A business plan does not have to be difficult to write. A business or accounting degree is not required to create a viable business plan. Business planning can be easy and even enjoyable.
Here are the 7 steps to write a business plan:
- Executive synopsis
- Goods and services
- Market research
- Sales and marketing
- Company structure and management team
- Financial forecasts
- Appendix
This article will help you understand the procedure to follow when writing a business proposal. Before diving into details, let’s first discuss a business proposal.
What is a business proposal?
A business plan is a document that describes your company, its products and services, and the customers to whom you sell. It describes your company’s strategy. How you intend to build and grow your company, your marketing strategy, and who your competitors are. Most business plans include future financial projections. They are setting sales targets, expense budgets, and cash flow projections.
A business plan is no longer just a static document you write once and then forget about. It’s also a guide that will help you outline and achieve your objectives. A management tool for analyzing results, making strategic decisions, and demonstrating how your company will operate and grow. In short, if you’re thinking about starting a business or pitching to investors or venture capitalists, writing a business plan can help you succeed.
Why do you need a business proposal?
Your business strategy is most likely already formed in your mind. So you might be wondering, “Why should I bother creating a business plan?” ” Here are the top five reasons to invest in planning:
· Planned businesses grow 30% faster
A surprising amount of research on business planning has been conducted, and it has been discovered that companies that take the time to write a plan and review it regularly grow 30% faster than those that do not plan. These businesses grow more quickly, perform better, and are less likely to fail in the long run.
· Lenders and investors require business proposals
You’ll need a business plan to expand your business and get a business loan or raise money from investors. Most lenders and investors will request a business plan, but even if they don’t want to see the actual document, they will ask you questions that only a well-written business plan can answer.
· Business plans help to reduce risk
It is always dangerous to start and run a business. Rather than flying by the seat of your pants, you can use a plan to forecast potential cash flow issues and anticipate potential roadblocks, so you aren’t caught off guard. A business plan will assist you in mitigating risk and navigating the future.
· Business planning allows you to make wise spending decisions
Before investing in your company, you should consider the financial implications. With a business plan in place, you can easily test different scenarios to see how a new hire or expansion to a second location will affect your company.
Business proposal format
Whether you’re creating a business plan to raise funds and grow your company or to see if your business proposal topics will work, every business plan must include six essential sections. Each section is summarized below:
1. Executive synopsis
The executive summary provides an overview of your company and its plans. It should be one to two pages long and placed first in your plan. However, most people write it last.
The executive summary should ideally be a stand-alone document that covers the highlights of your detailed plan. When evaluating your company, investors frequently request only the executive summary. If they like what they see in the executive summary, they’ll often request a full plan, a pitch presentation, and more detailed financials.
Your executive summary should include a summary of the problem you are attempting to solve, a description of your product or service, an overview of your target market, a brief description of your team, a summary of your financials, and a list of your funding requirements (if you are raising money).
2. Goods and services
The products and services chapter of your business plan contains the meat of your plan. It contains information about the problem you’re attempting to solve, your solution, and how your product or service fits into the current competitive landscape.
Begin the products and services chapter by describing the problem you are solving for your customers and the solution you have devised. This is a summary of your product or service. Following that, you should outline your competition. Who else is attempting to alleviate your customers’ pain points? What distinguishes your company from the competition?
This chapter is a great place to discuss any competitive advantages you may have, such as specific intellectual property or patents that protect your product. Finally, go over your metrics and milestones. This is a timeline of the next steps you need to take to get your product or service ready to sell. Here, discuss any key milestones you’ve already achieved, such as landing a key customer or accepting pre-orders.
3. Market research
This section will contain all of the information about your potential customers. You’ll talk about your target market, growth, and industry.
Begin by describing your target market. Your target market is the group of people to whom you intend to sell. Make an effort to be as specific as possible. It will be easier to create a sales and marketing plan to reach your customers if you have a solid target market.
Following that, provide any market analysis and market research that you have. You’ll want to explain how your market has grown over time and how your company is positioned to capitalize on anticipated changes in your industry.
4. Sales and marketing
The marketing and sales plan section of your business plan describes how you intend to reach your target market segments, how you intend to sell to those segments, what your pricing strategy is, and what activities and partnerships you will require to make your business a success.
Some businesses that distribute their products and reach their customers through stores such as Amazon.com, Walmart, Target, grocery store chains, and other retail outlets should reconsider how they operate in this area. The plan should cover the logistics and costs of getting products onto store shelves and any potential roadblocks the company may face.
A SWOT analysis can be included in your business plan’s marketing and sales chapter. This is entirely optional, but it can be a good way to explain how your products and services are positioned to deal with competitive threats and capitalize on opportunities.
5. Company structure and management team
Investors are looking for great teams as well as great ideas. This chapter should be used to describe your current team as well as who you need to hire. If you’re already up and running, you’ll also give a brief overview of your legal structure, location, and history.
Include brief bios that highlight each key team member’s relevant experiences. Making a case for why the team is the best team to turn an idea into a reality is critical. Do they have the necessary industry experience and background? Have any of the team members previously been successful entrepreneurs?
6. Financial forecasts
Last but not least is the chapter on your financial plan. This is often the most difficult aspect for entrepreneurs, but it does not have to be as difficult as it appears. Most startup financials are less complicated than you think, and a business degree is not required to create a solid financial forecast. If you require additional assistance, there are numerous tools and resources available to assist you in developing a solid financial plan.
A typical financial plan will include the following items:
· Sales and revenue forecasts
Monthly sales and revenue projections for the first 12 months, followed by annual projections for the next three to five years. Three-year projections are usually sufficient, but some investors will ask for a five-year forecast.
