How to Write a Business Plan

How to Write a Business Plan

Writing a business plan is an important step in the process of starting your own business.  By writing a business plan, you can develop a clearer idea of how you intend to make your business successful.  In addition, with the help of a well-written business plan, you can secure financing to help get your business started.

There are four sections that you must include in a business plan:

  1. a description of the business;
  2. how you intend to market your business;
  3. how you will finance your business;
  4. how your business will be managed.

When describing the business that you intend to establish, you should provide detailed information regarding what your business will offer and what sets it apart from the competition.  In order to accomplish this task, you will also need to research businesses that you consider to be competitors.  Your business plan should include detailed information about your competitors, as well as how your business compares.

Your business plan report should also describe your marketing plans, such as whether or not you will use direct mail campaigns, radio advertisement, Internet marketing, etc.  Within this section of the business plan, you should discuss your target audience and why you believe that your marketing plan will effectively help you to reach this audience.

A thorough business plan must also include a description of the business's operating procedures.  This will include the management layout and who will be responsible for which aspects of the business.  This section may also describe the personnel that you will need to effectively run the business, including how many employees are required and the various roles that will need to be fulfilled.

If you must still acquire financing to get your business off the ground, your business plan writing should include information regarding exactly how you intend to obtain the financing.  This portion of the business plan should also detail the type of business insurance that you will cover, including the categories of coverage that your business will carry.

Your financial information should also provide a detailed forecast of your projected profits and losses over the next few years.  You should include a three-year summary, month-by-month expectations, and what you anticipate from your business after the first year.

Along with the written portion of the business plan, you should include a variety of different supporting documents.  For example, you should include any tax returns for principles over the last three years, as well as any letters of intent that you have received from suppliers or other important business contacts.  You should also include any legal documents, including copies of your licenses and lease agreements.  Finally, if you are getting involved with a franchised business, you will need to include a copy of the franchise contract and any documents that you have received from the franchiser.

Viewpoint #2

It is likely that a student majoring in business will have to complete at least one business plan during the course of her degree.  Many students will encounter a business plan for the first time in upper-level business classes, and despite the fact that they possess many of the skills needed to design such a plan, will be unsure of how to write a business plan.  However, there are many existing models for how to write business plans that will help students successfully compose their own.  These models vary depending on the business plan objective, so it is likely that a student's business professor will issue a particular model that he or she deems appropriate for the course.

A business plan is significantly different from other types of college writing.  Some students who are unsure of how to write a business plan tend to approach the project in the same way as they would a research or report.  This should be avoided.  Business plans are detailed documents that present a strategic approach to a business operation.  They are therefore not papers such as a student may be used to writing, but rather practical guides that outline the operation of a business and reveal the business plan writer's knowledge of a variety of business skills and applications.

One of the most important things to consider when learning how to write business plans is the purpose of such plans.  Business plans are composed by business owners to assist in the development of their business and by prospective business owners to attract investors to fund a start-up business.  Therefore, a student's business plan should direct the plan to its intended (though fictional) audience: business partners and/or possible investors.  The business plan should aim to inform and persuade this imagined audience.

As mentioned, most students need not worry about the organizational aspect of how to write business plans, as it is likely that a student's instructor will recommend a particular model.  This model will likely be some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances.

An executive summary is in essence an outline of the business plan written out in sentences rather than in outline structure.  This should be the first page of the document, and serves the same purpose as an abstract—it gives the reader a complete overview of the contents of the plan.  The details of the plan will be presented in the remainder of the text.

After the executive summary, the business plan will likely present a description of the company.  This includes explaining what type of business the company is, where it is or will be located, where the business fits in among other similar businesses, and why the business plan writer believes it will be profitable.  

The plan will then provide a detailed description of the company's services and/or products and why those services and products are marketable.  This should not merely include the business plan writer's opinions, but should point to market research that indicates why the product or service will be successful.  This section should also indicate the price and profit margin of the product or service.  

The market analysis section of a business plan identifies who will buy the product or service and why they are likely to buy it.  To do this effectively requires the business plan to point to case studies of similar businesses or business models.  It may also require the inclusion of detailed information about the target consumers' purchasing habits and the business' competition.  

Every business plan should include a description of how the business will operate.  This should offer details of the management positions the company will have and the specific roles of each of those positions.  The business plan should close by projecting the costs of implementing the plan and the profitability of the company once the plan has been implemented.  

If students are not confident in how to write a business plan, they should read professional business plans in order to become familiar with the conventions of the form.  It is likely that a business library will be able to provide these to interested pupils.

Viewpoint #3

A business plan example is a complete or partial business plan that is distributed as a model for individuals unfamiliar with business plan writing.  Business plan examples are provided by writing reference sources, business how-to websites, business schools, business libraries, and business professors.  Business plan examples can be an excellent reference point for individuals who are new to writing business plans; however, as business plan examples are, like most examples, very general, they are intended to display the basic model of business plan writing.  Actual business plans will likely be far more detailed and specific as they will be directed toward a particular audience and designed for a particular business idea.  

