Not sure how to create a business plan? Think again! Here’s how to make a business plan, even when you’re starting from ground zero.
Whether you are branching out to freelancing in 2022, rethinking your current business strategy, or launching a new venture, you'll need a business plan.
An excellently written business plan prepares you for potential business roadblocks, gives you clarity into the resources and strategy you need for a successful business year, and gives you validation for your business plans.
This is how to make a business plan for your organization in 2022.
The steps for preparing a successful business plan are:
Your business description is vital because it outlines your business objectives and possibilities, making it easier for your partners, employees, and investors to understand your company better. As such, provide detail of what your company does and how it is different from competitors in the description.
Start by researching your company's industry as well as your competition. Use your network to find valuable trends and information about your industry. Find case studies, articles, news sites, or any other source of information to help you understand your industry.
Remember to get feedback from your target market to get valuable insight into the expectations of your potential customers. Then do the same for your competitors. From the research, start to detail the state of your industry and the future projections.
For instance, digital technology and robotics are revolutionizing the world of labor. This is something you should include as part of an expected future trend for your company. Have both the negative and the positive implications of these trends.
You want to ensure you record any possible outcome from your industry trends. Now that you are informed, start to outline your company's information. This is your business name, origin, location, structure, operation and management strategy, and expected number of employees.
Start by including your business industry category. Next, create your problem statement to identify your customer pain points and solutions you plan to provide to curb those issues.
Your problem statement should include your products or services, their benefits, features, and the gaps they fill in the market. This also means that you should identify your target market by describing their age, values, income level, spending habits, geographical location, and attitudes.
Also, identify what your business can do to resonate with your target audience. For instance, if your targeted audience is young people, you should be on social media platforms like TikTok to resonate with your audience preferences.
Remember to include your plans for manufacturing and distribution in your business description. This is where you have the names of your suppliers, employees, and vendors. Additionally, indicate the metrics to use to make your business profitable.
In a nutshell, your business description should have your company name, business structure, location, origin story, mission and vision statements, short and long-term objectives, target audience, and the products or services to offer.
Generally, market analysis and strategy is a qualitative and quantitative assessment of your company's market. The goal is to understand the size of your market, customers, economic environment, and competition from the perspective of the regulations or the barriers to entry.
A market analysis is crucial because it tells your partners and investors that you understand your market and shows the opportunity for your business to succeed. Start by assessing your market size, meaning the segmentation and demographics for your market. Do this depending on your business type.
When assessing your market, look at the market value and the number of potential customers. For instance, suppose your local town has a market value of $200 million in your industry with five local competitors. Still, the neighboring town has a market value of $100 million with one competitor. Then the neighboring town offers a better market value.
If the number of customers in your town is 2,000 and the number of customers in your neighboring town is 1,000, then your town is more accessible for a new business since it has more customers.
Assessing your potential customers requires determining the individuals or companies willing to purchase your products or services. But evaluating your market value is challenging because you are trying to determine whether the market is accessible.
You can use the top-down or the bottom-up approach to determine your market value. In the bottom-up approach, multiply the number of potential customers with the average value of each transaction. Let’s say your per-unit profit is $50 per transaction.
The number of customers in your town is 2,000. That’s the population of your target market. To calculate the market value using the bottom-up approach, we’ll multiply the population of the target market (2000) by your per-unit profit ($50) and your total number of yearly transactions. So, if you have 100 yearly transactions, your yearly market value equals $10 million.
In the top-down approach, start your assessment from a global approach and then look at the potential in your local town market.
Suppose 5 million houses are in the US. In that case, the value of your services for each home in the US would be $42 billion divided by 5 million = $8,400. Since your town has 2,000 potential clients, your market value will be $8,400 x 2,000 = $16.8 million.
Businesses are advised to use both approaches to determine their most accurate market value. Once you know that your market has value, start to look into your target market and its drivers for demand. This means determining why your customers need your business.
Assessing your market need is equally important because it helps you understand why your customers buy your products and incentivizes your investors to join your business.
When identifying your market need, specify the gap you fill with your business. You’ll fill this gap with the specific service or product that you offer.
In addition, identify your competitors and your competitive edge over them. Benchmark your competitors against market demand drivers like quality, price, and add-on services to find your competitive advantage, like offering equipment for hire.
Finally, identify your barriers to entry. That is, identify the factors that might prevent a competitor from opening a similar business and outline why you believe you will find success in entering your market.
Examples of barriers to entry include the need for a substantial initial investment, the cost of building brand awareness, access to distribution channels, technology, regulation, and location. Many investors like barriers to entry because they reduce competition. Remember to check the regulations in your industry and the steps you need to take to remain compliant.
