In the article “How to Write a Business Plan: A Step-by-Step Template,” featured on Inc.’s website, Zoë Henry, staff reporter, shares an informative outline and insightful tips to help write an effective business plan.
When it comes to building a successful company, explains Henry in the article, creating a business plan is a first and most critical step.
She continues by sharing business plan guidelines from the U.S. Small Business Administration (SBA), which include:
- An executive summary
- A company description
- A market analysis
- An organization and management breakdown
- A description of the service or product line
- An overview of your marketing strategy, a request for funding (if applicable)
- Some financial projections to back up your ask
- An Appendix (optional) that includes relevant resumes, permits, or leases.
Moreover, Henry offers five steps in the article to help you create the optimal business plan:
- Describe your new business. First, it’s important to describe the business you want to establish. Make sure to be honest about any hurdles or pitfalls you will most likely face along the way. Likewise, Drew Starbird, a professor of operations management and information systems at Santa Clara University’s Leavey School of Business, suggests in the article to include a breakdown of the target market and customer base. And, be clear about the components that will offer a competitive edge.
- Document all aspects of your company. As the founder of the business, you have to be concerned about all parts of your business plan, notes Starbird in the article. For example, include any licensing agreements (your location strategy). Make sure to also know and understand your numbers/cash flow.
- Create a modifiable plan. Certain sections of your business plan will be more important depending on the audience. For instance, investors will want to know financial estimates/projections while potential employees will care more about the overall business structure. Furthermore, make sure to include where you aspire to be in three to five years. Starbird also recommends in the article to update your business plan each year the company grows.
- Include the details. Include any information about external growth trends when writing your market analysis. Also, pricing power — how a shift in your prices will impact consumer demand — is another detail to consider adding to help boost your business plan. “It’s also important to keep your expectations realistic and honest,” explains Henry in the article. “The biggest mistake entrepreneurs can make when writing a business plan, says Starbird, is to be overly optimistic with sales and future cost estimates.”
- Remember why you care about your business. In additional to your financial goals and future projections, make sure your business plan reflects your values and how you hope to build up the community.
Read the entire article on creating an effective business plan here.