After a long period of ‘pondering’, have you decided to jump into the unknown like a madman, the archetypal symbol from tarot cards, and try your luck by starting your own business? Excellent! However, before you dive into the entrepreneurial world, keep in mind that a quality business plan guarantees you a greater chance of success. Indeed, it is very likely that you have put some things on paper, but you probably did not know that, according to the Journal of Management Studies, entrepreneurs who invest time in writing a detailed business plan grow 30 percent faster than those who do not plan. Additionally, 71 percent of fast-growing companies – those that have had sales growth greater than 92 percent year over year – have a business plan, which also provides a 129 percent greater chance of surviving the initial phase and developing the business.
Interestingly, one study showed that entrepreneurs with a quality business plan have a 271 percent greater chance of closing their business. Although this sounds paradoxical, it is not, because entrepreneurs with a plan regularly revise their business. They know when and why something is not going according to plan, so instead of forcing unattainable goals, they change the initial idea and/or close the initial business, thus saving themselves unnecessary costs and stress.
Therefore, if you want to create a solid foundation and compile a business plan that will lead you to success, follow these steps.
1. Business Summary
Although this chapter is placed at the beginning of the business plan, it should actually be written last, as it summarizes all the key points of your plan and answers the questions:
- The concept of your business (what do you do?)
- Goals and vision (what do you want to achieve?)
- Description of the product/service and how you differentiate yourself
- Target market (who are you selling to?)
- Current financial status and projections
- Who is involved in the business
This section should be concise, clear, and – interesting. It is precisely this that attracts potential investors and business partners.
2. Market Analysis
It is advisable to do a bit of detective work and research the industry, target market, and competition. The data you collect will help you identify opportunities and potential challenges. Include the following in this part of the business plan:
- Size and trends in the industry
- Profile of the ideal customer
- Competition analysis (their strengths and weaknesses)
- Unique selling proposition (why would customers choose you?)
Be thorough but also realistic, as no one likes, nor do overly optimistic projections serve anyone.
3. Description of Products and Services
In this part of the business plan, you detail what you are selling and why it is a good idea. Be specific and make sure to include:
- Description of the product/service
- How you solve the problem of the target group
- Development stage (is it even ready for the market?)
- Intellectual property
- Future plans for product and service development
4. Marketing Strategy
Every business plan should include at least a rough strategy in which you explain to yourself (and potential investors) how you will reach your customers. Because if customers do not know you exist, why even start a business?
- Pricing strategy
- Distribution channels
- Promotional activities (online and offline)
- Customer retention strategy
5. Operational Plan
This is the part where you show how your business will operate on a daily basis, and it includes planning:
