Regardless of the size of one’s business, creating a business plan is the most essential step for a wise entrepreneur to take. Basically, a business plan refers to the planned activities and aims of any entity, individual group or organization where effort is being converted into result. It not only describes and analyzes the business, but also covers its financial aspects. Thus, writing a business plan is always helpful in getting money, deciding to proceed or stop, improving your business concepts and odds of success, and keeping on track etc.

how to write a business plan

A successful business plan presents a lot of information in as few words as possible and becomes your roadmap to chart the course of your business. A business plan is usually confused with a marketing plan which is actually a statement, supported by relevant financial data, of how one or more marketing objectives can be achieved in order to develop your business. It may be a part of an overall business plan. The marketing plan will have costs that relate to a marketing budget in the overall business plan. The marketing plan will also have revenue and gross margin/profitability targets that relate to the turnover and profitability in the overall business plan.

The business plan format may vary enormously depending on whether one plans to offer products or services or a combination of both. Essentially it entails what products or services are offered, why there is a need for them, and the products or services offered by competitors.

The following are the essential elements of a business plan format in general:

1. Cover Page. It should start with a cover page which will include a short description of all of your business activities.

2. Executive Summary. Provide total overview of your plan steps that
you will be taking to make your business successful.

3. Table of Contents. It will allow lenders, investors, or partners to get to a specific section of your plan.

4. Company Description/Background. Don’t forget to highlight your skills and experience in your industry.

5. Marketing Plan. Describe the products and services you offer, your market and pricing strategy, and plan to advertise your business.

6. Action Plan. Outline your specific action items to create and deliver your products and services.

7. Financial Management, Statements & Projections. Include sources of startup capital, projected balance sheets, anticipated expenditures, monthly budget, expected return on investment (ROI), and accounting strategies.

8. Operations. Describe procedures for hiring procedures and expected costs for insurance, leasing, and equipment.

9. Closing Statement. Restate your goals.

10. Appendix. It basically includes statistical analyses, sample marketing materials, and resumes.

While writing a business plan it is always important to place some reasonable limits on long-term, future projections. However, long-range planning often becomes meaningless because the reality of your business can be different from initial concept as all the changing conditions cannot be predicted at the outset. Therefore, it is important to periodically review and update the plan. Optimism should be avoided at the very offset. Instead, you should be extremely conservative in predicting capital requirements, timelines, sales and profits. Simple language should be used in explaining the issues, making it easy to read and understand.

One of the biggest benefits of creating a business plan is that you are forced to look at how and why your business will success from a logical and reasonable point of view. This is essential because in any business venture one starts, it is inevitable for raw emotions and unbridled optimism to take the place of cold logic and sound strategy.

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