Do you have a fantastic business idea? Perhaps a marvelous product or service? There’s a whole lot of planning behind successful businesses, and you need to create a business development plan that will cover all the aspects of your startup.
Many entrepreneurs have thought that they can do without an extensive business strategy and just make it up as they go. Improvisation is an excellent skill to have while running a startup but having a key outline to your financial plan and business strategy will always be more beneficial.
It’s very natural to feel writing a business plan as a big task, especially if you’re starting a business without a financial background. But having a clear and organized business plan increases your chances to convert an investor.
According to a survey conducted with 2,877 people, only 995 had a complete plan. The results of the study were as follows:
The people with a business plan:
- 36% secured a loan
- 36% secured investment capital
- 64% grew their business
The people without a completed plan:
- 18% secured a loan
- 18% secured investment capital
- 43% grew their business
(Source: Small Business Trends)
You can’t consider creating your startup strategy based on the free financial plan templates and business strategy examples available online. Approaching investors with such ready-to-use templates is not a good idea. They see such business models from several other entrepreneurs every day.
Creating a formal business plan increases your chances of success by 16%.
Now that you have understood the importance of creating an original and expansive business plan, let’s get to the actual process of making a business plan.
Build the Business Plan that Works Right for You
There are several types of business plans and strategies format that one can work with, and none of them are an absolute right or wrong. The only thing that matters is that your business strategy should work perfectly for you.
The two most popular business plan formats are a Traditional Business Plan & Lean Business Plan.
Traditional business plans have a standard structure and follow a detailed approach in creating a strategic plan. Such plans tend to go 10 to 12 pages long.
Lean business plans are more of a quick pointer plan where only the essential parts are summarized into points. They are also known as one-page business plan.
Business planning can help companies grow 30 % faster.
Any business plan will always consist of these elements:
An executive summary of your business plan is where the readers will get a short description of what your company is and why it will be successful. Keep the summary short yet informational, cover your business’ mission statement, description of your product or service, and basic information of your companies leadership team.
Here you need to go into more detail about your company. First of all, focus on the points like who are your primary customers, who you will be serving your products or services, and how your business is solving their problems.
Then be specific about your advantages over your competition, the experts in your company, what would be the location of your plant and stores, etc. This is the section where you can (and should) boast about the accomplishments you’ve achieved and your strengths that will guarantee your success.
The next section in your business plan will back your claims made earlier. Here you will show the market research done for your particular industry and consumer base. In this market analysis, you and the reader will find out what your successful and failing competitors are doing; hence, you can create a business model based on their previous strategies.
This section will answer questions like what do your competitors do? How are they better than you? Where do they lack from you? And what are you to do to succeed?
Entrepreneurs that create a business plan are twice more likely to start their business.
Description of Your Products &/or Services:
Explain in detail about what you will be providing your consumers. Give a detailed description of your company’s product or services. Further elaborate, how your customers will benefit from what you are offering to them. What is unique about your product/service that the customers would choose you over your competitors.
Also, share your plan for patent filing, copyrights, and intellectual property. Explain your research on product/service in detail and how it has impacted on what you are offering.
Management & Operational Structure:
The investor will need to learn how your company will be structured. Give them specifics of the legal structure of your company and who will run it. You need to clarify many factors like if you intend to incorporate the company as a C or S corporation, if you’ll be a sole proprietor or an LLC, etc.
Mention a comprehensive management & operations chart to layout who’ll be in charge of what in your company. This is the chance to show the unique talent and experience of each key partner that will help the business in various ways.
Marketing & Sales Strategy:
Marketing & Sales are the heart of any company as they are the bread earner of this family. There is no single approach to marketing and sales, and the best approach is the one that yields returns and is perfect for your business.
Your only aim for this section of your business strategy is to show how you will attract more customers and retain them. Make sure you put in a complete sales and marketing strategy for the readers to understand.
Entrepreneurs seeking external finance are 19% more likely to commit their vision to paper than those not seeking funding.
This is the section for which you did all the work above. The reader (your potential investor) needs to understand what amount of funding you are asking and what for. Explain with clarity about how much funding you’ll need and how you’ll use it over the span of 5 years.
Mention if you want the funding in terms of debt or are you offering equity in your company. What are the conditions that you are offering for the financing, and where will the amount be spent (buying equipment and materials, employee salaries, specific bills, etc.).
The traditional business plans are very detailed and comprehensive. Investors mostly request such traditional business plans, which gives a complete idea of the company and its goals. On the flip side, Lean startup plans are fast to write and contain only the essential elements. Some investors prefer these as they can get a quick idea from such a one-page business plan.
Which business strategy format to follow is your personal choice. But make sure to mention all the points stated above in your business plan for your startup.