A marketing and sales plan is vital because it tells your customers who you are as a business, your products or services, and allows you to implement strategies to get your products or services into the market.
Since you already know your target market and competitors, start to build your brand. How do you want people to perceive your business? How do you want them to feel when people think about your products or services?
What benefits are you offering your customers and employees? Are you offering solutions to customer pain points? How different are your products and services from those of your competitors?
Answering these questions gives you the insight you need to create your brand message, after which, start to create your marketing and sales plan. Consider your marketing and sales budget, the metrics to assess your efforts' performance, and the staff members you need to market and sell your business.
For instance, pay for road signage, create flyers and posters to distribute across your town, and create a website for your local business. Additionally, open social media pages for your business and start to build your online profile.
Invest in advertising and promotional initiatives for your business as well.
Create a pricing rundown for your products or services as part of your promotional strategy. Your competitor prices will help you develop a pricing strategy that offers a reasonable markup.
If your products are more on the high-end market, consider supplementing your offer with a loyalty program or discount offers to entice your potential customers further to purchase. As you create your marketing and sales plan, ensure they align with your business goals.
Make your goals specific, measurable, achievable, relevant, and time-bound. The P's of the marketing mix is excellent for setting up a viable marketing and sales plan. Also, ensure your test and re-evaluate your goals occasionally to keep them viable for your market.
You've done your competitor research: you need a competitor analysis to have an in-depth outlook of their products, marketing strategies, and sales. This will help you create better processes to capture the market for a good ROI.
Besides, by knowing how your competitors work, you learn about available opportunities in your market to take advantage of. You can adopt the industry trends that keep you among the top-performing companies in your industry.
A competitive analysis will also help you categorize your direct and indirect competitors and identify each competitor's market share, distribution channels, and sales tactics. It also identifies the more successful strategies and those that fail, making it easier to implement performing marketing and sales strategies.
For instance, if your competing online retail store has had excellent success with Google Ads, you can include a budget for the same in your marketing plan and add an edge by adding a budget for Facebook ads.
Also, use your competitor analysis to determine the most successful way to handle your customer relationships. You need a customer relationship management strategy and tool that encourages customer satisfaction, experience, and loyalty.
This will provide repeat customers to grow your business further. Look into your competitor's product pricing and confirm if they use any promotions to entice customers. Remember to look at shipping or delivery costs as well.
Next, analyze the marketing strategies your competitors use. Do they have a blog, podcast, webinars, features articles, case studies, or press releases? Do they use offline and online advertisements? What type of content do they share, and how often and consistently are their posts?
Are they using any technological tools to make their marketing efforts more automatic and easy to handle? Do they promote their content? What is their brand awareness like on social media? Do they have an active engagement for their content?
Once you have the answers to these questions, perform a SWOT analysis to learn about your competitor's strengths, weaknesses, opportunities, and threats.
This part is a deep dive into your business structure, employees, and shareholders.
It comprises two primary sections – your business team and structure and your management team. Start the section by summarizing your business size, management team, composition, and years in existence.
Now, start to fill in the details of your company structure. Usually written in a chart, your organization structure identifies the CEO, CFO, directors, and other individuals with management or different employment roles in your organization.
Also, identify whether your business is a corporation, sole proprietorship, Limited Liability Company (LLC), or a partnership. Remember to determine whether you plan to hire remote workers like a virtual assistant or a freelance copywriter.
In your management team section, detail the role of each employee, their responsibility, and the value they bring to the company. For instance, if your business is an LLC, mention the owners, managers, and organization members.
Include their name, stake in the company, whether they are silent or active partners, the stock ownership, and position of the primary shareholders, including the CFO, CEO, COO, and the directors.
Include the educational background, experience and skills, and the responsibilities of each member. Mention any recognitions or awards, if available, and their value to the company. For instance, a CFO can help with the financial budget and resource allocation.
Then identify how each member will be paid and the amount of payment. Add this type of information for your supporting professionals like your lawyers.
Showcase the value, quality, and benefits of your products or services here by describing why what you provide is needed by your target market and how it differs from your competitors. Start with a description of your products or services.
Then, detail your product or service pricing plan to compare with that of your competitors. Account for the sales strategy you plan to use to sell your products, including your online presences' role in enhancing your marketing and sales efforts.
Also, include your sales processing and shipping strategy and needs. This includes all the materials you need for marketing, selling, and delivering your products. Don't forget to include the legal requirements for manufacturing and selling your products.
Next, it’s time to write a product description. Remember to include all the future products you plan to have in your product or service portfolio.
The trick to writing a successful product and service description is to make it exciting for any reader. Ensure you indicate the needs that your products or services fulfill. For instance, state that your business is bound to enhance your customers’ lives.
