How to create a business plan
Understanding the basic components of a business plan is just the first step. Actually starting to write a business plan can still be a daunting task. Writing a truly stand-out, successful business plan, in particular, can take months of research and revision.
However, there’s no need to worry. Even if you have no prior experience, our detailed process on how to create a business plan documented below will make sure you get off to a good start.
Conduct an industry and a competitor analysis
No matter what you’re doing, you always want to be prepared. Why take a shot in the dark when you can be armed with all the knowledge you need? To avoid potential missteps and see how you stack up against the competition, conduct an in-depth analysis of the industry you’re in.
Where is your industry headed? Is it projected to grow in the next 5 to 10 years? How can you be a first mover? Research the trends and statistics in your industry to identify future threats and opportunities. Use data to predict your performance.
In addition, conduct a competitor analysis. Identify your direct and indirect competitors and figure out their strengths and weaknesses. How does your business compare? Apply what you learn to upgrade your business strategy and remember to include your competitive advantages in your own business plan.
Identify your target market
Do not skip market research when writing a business plan. Secure funding by showing your future investors that you have a precise understanding of who your customers are and what they want. Identifying your target market will help you refine your product and service offerings as well. This way, you can increase your profits and steer clear of losses.
Learn more about your target audience through surveys, personal interviews, focus groups, observation, and data you’ve already collected. How big is your target market? How old is your typical customer? How much disposable income do they have? Is there a lot of demand for what you are selling? How does your audience interact with your brand? Can you use behavioral targeting for more personalized marketing?
Develop a marketing strategy
If you want a business loan, be sure to showcase your unique selling proposition and a detailed advertising and sales strategy in your business plan.
What does your business do best? Why should investors help you instead of someone else? Do you offer irresistible low prices, high-quality materials, innovative products, or a sustainable vision? Highlight your strengths and tell a concise but touching story with your business plan.
Detail how you are going to market your offerings in your business plan as well. From your goals and budget to the metrics and KPIs you are going to measure, write everything down. What types of marketing do you plan to utilize? While content marketing may make you an authority in your industry, social media marketing may be better for audience engagement.
Outline your operations and management
Describe your business structure or business model in your business plan. Not only does your business structure communicate how your business is legally recognized, but it also influences your day-to-day operations. Do you own an unincorporated business by yourself and have a sole proprietorship? Or do you run a limited liability company?
Additionally, outline the different positions within your business. Who is on your management team? How many departments do you have? Who are the key personnel? What are the responsibilities of each employee?
Create a financial plan
A financial plan holds you accountable and keeps you focused on your goals. Investors also want to see that your business' finances are something you have put a lot of thought into before giving you a loan.
In general, you’ll want to develop a budget and project your sales and revenue. Include numbers on the sales operation, profit margins, cash flow, customer acquisition cost, and debt ratio of your business.
Write an executive summary
Having an executive summary for your business plan is more important than you think. Many investors don’t have the time to go through every business plan that lands on their desk. For the most part, it’s common practice to look at the executive summary of a business plan before deciding whether to continue reading.
This means your executive summary has to be immediately interesting and straight to the point. Make it as concise as possible, summarizing the key points of your business plan. Typically, it’s best to include a short company description, your purpose and goals, your target market, and your financial projections. Remember to include stats to back up your claims.
Review and revise your business plan
Don’t be hasty and submit the first draft of your business plan as soon as you finish writing it. A solid business plan takes time to perfect. Seek feedback from your advisors and mentors. Then, implement their recommendations in your business plan. Always remember to edit and revise.
Continuously update and improve your business plan
Creating a business plan is a great way to take stock of the big picture of your business. Thinking through your legal and operational structure, your financials, your marketing strategies, and more will help guide you to success and profit. It's also a concise way to pique the interest of and inspire confidence in outsiders you want to impress, like potential hires or investors.
If you're starting a new business, a well-thought-out business plan can help you see which areas need more attention so you can iron out any potential problems before diving in. For an existing business, creating an updated business plan can help you analyze your success, set new goals, and stay on track.
Need more help writing a business plan? Check out Mailchimp's Marketing Library for inspiration and examples. If you're looking to level up your marketing strategy as a part of your business planning, try Mailchimp's email marketing software.