How to Develop your Business Plan?
Most Entrepreneurs want to skip on developing a business plan, I don’t blame you, because everywhere you look you see people telling you to develop an extensive business plan, and you need a business degree to do it.
The good news is, you can develop your business plan even without a business degree!
Business plans don’t have to be complicated, but you have to pay attention to the details. I have developed all types of business plans and the most effective ones are the simplest and the easiest to read.
Identify why you are developing the business plan and who is your audience. Is it for internal consumption to focus your team, for external consumption to your shareholders, or for financing, debt or equity.
Develop a 3 years business plan. In fact, you may find some people telling you to develop a 5-years business plan. It is extremely difficult to foresee 5 years into the future.
In fact, I have always been able to defend the 3 years business plan and if you have an experienced audience they will understand. You don’t have to be too verbose you can do it in point form.
The main elements of a business plan are:
1- Executive Summary
2- Company, products or Services
3- Marketing Strategy
4- Pricing Strategy
5- Sales Strategy
8- Company Milestones
Company, Products or Services
1- Illustrate the company and its structure.
2- Identify the market the company is operating in.
3- Describe the product or services you are offering.
4- Discuss your customers and their acceptance of your product or services.
5- Define your competition and identify your direct competitors.
6- Outline how you can compete and win.
In this section describe your marketing strategy. The objective of an effective marketing strategy is to identify the customer that will commit to buying the product or service. In other words, identify your customer Demographics and Psychographics and the company’s approach on how to win this customer over.
To get into this strategy in details, check out my post on How to Develop a Marketing Strategy? I have also left you a link at the bottom of this post.
In this section, identify your price and the reasons behind it by describing your unique offering versus your competitors. Moreover, illustrate the market condition and its ability to support your pricing strategy. Additionally, be insightful in discussing your competitors’ pricing and the variances between your price and theirs.
Moreover, discuss the market supply and demand issues, if there are any. Also, do not forget to talk about how these issues would affect your price in the near and long term. To understand this topic in detail, check out my post on Pricing Strategy: How to Price your Products or Services? I have also left you a link at the bottom of this post.
In this section discuss your sales strategy by identifying your target customer, and the advertising campaign you intend to initiate. Also, describe the selling approach, and how many sales people the company needs. Additionally, talk about the training process for the employees and how you intend to win the war against the competition.
For more information, please refer to my post on How to Develop an Effective Sales Strategy? I have also left you a link at the bottom of this post.
Define your operation in terms of how you intend to run your business. In short, start by developing a corporate functional structure of all the functions that you need to run your business. Talk about the following:
1- Describe each function and what it does.
2- How many people you need to run each function?
3- When you will hire the employees to run each function?
4- Who reports to whom?
5- Identify your employee’s training if needed.
Based on the corporate functional structure that you developed in your Operation section, include the key people to fill the important jobs you identified.
Furthermore, mention each person by name, and include their background. Then, discuss their experience and why they are the best suited for the job. To clarify, your team is the company’s credibility. And having excellent people in key positions will increase the confidence in the company and in the execution.
In short, your selection of credible people and allocating them to the appropriate job will increase your likelihood for success. Especially, if you are seeking financing through bank loans or Venture Capital. For more information, please refer to my post on How to Hire The Right People? I have also left you a link at the bottom of this post.
1- Financing closing date.
2- Hiring of key people.
3- Product development timeline and delivery.
4- Marketing campaign development and launch date.
5- Sales objectives; and so on.
1- Startup cost: If you are in startup mode, this would include the initial cost to start the company and can include, equipment, desks, computers and so on.
2- Cost of Goods Sold, material and labor, related directly to the product or services.
3- Projected revenue from sales.
4- General expense, office, marketing, sales and so on.
5- Add it all up and balance your sheet.
6- Identify your profit or loss.
All in all, developing a business plan is very important for a Startup or a Running business. And by doing it, you and your management team would be thinking about all the important business elements. As a matter of fact, this would allow you to plan your business well in advance. Furthermore, your business plan would also help the company in focusing on the common business objectives.
In fact, business plans are living documents. And this is the reason for why they should be reviewed every 3 months to compare what is written in the Business Plan to the actual result of running the business. Mainly, this review will provide the management team with the understanding of the difference. Along with that, they would be able to see what has changed in terms of internal execution and external business conditions.
On the whole, the development of Business Plans may consume some energy. But it forces the management team to articulate their 3 years plan and how they are planning to achieve it. And this is what helps the company focus on the specific objectives and track the success of the execution. Which eventually helps the company become successful.
So, if you are about to start your own business, ensure that you have your business plan in place. You can leave a comment in case you need any assistance from me. Good Luck!
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