[YS Learn] 8 key steps entrepreneurs need to write a great business plan
Sometimes, having a great startup idea is not enough. While you may want to plunge right in, it is important to have a business plan for effective growth.
A business plan might not guarantee the success of a startup, but it ensures that you have visibility on what needs to be done, keep working on a path to achieve success.
Image credit: Anubhav
But before we dive deeper, let us look at what a business plan is. A written document, a business plan describes the nature of your business, the sales and marketing strategy, financial background, and projected profit and loss statement.
The need for a roadmap
Your business plan should provide a roadmap of where the business will head in the near future.
Here are some important factors to consider before you start crafting your business plan.
- Be objective and logical. Sometimes while an idea seems great, you need to critically analyse it to see if it can be a viable business opportunity
- Create a clear blueprint for the leaders and core team of the company
- Clearly communicate the purpose and vision of your startup. Describe all the responsibilities, requirements, and provide an overview of the plans
- Evaluate current, potential, and future competition.
Once you have a clear vision, start working on your business plan in the following format:
- Executive summary
- Overview and objectives
- Products and services
- Market opportunities
- Sales and marketing
- Competitive analysis
- Management team
An executive summary describes the company’s purpose and goals in a short and crisp manner.
A good summary needs to have a concise description of your products and services, a summary of objects, market description, the justification for the viability of your business with a quick overview of the competition and competitive advantages, growth potential, and funding requirements.
Your executive summary shouldn’t be more than one or two pages. Remember, this can make or break your plan.
Overview and objectives
A business overview describes the products or services you will be providing and selling, who will provide those, and who are you providing those to. It generally entails your offerings, what do you need to run your business, who your customers are, and who will be servicing them.
You need to identify the sector or industry you are in, clearly define the type of business, identify potential customers, explain the problem you are solving, and how exactly you intend to solve that problem.
Products and services
As the name suggests, this section needs to be dedicated to the products and services your business will provide. Avoid using jargon, try using simple terminology and language.
This section also needs to describe how your product or service will be different from the competition, and why customers need it. Any copyrights, patents, or trademarks that you have won or applied for will also come under this section.
Here you will evaluate and analyse your customer demography, behaviours, habits, and spending and buying patterns.
This needs a deep understanding of the market and the opportunities that it may present. It also needs to describe if there is a viable market for what you plan to offer.
Some of the key things to keep in mind are:
- Size of the market
- Overall industry perspective and performance
- The segment of the market you are targeting
- Current demand for your product or service
- Pricing you plan to keep
Sales and marketing
In this section, you will need to describe how you intend to reach your target market and consumer. These include different marketing strategies.
- Figure out what is the best way to reach your potential customers
- Build your marketing plan different from that of your competitors
- Consider how do you want people to consider and think of your brand
- Highlight the benefits of your product
- Key differentiators of your product and service
- Calculate the budget you will need for your sales and marketing efforts
- Metrics to decide whether your initial marketing plan was successful
- Figure out if you need on-ground sales support
- Decide if you need PR support.
While you may have defined and spoken about your competition in bits and pieces, across the document, this section will focus on who they are and what they do.
You will need to analyse your competitors — current, potential, and future. Here, you need to clearly outline your understanding of their strengths and weaknesses.
- What are their strengths?
- What are their weaknesses?
- What are their objectives of getting into this particular business?
- What are their marketing strategies?
- What is their market share, and can you grab a share of that pie?
- How will they respond when your product or service hits the market?
In this section, focus on how you will serve your customers and at the same time, keep your operating costs in line to ensure profitability. It should detail all the operational strategies — manufacturing, technology, fulfilment, inventory, staffing, managing, everything needed for the day-to-day running of the business.
You need to focus on
- The facilities, equipment, and supplies needed
- Organisational structure on who is responsible for what aspects of the business
- R&D, if needed
- Initial staffing needs
- Business relationships with vendors and suppliers
- Operational changes as the company grow
- Cost-cutting steps if the company does not perform to expectations
In this section, outline the team you have or intend to have in place.
Here you will need to show:
- Who are the key leaders? What are their backgrounds, skills, and experience?
- What experience do they bring to this business and sector?
- Duties and responsibilities
- Salary levels.
In conclusion, a business plan is a strategic outlay of what one needs to expect from at least the first few months of their business. It makes the journey of starting out simpler and easier.