just have to be substantive differences I mean meaningful your
customer cares about cost but not all about speed it doesn't matter if you're 20 percent faster
so make sure as you're articulating these points differentiation you look at substantive
differences as well as meeting once. Knowing how you're differentiated it's going to help you
know where to invest your time and money because this is a planning exercise you're going
to focus on differentiating factors and where to compete or not compete on market place this
is the part of your business plan that's going to keep your strategy focus and staying on
strategy or tactic and more competitive. Thank you for chasing work you should of course. I
thank you from investing in things that are going to lose your customers won't care about. So
is your take away your business plan make sure you think through those points of
differentiation that your customers care about and that you have a meaningful performance
advantage versus your competitors am I spelling this out clearly you're going to make sure
that you focus on strategy and you have a more competitive offer. Just because you build a
business it doesn't mean it's safe and your business plan you should articulate how you're
going to protect what you've built how are you going to protect another company from taking
your customers. Maybe look at things like proprietary rights that you have to the product or
service you may look at things like or copyrights do you have trade secrets that nobody can
replicate. I'll have to put in place some non compete agreements for other proprietary
knowledge and skills that's going to keep your business safe. Editor's taking your
customers. Now what a lot of people want to go down the path copyright. However that's
costly and it takes a lot of time additionally just because you have 8 copyright it doesn't
mean it can't be defeated. There are companies out there that will infringe upon your packs
there are companies who will sue you in court and while you may ultimately win the case it's
going to cost you a lot of time and money to defend it so just be aware of the pros and cons
of each of these defense mechanisms. Also don't underestimate speed and size as
expected missiles are protecting your market in your business plan what what mechanisms
you're going to use to protect your business from the threats you're invariably going to fix.
They're going to face. This plan allows development. That's what the main product. As well
as. Along with the. Describe what's in your minimum viable product the first month one of
the. At least discuss what the next level. As well as what. It's going to be available in the
market. The business plan also describe your approach to testing research and development
and what. Our road map will be. Explain the risks. Life cycle. How are you going to work or
those racks when you lay out your. Well those features. At each stage of development and
articulate what the HR. Go back next level. The next section of your business plan meets all
our product or service delivery. You're in the hands of your customers. Product was going to
ship are you going to ship it direct route the post office yes. I want to stress are you going to
sell your product retail. Service are going to go to the customer are you going to deliver your
service. The customer comes. And that was laid out how you're going to get that product
service. Explaining. Challenges you'll face as well as how you're going to get over that make
sure you lay out the channels you're going to use to deliver your product or service and how
you're going to overcome the challenges you're. That's a promise you should spell out what
you want. Also why your customers going to Kerr why is that or. How are you going to
advertise and promote your product or service in a manner that's consistent with and build
brand. Your cost. We'll be online advertising public relations. Personal selling were
created. Are there other promotional opportunities you're going to take advantage. Sell these
things out in the branding this is. Then I'm going to assign more points of differentiation. Are
you going to point out all the salt and why you're better than anyone else in solving it your
business plan spell out what the promise is that you're making to your customers why don't
care and how you're going to get that message out into the market. Pricing is one of the
most critical decisions you're going to have to make your business plan needs to spell out
your pricing model as clearly as possible. You need to understand even a one percent
differential on pricing can have a disproportionate impact on your total profitability. What's
your business has a 10 percent profit margin if you raise prices by just one percent on the
top line revenue increase your profitability by 10 percent that one percent will go from your
revenue line all the way to the bottom and your pricing will drive margin from 10 percent to
11. Icing is huge to under invest in thinking about it. So how do you come up with your
price. Mark some of your competitors look at their pricing model as well as their price points
and use those price points anchors for pricing your own search also determine your pricing
model and the rationale behind it are you going to sell on a cost plus basis are you going to
celebrate value basis this is gonna be a one time or ongoing or some combination
thereof. Laying out this model is critical because you're going to have the best to the market
as well as the model year old financial model as part of your business. The sale section. You
have to spell out how are you going to sell your product or service will you use the sales
force or will you just go direct to consumer maybe from your website if you're using a sales
force what's the sales cycle going to look like how long will it be what's the conversion rate
from prospect to customer and make sure the business plan if possible have supporting
evidence for that. How are you going to compensate your sales force what would be a base
salary we pay them a commission is going to be a combination of the 2 because that's going
to drive your sales forces behavior. In the sale section how are you going to conduct contract
well you have a long term contract well you have certain payment terms that you're going to
expect what type of sales people do you need and how are you going to compensate them
and having that clarity in your business plan is going to make it clearer how those people will
perform as well as how will show up in the financial performance of your business. Another
operational area to cover in your business plan is how are you going to support your product
or service just because you sell it doesn't mean you're gonna. What's it going to take to
deliver aftercare handle returns to deliver customer service when your customers have
questions how are you going to staff that search are you going to insourcing have people
within your organization who do it are you going to outsource it to another organization are
you gonna make it self help. What are the expectations that your customers are going to
have for the support how many calls do you expect how many incidents are you going to
handle what's the return rate on your product. What expertise is going to be required to
handle some of these issues you need to spell out all of these operational components in
your business plan because if you don't think about them you're going to have operational
challenges down the road. The lesson here is think about how you're going to support your
business before you make any operational changes and this is exactly what you'll be doing