· Statement of profit and loss
An income statement, also known as a profit and loss statement (or P&L), is where all your numbers come together to show whether you’re making a profit or losing money.
· Statement of cash flows
A statement of cash flow. The income statement computes your profits and losses, whereas the cash flow statement keeps track of how much cash (money in the bank) you have at any given time.
· The balance sheet
A balance sheet lists your company’s assets, liabilities, and equity. In a nutshell, it provides an overview of your company’s financial health.
· Sections to include if you’re looking for funding
If you plan to raise funds from investors, include a brief business plan section detailing how you intend to use the money. This is commonly referred to as the “Use of Funds.”
Investors will also be interested in a brief section on your exit strategy. An exit strategy is your plan to sell your company to another company or the general public through an IPO. If you have investors, they will want to know what you think about this. If you’re running a business you intend to keep ownership of indefinitely and aren’t looking for angel or venture capital funding; you can skip the exit strategy section.
Finally, go over any assumptions and significant risks for your company. Knowing your assumptions when starting a business can mean the difference between success and failure. Once you’ve identified your assumptions, you can set out to prove that they’re correct. The fewer assumptions you have, the more likely your business will succeed.
7. Appendix
By no means is an appendix to your business plan a required chapter. It is, however, a good place to put any charts, tables, definitions, legal notes, or other critical information that felt too long or out of place elsewhere in your business plan. If you have a patent, patent-pending, or illustrations of your product, include them here. Read about what to include in your business plan appendix for more information.
Business proposal writing tips
Here are a few tips and key questions to ensure you get the most out of your plan and avoid common mistakes during the business plan writing process.
· Determine the reason for writing a business plan
Your approach to your planning project will determine why you are writing a business plan. For example, if you’re writing a business plan for yourself or your company, you can probably skip the section on your team and organizational structure.
If you’re raising funds, you’ll want to spend more time explaining why you want to raise funds and how you intend to use them. So, before you begin writing your plan, consider why you’re doing so and what you hope to gain from the experience.
· Keep things brief
The most important advice is to keep your business plan short and simple. Long business plans do not win prizes. The longer your strategy, the less likely it will be read. So, focus on distilling information to the essentials that your readers require. Skip the lengthy descriptions of your target market and instead concentrate on writing an easy-to-read plan.
· Have someone look over your business plan
Writing a business plan in a vacuum is never a good idea. It’s a good idea to zoom out now and then to ensure that your plan is logical and makes sense. You should also ensure that it is simple to read and understand. However, don’t wait until your plan is “completed” to get a second opinion.
Begin sharing your plan as soon as possible and ask your reader what questions the plan leaves unanswered. This early review cycle will assist you in staying on track. If you require a more thorough examination, you may consider hiring a professional plan writer.
· To get started, use a free business plan template
Knowing what information to include in a business plan isn’t always enough. If you’re having trouble getting started or require additional guidance, a business plan template may be useful. Download the template over 1 million businesses have used if you’re looking for a free downloadable business plan template to get you started.
· How do I create a basic business plan?
If you aren’t ready to work on a detailed business plan and would prefer to start with something shorter and simpler, we recommend creating a simple one-page business plan. In less than 30 minutes, you can put together an initial plan. This is an excellent starting point for many businesses. This may be all you need if you’re not looking for outside funding.
Business proposal writing process
A solid business plan will help you get there, whether you’re writing a plan to explore a new business idea, establishing steps to start a business, looking to raise money from investors, seeking a loan, or simply trying to run your business better.
Business planning is a continuous process that can assist you in validating your idea, setting goals, managing your business, and successfully pitching it. Jumping in and starting planning is one of the most beneficial things you can do to build a successful business. Check out our business planning guide for a more comprehensive step-by-step guide to writing a business plan.
We recommend looking into business planning software like a life plan if you require more than a template. It includes step-by-step instructions to ensure that you include only what you need in your plan and that you spend less time formatting and presenting.
You will also receive assistance in developing solid financial models that you can rely on upon without worrying about getting everything right in a spreadsheet. Finally, it will turn your plan into a management tool, allowing you to easily compare your forecasts to your actual results. This makes it simple to track your progress and make changes as you go.
FAQs about business plans
What are the advantages of having a business plan?
A business plan enables you to understand where you want to take your company and what it will take to get there. It lowers your overall risk, assists you in discovering your company’s potential, attracts investors, and identifies areas for growth. A business plan ultimately increases your confidence as a business owner and your chances of success over time.
What are the seven steps in creating a business plan?
When writing a business plan, numerous mistakes can be made. However, these are the five most common that you should try to avoid:
- Failure to take the planning process seriously.
- Having unrealistic financial projections or insufficient financial data.
- Inconsistent data or simple errors.
- Failure to develop a solid business model.
- Failure to define the purpose of your business plan.
What questions should a business plan include?
Writing a business plan involves asking yourself questions about your company and answering them through the planning process. You’ll most likely ask dozens of questions for each section of your plan. The following are the most important questions you should ask and answer in your business plan:
- How will your company make money?
- Is your product or service in demand?
- Who are your clients?
- What sets you apart from the competition?
- How will you communicate with your customers?
- How will you determine success?
In a nutshell
Your business proposal elements will differ depending on the prospect’s needs and the type of business you are in. Prospective clients should have very few questions about your company and what it can do for them after reading through your plan. With the tips and examples in this article, you’ll have everything you need to get started. You’re sure to impress your client and possibly win their business with a professional, customized business proposal.
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