Include the features that separate your products or services from others in the market. This can be anything from the products themselves to your entire delivery process. For instance, if you offer free shipping for repeat customers, mention it in the product description.
You must mention the benefits of your services or products. Also, show your expertise in delivering the products or services. Do this by including your expertise, portfolio, achievements, or experience.
Remember to be precise in your description and make your work easy to read and understand. Also, write for the customer, focusing your attention on their needs.
This is where you write your step-by-step plan to achieve your business mission and vision. Give detail of your company's goals, procedures, and timestamp. The more strategic you are with your operating plan, the more tactical you will be with your processes and deadlines.
Focus on describing who is in charge of your business processes, what each department in your organization is responsible for, and where your business operations will occur. Include the deadline for each task and the cost of implementation.
The operational objective should differ from the organizational objective, and it should depend on each department. Nonetheless, each operational objective should ensure it adds value to the overall business objective.
For instance, your business objective might be to provide services to at least half of the 2,000 homes in your local town. Your marketing operational purpose might then increase brand awareness among your target audience.
Once you have your objectives, determine how to achieve them and the resources you need. This includes a list of your supplies, equipment, technology, and the cost each department is expected to incur. It is a description of your production process.
Technology includes company software, phone systems for the customer service department, and web analytics tools for the marketing department. Include your business location, employees, and working hours.
Now that you have your operational objectives and the production process, set a timeline for your goals. Include a milestone for each goal and keep tracking your performance to meet your business objectives.
One example of a production milestone is launching your business and maybe providing services to 50 customers within the first quarter of the year that your business is in operation.
This means that after three months of launching your business, you should check to confirm whether your business has provided services to at least 50 customers.
Your milestones should include the process of hiring employees, marketing your products or services, and the financial benchmarkers for your business like finding funding for the company, production, marketing, and sales costs, and the expected ROI.
You need short and long-term financial projections for your business, including a sales forecast, cash flow statement, profit and loss statement, expenses budget, and balance sheet. Ensure you follow the accepted accounting principles for the United States when creating these aspects of your financial projection.
Use your market research and understanding of industry trends to determine your sales forecast. For instance, project the sales you expect to make every month for the first year of business operations using your market value information.
For your expense budget, include every business cost, including your overhead costs. This includes your employee costs, production and manufacturing costs, the cost of resources, the cost of marketing, and other costs like rental and utility expenses.
In the cash flow statement, identify the money coming into the business from sales and other interests and the money leaving your business in the form of costs and investments every month.
Ultimately, you’ll use your sales forecast and expense budget to create your cash flow statement.
Remember to account for the lag in your invoices if your clients take a while to pay for products and services. Create your profit and loss statement to show your expected profits and losses from the three predictions. Have a monthly figure for the entire year.
Then, write down all your assets and liabilities in your balance sheet, including things like equipment, property, outstanding invoices, unrepaid loans, and unsold inventory. Assign a value to every asset and liability on the balance sheet.
Finally, identify the period when your business will break even, meaning when it makes a profit. Be realistic with your financial projections.
Accounting software will simplify the process for you. Using your software, you can create a financial projection for the best-case outcome and another for the worst-case outcome.
This is where you put the actual value to support your business plan since it includes the details that support all your business projections.
Include all your business credit, tax information, management and shareholders' resumes, product images, and samples of your marketing materials like logos and flyers in the appendices.
In addition, include reference letters, market research information, competitor information, legal business documents, copies of your licenses and permits, any business agreement copies, business contracts, financial projection documents, spreadsheets, and your business and staff contact information.
Not everyone in your company needs access to your exhibits and appendices. For instance, your employees might not need to see your financial projections — but your investors will. Nonetheless, the materials in this section must be thorough and accurate.
The executive summary is usually the first section of the business plan, but we've placed it here because, like writing your introduction, writing the executive summary is much easier when everything else is figured out.
Your executive summary is, in essence, the synopsis of your business plan, and it includes a summary of each section of your business plan. It is the most significant part of the plan since it encourages people to continue reading.
Any reader should know what is in the entire business plan by reading your executive summary, making it one of the most challenging sections to write. Also, this section should entice your potential investors, customers, or employees if they are to be interested in your business.
As a result, make a compelling statement detailing the story behind your business idea at the start of your summary. Try not to oversell yourself but keep your tone exciting and highlight the positive aspects of your business, even amid the risks or challenges.
Make sure everything is self-explanatory, direct, and easy to read and understand. Tell your readers why your business is bound to succeed in a confident tone at the end of the summary. The elements to include in the summary include your business name and location, market value, competitor edge, management team, financial overview, and milestones.
In addition, include your value proposition, product or service benefits, target audience, financial needs, and current business stage of development. Your marketing and sales strategy and implementation process should be part of the summary.
Other essential elements to include in the summary are your mission and vision statements, your company history, your products or services, and a roadmap for your projected business growth, both in size and revenue.
Remember to mention your business objectives, investors, stakeholders, and the opportunity your business plans to exploit. Additionally, note your growth plans and your chosen business model.
This document holds all the details of a business's objectives and the strategies to attain those objectives. Your business plan will provide you with a clear roadmap of your financial, operational, and marketing goals.
Usually, a business plan has an executive summary, a business description, marketing strategy, market analysis, financial planning, business budget, and products or services. An excellent business plan will also identify plans to stand out in a particular industry and an overview of the industry as a whole.
The length, details, and language in a business plan are different for every business, and they depend on the audience and the objective of the plan. For instance, a business plan for a restaurant includes details about the location and the primary menu. Still, the plan for a pharmaceutical company might focus on the government approval processes.
Usually, you will find three different business plans, the traditional business plan, the one-page business plan, and the lean startup business plan. The one-page business plan is a one-page business objective summary.
Since it is straight to the point, it is often used to introduce outsiders. The traditional business plan is the standard form used by companies, and it provides comprehensive details in each section of the plan.
As a result, it is much longer and takes longer to create. It also has more vital uses like training new employees, getting business loans, and enticing potential investors, so it often has detailed financial plans and uses and details about company employees.
On the other hand, the lean startup business plan focuses on the critical elements. It is short and less detailed, and it skips sections like the management team and the company history. Therefore, it's not the preferred option for financial loans or investors' businesses.
However, lean startup business plans are perfect for creating a business plan that grows organically. They fit well with organizations that want a shorter and easier business plan for operations.
When creating your business plan, remember to include your financial projections as part of the steps to starting your business. Your business proformas are essential because they include your business budget, market analysis and strategy, and the expected financial needs for a company in a given period.
Business plans are essential for internal and external business uses. They give all your employees a guideline for your goals and provide potential investors with a plan to invest, even if your business is just a startup with no proven record of positive performance.
Also, a business plan ensures your business shareholders are on the same page, thus reducing management conflict. Established businesses also use business plans whenever a new project is underway or to change their business processes.
Usually, small business owners use business plans to clarify the drawbacks and costs of their business ventures. They can use these predictions to modify the business structure to reduce risks. Additionally, business owners use the business plan to get an idea of the financing required to run their business and sustain it successfully.
Besides, a good business plan outlines all your project or business costs, making it easier to venture into investments with a high probability of a good ROI.
If you plan to start a business venture outside the scope of freelancing, you should learn how to make a business plan. This is especially vital if your new project requires plenty of time, money, and other resources.
The business plan helps deter any uncertainties of starting a new business or project for a startup by offering projections on costs, sales, and market conditions. Here, the business plan focuses on what the company is created to do, the reasons for choosing the founders, and the steps to achieve the said business goals.
A business plan is used strategically to steer the business in a given direction for existing businesses. For instance, you can create a plan to reinforce your strategies, manage your goals and employee responsibilities, and track your business results with established metrics.
You can also use the plan to manage your resources for running your business successfully. Your existing business will have a competitive advantage over competitors with a business plan. It helps you grow and innovate faster by identifying opportunities and problems that might delay your progress beforehand.
Who should prepare the business plan? It can be written by anyone in your organization who can write a business plan. However, it’s best if they hold a significant role in the business you plan to undertake. So, involve people responsible for the business’ major decisions in your business plan’s creation.
For instance, as the business owner, it is crucial to be a part of the creation process because you drive your company's goals, desires, abilities, and philosophies. Additionally, your employees, investors, and shareholders rely on you.
You should also prepare the business plan with help from different experts. For instance, get a marketing specialist to help with your marketing strategy, a financial expert to help you set up your financial projections and operations, and a skilled writer to document the plan in the right tone.
Businesses that use a business plan often see a 30 percent faster growth than their counterparts. That’s why it’s so essential to plan ahead — you’re setting yourself up for success as your company grows.
So, now that you know how to make a business plan and use it, it is time to grow your business. However, a business plan will not guarantee your business success. Instead, you must use it for your management processes and re-evaluate and change it often.
Use the business plan to track your milestones within given periods, say every 30 days, and compare your projections with the actual business results. Also, always ensure you review every facet of the business plan to ensure you’re not missing any potential problems. Bonus tip: Get additional tools to help you set and achieve your career goals. For instance, Hoist is a business platform created purposely to empower small business owners in the painting industry.
Get in touch with Hoist and use a small fee to get high returns for running, marketing, managing, and growing your business hassle-free.
From creating a business plan to estimating your first project, we’ll walk you through the essentials of starting a painting company.
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