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Writing a Business Plan - A How-To Guide
Lots of people want to start their own business. One of the first
things that stops these would-be entrepreneurs from realizing their
ambitions is the seemingly daunting task of writing a business plan.
Writing a business plan, though, is a rather easy task if you understand
your business, so let's take a look at what a business plan entails.
we jump into drafting our business plan, we should think about why we
are writing a business plan in the first place. Most business plans are
used to secure financing for a business - whether it be a start-up or an
existing company looking for additional capital. This financing could
come from a bank, an equity or venture capital fund, friends, family or
just about any other potential investor you could think of.
reason to write a business plan is to organize yourself, make sure you
have thought through all the components of your business and make sure
that it makes sense. A great idea for a product or service may not
amount to a great business unless you can turn a profit through
effective marketing, management of expenses, management of accounting
and information systems, etc.
Things to Keep in Mind
you write your business plan, keep in mind that your audience - whether
you're currently looking for financing or not - is likely to be a
potential investor. You need to communicate to investors that your
company understands its business and has thought through all the risks,
challenges and opportunities involved in its industry.
communicate this understanding to investors, you should try to provide
sufficient detail about your business to demonstrate your knowledge. For
example, you could write something like this: "According to the ABC
Trade Association, profit margins for our industry average around 25%.
With the procedures we have put in place, our business can achieve 30%
margins due to the increase in our operational efficiency."
is no hard and fast rule for where or how you should add these kind of
details, but using them will improve your credibility as a company.
should also pay attention to your writing style. There is nothing to be
gained by using fancy vocabulary or flowery language. In fact, such
writing may cause your audience to lose sight of your business. Instead,
you should write clearly and to the point so potential investors have a
clear understanding of how you run your business.
with these ideas in mind, how should we structure our business plan?
Below is one example of how a business plan can be structured. This
outline contains the most commonly-used sections of a business plan but
is by no means exhaustive of the areas that a particular business might
need to cover.
The executive summary of your business plan should be
a two to four page summary of your business plan. It should touch
briefly on each area that is contained in the rest of plan and give the
reader a good sense of your business even if they don't have time to
read the rest of the document. You may also want to touch briefly on the
history of your company and its mission and values in this section.
Hitting the Highlights
it's good to jump into the business highlights section. This section
discusses what sets your business apart and what will lead to its
success. You may want to highlight the experience of your management
team, discuss the strength of your position in the market or any other
factors that make your business competitive.
You may want to
follow this section with a discussion of risk factors coupled with how
your business mitigates or addresses these risks. Discussing risks is
another opportunity to demonstrate that you understand the business and
industry that you're in.
Getting Down to Business
next section is a discussion of the operations of your company. The
operational overview is usually the longest section of a business plan
and usually covers the business strategy, marketing strategy, the
product or service offering, management and information systems and any
other components that are important to the operations of the business.
industry or market overview is also a helpful section to have. It will
give potential investors who are not familiar with your particular
industry or market a better sense of the environment in which you
This section may include demographic information for the
market where you sell your products or services. It may include a
discussion of the regulatory or legal environment for your industry. You
can also include some general statistics on the industry from a
credible source such as a trade association. This will lend credibility
to some of the assumptions in your financial projections in the next