as you right this section of your business plan. This. People people from the bottom. A look
at. How many. What job. Where will you hire operational folks finance HR. Well the boys are
will they be contractors are you going to use better stop. Personal strategy. You're welcome
ramp up. Requirements for something just because you say you want. Your whole. Her work
backwards and say take us 3612. We have that it's gonna take to. This is all part of your
people. Our staff as you grow your business and what's going on. So you take your
customers how many customers have higher. Chico's. When hiring black now well the
business continues to grow. Well. All calls what's the. How much are you going to pay
the. All these numbers are going into your. By building your people plan based on the
band. This. And laying down on the quarterly basis where we. What will look like. This this
plan thanks for all the different job. What's going to drive. How much they're going to cost
you what. A major portion of your business. Where are you calling me your car are you going
source work. Fires. Well you're all. We'll also discuss how are you going to meet a man. And
do you know what works. Once you build your operating. Do your operations. In this section
this. This might. What. Are your car. This is. Do you have a personal source. How are you
going to manage the cost. Fires long term contracts you can get. We have many joint
ventures alliances for key components. Fire rescue 6 huge risk for your. A major supplier
grossed out or decide to renegotiate rates what's your backup plan what risks do. Applier
concentration and how we're going to mitigate those risks. What operational risks do you
face by insourcing thing you're not great at things that aren't or call. What risks you face. If
you are. I don't want to. All risks to your. A large company partnered with famous athletes or
movie star and then we start goes something that isn't so great. The company sponsored
race. All risks she articulating the supplier side your business plan. So I understand where
you're going to get your car. What the concentration risks are and how you're going. To have
a clear piece of this operating. She. Thanks. Your business. All are the structure. How you're
going to call. The bonus or. Right thanks. I highly suggest you get some legal assistance
somebody who has done this. Or. When you. The best. Even this way I'm required. Walk
away with a big chunk of equity just had a good idea. Also when you first start
your. Way. Yeah I realized that what is the most expensive financing given out twice this is
why it's so important to spell this out in your business. This is another option. If your
techniques don't need cash right now in doing so it's cheaper than what he. Service the cash
you need to start up. No matter what. Women agreements in place that specifically spell
out. Because this plan is complete. Taking away your call. It's going to turn those investors
by. These very complex transactions. Legal and financial assistance as you set up your
business plan. Especially if you're going to see outside. Yes there are a lot of strange matter
I have to handle these. Thank you binance HR legal. Who's going to represent. Who on your
team is going in this matter the company. There are some questions you need
answered. What. All your life and business filings complete. Or use certain. All walks. All
employment law. What you're doing is you're legally. Do you have the right legal strong
intellectual property and copyright protections your contract solid. Finances. Are you guys
doing 1099. Filing your taxes. These are all things. Especially if you recall. Time. Service
providers you will. Make sure you're staying on this. Your business plan is your financial
plan. First thing that. Documenting. What are you going to assume what's the grounding or
those. Market research. Figure out what. No Way Out best case worst case scenario
one. I. Explain what you just saw as. Your assumptions clearly articulated you can track your
financial performance visit us over to make sure your forecasts are as accurate as
possible. Your forecast part of your business. Without a forecast you don't know. What
results you can expect. When you work past build them on the bottom all. Based on your so
how many courses are you going to sell how many. Going to this I understand those cry. No
we lost. All white. Is this your verdict. Create a. That work best revenues. How much cash
you'll have. She. Don't know how to. Professional help from a financial. When you build your
forecast. Several cases. Where accelerated increase costs and delays. L. expected
which. All the best which is your costs are as expected and you have accelerated. I'm
looking. You'll understand what happens if things don't go well. Right. The link or cast aren't
accurate as you possibly can. Because they're going to tell you what your business will look
like in the future and you plan. This. We critical numbers you'll have to know. How much do
you have on hand. What's. How much runway. How much cash you have. Your money are
you spending every month your staff this. One way is to look at how much. No more money
comes. How long do you have or you run out of money. Obviously the longer the runway is
the same as. All. Cash flow. Which is why this business generating money. To. Also
running. Going on now what are you going. Because when you don't eat more
money. You're also spell out where you plan on getting your. Looking. Loans. We see
outside. France we work with partners. Also what are you going to use the capital or only
use capital in the early years of running your. Right. Sales. You're spending money on other
than those items are going to question. So if you're thinking about. About how much money
you're going to eat. One of the business. This mantle rests. Lay out in your business plan
what those risks are and what you're going to do if they come. Some of the risks you might
face what happens if you lose funding. If you don't get that loan or the investment recounting
of. What. When the economy turns out. What is that marketing campaign you thought. Turns
out. Electoral property or a major competitor emerges all of these are bad things that could
happen to your best but if you think about that now and plan for that you can put. You can do
things like how expensive or what office. You might as well that's what the founders might
put more money. You could drop prices market or offer retention discounts for some of your
customers you may even say we would sell out to a competitor or partner with
another. Having these contingency plans in place enables you to react quickly. Thanks for
what the risks your organization faces arm and put them in your business plan along with the
contingency plans to go along with. As you build your business make sure you're clear on
whether it's a lifestyle. What you're looking. Because it has huge implications for how you're
going to find it. Your accent your search will want to know how are you going to. I I. By your
company will sell out when IPL itself a little bit silly especially in the early stages. All about
saying what might be. Lifestyle business just understand that you'll get fewer people were
willing to. When you lay out a plan R. O. Y. well what return on the investment that they're
going to get. I mean they should expect on your search will want their money back and
then. This case to spell out it's going to be a lifestyle business for you. External investment
that you're just looking to build something to give you personal and. Or is it something where
your customers can expect to return.