business, marketing, mentoring

How to Begin Writing Your Business Plan

A business plan is a written description of the future of your business.  It is an essential road map for business success and without one, the business will lack direction. This living document generally projects 3-5 years ahead and outlines the route a company intends to take to build customers and grow revenue and profits.  Consider your mission statement and let this theme run through your business plan.

This is an easy guide to get you started.  There are six main heading in a business plan:

  1. Executive Summary

This section can only be written when you have finished putting together the other sections of your plan, however it usually appears first in your business plan.  Your executive summary is a snapshot of your business plan as a whole and touches on your company profile and goals. It is often considered the most important section as it briefly tells your reader where your company is, where you want to take it, and why your business idea will be successful.

  1. Company Description

This section provides a high-level review of the different elements of your business and should be written to help readers and potential investors to easily understand the goal of your business and its unique proposition.  It should include:

  • The nature of the business and list the customer or industry needs that you aim to satisfy
  • How your products and services meet these needs
  • The specific consumers, organisations or businesses that your company serves or will serve
  • The competitive advantages that you believe will make your business a success such as your location, expert personnel, efficient operations or ability to bring value to your customers.
  1. Market/Competitor Analysis

The market analysis section of your business plan is vital in accurately illustrating your industry as well as your research findings and conclusions. You should provide in detail:

  • The critical needs of your potential customers
  • Demographics of the group and where are they located
  • Seasonal or cyclical purchasing trends that may impact your business
  • Forecasted market growth for this group
  • How much market share can you gain
  • Pricing and gross margin targets (define your pricing structure, gross margin levels, and any discount that you plan to use)
  • Information about market tests or research studies you have completed
  • Competitive analysis should identify your competition by product line or service and market segment, market share, strengths and weaknesses and opportunities and threats (SWOT)
  • How important is your target market to your competitors
  • Are there any barriers that may hinder you as you enter the market
  • What is your window of opportunity to enter the market
  • Are there any indirect or secondary competitors who may impact your success
  • What barriers to market are there (e.g., changing technology, high investment cost, lack of quality personnel)
  1. Product or Service

In this section you will get into the details about your product or service and outline the benefits from a customers’ perspective. Think about how your product or service will meet customer needs and include any advantages your product has over that of the competition. Outline where your product or service is in its life cycle, as well as any factors that may influence its cycle in the future.

  1. Finance

The finance section should consist of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation and analysis of these three statements.

Illustrate your sales forecast in detail by including a spreadsheet projecting your sales over the course of three years. Set up different sections for different lines of sales and columns for every month for the first year and either on a monthly or quarterly basis for the second and third years as this will give potential investors a good idea of future profits.

Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements, both historical and prospective. Since pictures speak louder than words, you may want to add graphs of your trend analysis, especially if they are positive.

  1. Marketing

It is vital you define your marketing strategy early on in the business planning stage. There is no single way to approach a marketing strategy; your strategy should be part of an ongoing business evaluation process and unique to your company. However, there are common steps you can follow which will help you think through the direction and tactics you would like to use to drive sales and sustain customer loyalty.

Using the Four Ps Model (product, price, place & promotion) will help to develop a marketing strategy suitable for your product or service.4ps

  • The first of the Four Ps of marketing is product. It’s imperative that you have a clear grasp of exactly what your product is and what makes it unique before you can successfully market it. Identify the unique selling point (USP) as this will act a guide when analysing the other P’s.
  • Once a concrete understanding of the product offering is established you can start making some pricing decisions. Price determinations will impact profit margins, supply, demand and marketing strategy. Therefore your product or service may need to be positioned differently based on varying price points, while price elasticity considerations may influence our next two Ps.
  • We’ve got a product and a price now it’s time to promote it. Promotion looks at the many ways marketing agencies disseminate relevant product information to consumers and differentiate a particular product or service. Promotion includes elements like: advertising, public relations, social media marketing, email marketing, search engine marketing, video marketing and more. Each touch point must be supported by a well positioned brand to truly maximize return on investment.
  • Often you will hear marketers saying that marketing is about putting the right product, at the right price, at the right place, at the right time. It’s critical then, to evaluate what the ideal locations are to convert potential clients into actual clients. Today, even in situations where the actual transaction doesn’t happen on the web, the initial place potential clients are engaged and converted is online.

If you need help with writing your business plan then contact MentorUs Business Solutions today!