If you’re thinking about starting a business, then you’re probably considering writing a business plan first (and if not, you should). A good business plan explains the purpose of your operation, what you hope to achieve and how you plan to do it.
Although creating a business plan might sound scary, the good news is, writing one isn’t as difficult as you think. And once your plan is in place, it will help you steer your business, reach the milestones you set for the business, and perhaps most importantly, help you get funding or bring on business partners. Your plan will help you persuade others that working with you (or investing in your business) is a smart decision.
What, then, does a business plan include and how should you create one? Your plan will vary based on your market, offerings, industry, business size and goals, but below is a basic step-by-step outline for creating a business plan that will outline your goals, market, objectives and budget and help you secure funding, if and when you need it.
- Define your market and opportunity
Before you write a business plan, you need to understand your market. This will most likely involve conducting market research and a competitive analysis to identify where you’re most likely to find success.
By reviewing consumer trends and statistics, you can narrow in on a clearly defined segment of your market, determining factors such as where your consumers are most likely to live, how they make purchases, and the size of the target market. You’ll also want to take a look at the top competitors serving this targeted segment to identify opportunities and explore ways you could serve the market differently (or better).
- Start by writing down your overview and objectives
Your final business plan will actually start with an executive summary, but it’s easier to write this last, after you’ve had an opportunity to work through your goals, objectives, assets/budget and capabilities. Therefore, it’s easiest to begin by writing your overview and objectives first.
The overview and objectives section of your business plan should include:
- An overview of your business, including a brief synopsis of what your business will do and where it will be located
- A description of your industry, product(s) or service(s)
- Your target market
- Your distribution plan
Next, you’ll use data drawn from the market analysis you created in Step #1 to write an overview of the customers that you plan to target with your product or service, as well as outline how you plan to distribute your products to your customers.
- Describe your product or service line
The next step is to supply specific details about your products or services, including a pricing plan and your go-to-market strategy. The first section can list each product or service by name with overall descriptions, model numbers, manufacturers, etc.
The second section should display your pricing model with information about how you will charge customers, such as on an hourly basis or per item, etc.
- Define your opportunity and strategy
After outlining your offerings and pricing structure, it’s time to use your research and analysis to define the market opportunity and your go-to-market strategy. To do this, you’ll provide information on three categories:
- Target market segment
- Trends in the market/industry
- Business requirements
This section of your plan will start with a paragraph or two describing your target market segment, including details on location, size, and market expectations, such as growth in the market on which your business could take advantage of.
Your business requirements section outlines what your business will need to compete in the market, such as the equipment and facility or office, supplies, storage areas, machinery, etc.
- Outline your sales/marketing plan
In the next section of your business plan, you will create a marketing plan that explains how you’ll reach customers in your selected target market. This is a major part of your plan and requires information on pricing strategy, sales forecasts and competitor profiles, and the marketing channels you plan to use to reach your target market.
For more details and a helpful marketing plan template, check out HubSpot’s Free Marketing Plan template.
- Define your day-to-day operations
An operations plan explains the day-to-day running of the business, including details on staffing, manufacturing, fulfillment and inventory. You’ll need to answer questions including:
- Where will your office or facility be located? Will you rent, lease or buy a property?
- What facilities, supplies and equipment will you need to create your product or offer your service?
- What will your initial staffing be and how will your management team be structured?
- Which vendors or suppliers will you use and how will you establish relationships?
- Will you need any licensing, permits or trademarks? What about insurance?
- How will you evolve as your business grows?
- Financials & budget
The final critical step in creating a business plan is to provide a financial analysis and budget plan. This critical evaluation will help you determine whether your opportunity is viable and will be used by investors and lenders if you seek funding for operational or start-up costs.
This section needs to include information on topics such as expected revenue, expenses, cashflow, capital and collateral. For this section, it’s a great idea to sit down with your partner(s), banker and/or accountant to discuss all the necessary points and explore options for potential funding or support.