If you’re one of the 27 million Americans who are looking to open their own business this year, you’re probably also looking for a way to fund your venture. Unless you have the financial capability, you are more likely to rely on investors or take out a loan to get the needed funds. The main document that you’ll need in these deals is a business plan.
In this article, we’ve collated frequently asked questions about business plans and attempted to provide the most useful answers based on our years of experience as business plan writers.
What is a business plan?
A business plan is a formal document that describes in detail a business’s goal and how it plans to achieve those goals. Business plans are commonly used by both new ventures and more established companies to present their goals and business opportunities to investors in order to secure funding. Internally, the plan can be used as a strategic roadmap that can help keep everyone in the company on track.
Do I need a business plan?
If you’re planning to present to investors, yes.
According to Forbes, the idea that you don’t need a business plan is a “popular myth” that has only recently arisen. “There is scores of research proving that setting goals dramatically improves your chances of success. And setting goals is the cornerstone of a great business plan,” Forbes said.
The Small Business Administration defines business plans as a “vital part of due diligence”. It explains that without a business plan, the pitch and the summary are like movies made without scripts. “Ultimately, seeking investors without a plan doesn’t work.”
Are business plans only for startups?
According to the Small Business Administration, mature businesses use business planning to set milestones, strategy reminds, and forecasts, making sure the plan is often reviewed and refreshed. “The more a business grows, the more it can benefit from good business planning,” it said.
How does one create a business plan?
There is no “official” or “perfect” business plan format. Your business plan will likely differ from other plans owing to a number of factors, such as your business goals and the audience you’re writing the plan for. For instance, if you’re writing a business plan for an L1 Visa application, your main audience will be the United States Citizenship and Immigration Services (USCIS); not investors, so you’d need to adjust the content accordingly.
Despite the flexible nature of business plans, there are sections, however, that can be considered mandatory, regardless of the format. These sections include the company analysis, industry analysis, market analysis, and financial plan, among a few others. These core sections are part and parcel of business plans and are needed by investors in their decision making.
Your goals and your audience will always affect the content and structure of your business plan. It is always a good idea to determine both prior to writing or hiring a professional writer to save yourself time from revisions, or, worse, a complete rewrite.
What are the key sections of a business plan?
A standard business plan will often include the following sections:
An executive summary is a short and concise overview of your business intended to immediately grab the investor’s or reader’s attention. This section should be two pages or fewer and includes everything you would cover in a five-minute interview or investor meeting.
The company analysis sections is meant to provide an overview of your business, what products or services you offer, and should tell clearly the opportunities presented by the venture. Just like executive summary, it should be provide a concise overview of the business opportunity.
This section provides investors and potential partners with a detailed overview of the industry the business belongs to. It often includes historical data and future estimates of revenue, growth drivers, products and services, and key industry trends.
This section defines your customer base. It is important for you and the reader to understand the type and size of market you’ll offer your product or service to. Markets can either be the end user or intermediary businesses, such as distributors and resellers.
The marketing plan section tells your reader how you plan on getting your customers to buy your product or service. The marketing plan will further include subsections detailing your sales, distribution, advertising, and other promotional strategies.
This section explains the daily operation of the business, particularly its location, equipment, people, processes, and key operational milestones.
A standard business plan financial plan should consist of a five-year profit and loss projection, a cash flow projection, a projected balance sheet, and a breakeven analysis. Together, this section includes a reasonable estimate of your company’s financial future.
Some business plans may need an Appendix section, where maps, photos, copies of contracts, and other supporting documents can be included. Again, this will depend on the type of business or audience you’re writing the plan for.
What is the typical business planning process like?
The business planning writing process differs per individual or company, but there are commonalities. Most business plan writers tend to include the following steps.
Step 1 Kick-Off Call
Also known as the initial interview, this part involves an in-person or over-the-phone meeting with the client. The kick-off call is where the writer is briefed about the background and goals of the business. This is also the part where the writer asks the necessary materials and data from the client.
Step 2 Research Stage
Often, the materials given by the client are hardly enough to complete the plan. Business plan writers would often supplement the missing information with their own research on the client’s industry, market, and competitors. The length of this phase will depend on the type of information needed for the plan. Data that is difficult to acquire could prolong the research stage.
Step 3 Drafting Stage
The drafting process consists of the actual writing of the plan and the creation of the financial model. The time needed to complete the first draft, again, will depend on the scope and complexity of the plan.
Step 4 Review and Final Delivery
Once the draft is delivered, the business plan writer will wait for the client’s feedback. Usually, both parties will agree beforehand on the maximum length of time for revisions and edits. For instance, an agency will only agree to make changes for a period of four weeks after the completion of the draft.
If you need help with your business plan, please don’t hesitate to contact us for a free consultation. We have successfully completed more than 3,000 business plan projects for companies in sundry industries and look forward to working on your business plan project.