how to write business plan

how to write business plan

Guide to Writing an Effective Business Plan

1. Introduction

The business plan is a systematic guide for creating the business written document that, if followed accurately, describes in detail the nature of the business, its development, the aims, methodology, interest, and an anticipated financial result. Every business needs a business plan. A successful business plan is the correct key to the heart of investors. When you need people to invest cash in your business, you need a plan. A plan of action established by future in business and an exact way to convince them forward your plans. When a bank, for example, is asked to finance a business, they are very cautious in how the money is spent. While the bank considers whether to make a loan, its officers are mindful to consider the type of risk involved. An effective business plan can make all the difference between a positive answer or a definite no. This is because banks invest a greater sense of confidence in businessmen who express logical thoughts and have hard evidence to back up claims.

2. Defining Your Business

Analysis Body. Investigate the nature of the industry and market. This will give clear support to the claims made in the preceding sections, and strengthen the reader’s conviction that the products are indeed feasible with satisfying today’s customers. This analysis will allow a better understanding of who the customers are and their common attributes, helping to paint a clear picture for the nature of the futures customers in following sections. This is a good place for charts, graphs and other visual aids. Next take a detailed look at your anticipated customers and the decisions they make to buy your product. Provide a clear explanation about how and why you arrived about these customer segments. Validate these decisions with whatever information you have available from your own experiences with similar past customers, anecdotes from employees or other businesses, or any facts or figures that you can obtain from the public. By doing this you will plant a seed of resonance of your products and the customers in the reader’s mind. This is important because people buy products that they can believe in. If you have a narrative, now is a good time for a vignette, showing the customer purchasing a product and leaving them the marked satisfaction of having made a good decision. Finally decipher the buying and selling processes between customer and business. This is important because it explains the value exchange and how firms can satisfy customers at a lower lasting cost. Understanding this will give insight about how to best interface with the customers in your products.

Create a preliminary outline of what your company does, who its customers are, the nature of the products and services, and how the company plans to succeed. A feasibility plan for a small business. Your business plan starts with your business in the middle of a circle. Step one: need Direct the reader’s attention to your business plan with an elegant introduction. Remember this is a feasibility plan and for some people only time they will read. With the reader in mind, information should be tailored to the specific interests of the customer causing them to act, invest, I give credit, you get the idea. Set the stage for later explanation on how your business is a good opportunity. Include some history about the current a need for business and the way your business satisfies or is a strong demand for. This will build empathy with the reader and prepare them for the overview in the next section. Sentence? of the thesis on comparison? In the overview section provide a birds eye view of your products, the various anticipated customers, and how you plan to satisfy them with your products and services. This will be the first time on a business plan for the reader to reach an understanding of what your business does. With the stage set in the previous paragraphs, they will possibly feel like they are making a discovery, this is a powerful feeling.

3. Market Analysis and Competitive Research

Conducting a market analysis will help you identify your customers. The results of the market analysis should identify what type of customers are worth Lawrence’s time and who have a realistic chance of being a repeat customer. The location of Global Commute’s customers is moderately important. For individuals, Lawrence needs to identify the cities where there are a good number of potential repeat customers. This will identify the cities that he should focus on providing services. Lawrence’s best individual customers are professional women with higher levels of disposable income and who are time stressed. These women generally take public transportation and in the cities that they can be found, our transportation service is a viable alternative to taxis, public transportation, and to the stress of driving a personal car. For corporate clients, Lawrence will focus on larger firms that are based in metropolitan areas with good public transportation. His best corporate clients are those that are based in cities with good public transportation that have employees who need to travel to and from work sites. These workers are usually time stressed and the companies will be more willing to provide premium transportation services for them rather than reimbursing them for using public transportation. Understanding customer needs in different markets is crucial to Global Commute’s success. The goal is to identify niche markets where there is higher than average demand for the type of transportation services that Global Commute provides. This is because the market is less competitive and pricing power is stronger in these markets. Pricing power is important because it’s difficult to offer a viable transportation service to customers if the cost is too high compared to the alternative. Services that customers need or are required to address their problems are much easier to sell than those that are nice to have but are not particularly cost effective. The bottom line is that price elasticity of demand is always zero or negative and basic economics says that if price and costs are not equal there can be no equilibrium in the market. So if basic economics is wrong, price elasticity of demand is exactly everything that the world says it is. Maybe the world is right.

4. Developing Your Business Strategy

It is significant at this point to discuss why the management has chosen to enter into the business of their choice. What are their aspirations and motivations? Evidence suggests that firms perform better if the owner has a strong interest in the line of business they are involved in. The job satisfaction of the owner can be crucial to the success of the business; an entrepreneur that is satisfied with what they do will have a better shot at succeeding. Seeking an intended future position in the market is evidence that the firm has set a long-term goal. Forming a strategic target is a method to unite the employees of the firm around a common objective, giving them a clear understanding of what the company is working towards, and a comprehension of the role they play in achieving it. A clear goal can also assist in the decision-making process, as future decisions can be made with the best interest of realizing the goal. A written business plan can be a useful tool to assist in the mapping out of specific future goals and the strategy to achieve them. A plan can be a great way to gauge the dedication of employees, as achieving the goal becomes a more concrete task.

5. Financial Planning and Projections

Steps in Financial Forecasting and Planning: 1. Forecast sales revenue – important to the analysis that generates projected cash flows and eventual profits. 2. Project the firm’s sales based on a specific product – this can increase the specificity of your financial plan. 3. Estimate a demand for an increase in goods sold and services for an accurate sales projection. 4. Use statistical procedures or causal methods of market research to forecast sales levels for specific products over the next three to five years. A statistical model can focus on the relationships of sales with product price, the advertising budget, and the firm’s sales force. Using regression analysis, we can estimate the values of the advertising budget and sales force in the future. High-low methods and educated guesses can suffice for a small company with small-scale operations.

Although financial models take many shapes, a good one will have several years of past financial statements and several years of forward project-formatted monthly and the forward years summarized annually. Input your financial data utilizing an average of the industry’s interest rates and the debt. This will develop your projected interest and tax figures. Make a detailed analysis of the industry’s key success factors. This research will help you as you make strategic decisions later on. Remember that the CSFs in the important areas will determine the basic financial and economic consequences.