How To Craft the Perfect Business Plan in 5 Simple Steps
Description: Starting a business is challenging because not all things go as planned. However, a thought-through business plan is always a nice start because it helps not only to prepare for many surprises along the way but also to attract investors.
A business plan is pretty much just like a building’s foundation. If it’s good, then it may well bring you success. No matter if you are about to open a flower shop or build an aerospace company to carry out the next Firefly launch, understanding how to write a business plan is the first step in any endeavor. And in this article, we will help you should help you grasp the essentials by sharing all the components of a business plan.
5 tips on crafting a perfect business plan
#1 Talk about your story
If you want investors to be convinced and inspired by your plan, then you have to bring in a human angle. This can be done through storytelling – have readers hooked by presenting how you came up with an idea and what drives your vision towards future success. It seems that stories activate a lot of brain parts, making them more emotional, memorable, and persuasive. In other words, stories always work better than data.
#2 Structure it
A business plan template is quite standard, but you should stick to only 20 pages (or less) if you want clarity and even professionalism. Look over business plan examples to understand more. After you have made an executive summary and informed about your product, structure your plan into three main sections:
- Action plan
#3 Be specific
You won’t get too far by creating a business plan that is vague and clear. Always remember that business plans that secure investment is based on workable models backed up by detailed statements.
#4 Express yourself visually
Most people stick to data when writing their first drafts, but practice shows that documents with visuals (graphs, charts, etc.) are more effective these days. Remember the statement above, that stories work better than raw data? This is a similar principle. Because when you present something, accompanied by some visuals, people get a lot more invested in hooked up, and it helps to deliver your message more clearly.
#5 Justify your projections
Any startup, regardless of its specifics, should bring profit. ROI estimates are an important part of any long-term strategy, and you cannot just take those estimates out of thin air. Always make sure to research and justify your data.
Common Challenges with Crafting a Business Plan
Most startups remain in the fantasy stage because aspiring entrepreneurs believe that a set of projections and strategies can convince investors that any startup idea would work. This is a mistake.
First, you need an idea that makes sense, as your money, efforts, and time should be focused on this idea. Strategic plans should be carved, together with sales and marketing plans. Set foundations for smooth operations because if you do, your investors will join you.
For most entrepreneurs, using a business plan software comes easy. Developing a strategy is the first step when starting any business. Identifying if a business idea is failing on paper should be helpful when prospective founders avoid wasting their time instead of making money with a business that doesn’t have a real chance to succeed. So, in the least, the plan must be logical and objective.
What sometimes seems to be an interesting idea may prove unviable after competition and funding analysis. Non-existing markets are another challenge to watch out for.
Communicate your company vision and purpose, describe what responsibilities management should have, inquire about personnel requirements, and provide an overview of any marketing plan, evaluating the current and the future marketplace competition. Lay down the foundation of the financing proposals that lenders and investors come with to evaluate the company. These are the components of a business plan, but the actual plan should as well accomplish some other objectives.
Objectives of a Business Plan
Above all and anything else, a business plan needs to be convincing and to prove a case. You need to provide factual and concrete evidence. Moreover, your idea should be reasonable and sounding like it has a chance at success. After you have evaluated your capital needs objectively, as well as your services, products, and competition, together with your marketing plans and the profit potential, you will have increased chances to succeed. Who can your business plan convince? The business plan ideas should constitute your business plan model. Here are the objectives that need to keep in mind:
- Identify the potential financing sources. If you need some money from friends, a bank, or your relatives, then your business plan can be of great help to obtain this money. Your financial statements can show what you have been doing. The financial projections describe where your plan is going. You will have your business plan showing how you are going to get wherever you want to get. Since investing is about risk, a business plan that’s great can be helpful so that lenders understand the risk to quantify it, whereas your approval chances are increased.
- Attract potential investors and partners. As far as family and friends are involved or concerned, you might not have to share the business plan with outside investors but if you do, keep in mind that they will be looking for a property evaluated strategy.
- Finding the talent to work with. To attract the most skilled people for your business, you must show your prospective employees that the startup phase is still in motion. In the early stages, a business is in the idea stage. You need a strategy that clearly highlights your startup goals so that you can attract the right people to move it from idea to exit the stage and bring profits in the long run.
- Establish potential partnerships. In a partnership, there’s an agreement of sharing work, profit, and revenue. If you are a new company, then no one will know your market quantity. Set up a partnership that can make a difference for your business launch.
Following these tips and sticking to a standard business plan structure should help you outline a clear strategy for your company’s development. However, every new endeavor starts with a workable idea, so our last tip is to carefully evaluate all weak and strong points of whatever business you are about to start.
Emily Moore is an English & programming teacher with a passion for space and blogging. She believes that current exploration should be focused on preserving our planet’s resources. With satellites circling the orbit, it is easier to get relevant data on any environmental changes. This, in turn, should help people quickly address any challenges.