A business plan example is most useful for its indication of the structure and general content of a business plan.  Though business plans will vary, they follow a general format comprised of several sections related to the operation of a business.  This format will likely be some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances.  The order of this structure will differ from example to example, with the exception that the executive summary will likely always come first, as it is an overview of the information included in the plan.  Business plan writers can select a structure based on the example they find best suited to their particular aim.  However, business students who are composing a business plan for a class should always use the example provided by their instructor, as it is likely that the instructor considers the particular example he or she provided to be the best model.

Two of the most important considerations when writing a business plan are audience and purpose—who is going to read the plan, and what the business plan writer hopes the outcome of the plan to be.  Therefore, the best business plan examples are those that are geared toward the same audience or industry as those for which the business plan writer intends to write.  An individual preparing a business plan for an independent cosmetics boutique looking for investors has a different audience and purpose than an individual preparing a business plan for a toy store franchise.  These individuals would benefit more from a business plan example that has a similar audience or purpose to their own.  This way, the business plan example will provide the writer with more and specific details and guidance.

Viewpoint #4

A business plan is a detailed outline explaining an approach to a business' operation.  Business plans are composed by existing business owners to assist in the development of their business and by prospective business owners to attract investors to fund a start-up business.  Because they are an important document in the business world, it is likely that undergraduate and graduate students majoring in business will have to complete at least one business plan in the course of their studies.

It is important for business students to realize that a business plan is radically different from other types of college and graduate-level writing.  It is not an assignment, in the standard sense of the term.  It requires extensive research, planning, and revision in the same way that a paper would, but its purpose and appearance are very different.  A business plan is not written to argue a position or demonstrate the writer's grasp of a specific business concept.  It is, rather, a practical guide that outlines the operation of a business and reveals the business plan writer's knowledge of a variety of business skills and trends.

Business plans written for a college or graduate course should follow the explicit format requirements issued by the instructor.  This format will likely include some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances.

An executive summary is simply a summary of the business plan.  It is essentially an outline of the entirety of the plan written out in sentences rather than in outline structure.

Following the executive summary, business plans frequently begin the detailed portion of the plan by presenting a description of the company.  This includes explaining what type of business it is (retail, service-based, etc.), where it will be, where this business fits in among other similar businesses, and why the business plan writer believes it will be profitable.

Next, the plan will describe the company's services and/or products and why those services and products are marketable.  This should not merely include the business plan writer's opinions, but should point to research that suggests why the product or service will be successful.  It should also outline a pricing structure.

The market analysis section of the business plan should also rely on research.  This section identifies who will buy the product or service and why they are likely to buy it.  To do this effectively requires the business plan to point to case studies of similar businesses or business models.  It may also require detailed information about the target consumer's purchasing habits and the business' competition.

Every business plan should include a description of how the business will operate.  This should offer details of the management positions the company will have and the specific roles of each of those positions.

Finally, the business plan should close by projecting the costs of implementing the plan and the profitability of the company once the plan has been implemented.

Viewpoint #5: The Outline

Whenever an individual or a partnership wants to open a business, it will have to write a business plan.  The business plan is not only an essential document for ensuring the success of the business, but it is also the document that will be used in order to solicit support for the business from investors, partners, clients, and other entities.  In order to write an effective business plan, it is important to start with a business plan outline.  

Many students will have to learn how to write business plan outlines during their academic careers—especially students in undergraduate and graduate business programs.  A business plan is similar to many other types of academic documents that a student should know how to write.  However, business plans must include plenty of research, projections, and background information.  

There are many different business plan formats.  Because there are so many formats, many people begin by finding a business plan outline that has the appropriate sections for their needs.  When people start with a business plan outline, they simply need to fill in the sections of the outline, rather than starting the business plan writing from scratch.  

Each different type of business may have unique business plan outline fields.  For example, a business plan for a restaurant may require sections devoted to the menu, cost of food, cost to build out the kitchen area, depreciating food asset projections, and more.  The business plan for a services company may not require as much financial information, especially financial information about depreciating assets.  

In order to find the right business plan outline for a particular business, many individuals search online through business plan outline databases.  Many databases provide separate outlines based on the category of business.  Some outlines are more comprehensive than others.  Additionally, some business plan outlines are focused on helping individuals raise capital for the business, and, therefore, have more fields for financial information and projections.  

Whenever students have to work on their own business plan outlines, they need to keep in mind that a business plan outline not only requires an explanation of the business industry, experience of founders, financial situation and current situation, but it should also contain information about industry trends, financial projections, economic and environmental projections, and more.  Therefore, unlike many other academic documents that students will need to write objectively and based solely on proven fact, learners will need to use some creative thought when writing business plan outlines so that they can predict probable (or possible) outcomes.

Viewpoint #6

A business plan is a practical guide that outlines the details of a proposed business or business operation.  A free sample business plan is a business plan provided free of charge by an institution, organization, or individual.  Free sample business plans are distributed to serve as models or guidelines for individuals unfamiliar with how to write such plans; free sample business plans are therefore not templates to be copied, but rather general guides to be used and modified as the business plan writer sees fit.

Free sample business plans are often distributed by business schools, online resources for developing business models, and instructors of business classes.  A free sample business plan will often point out important structural, stylistic, and informational aspects of business plans so that students can learn how to incorporate these aspects into their own plans.  For instance, the sample may point out the various sections of the plan and their organization.  A business plan will typically be organized into some variation of the following structure: (1) an executive summary, (2) an overview of the company, (3) a description of the company's services and/or products, (4) a market analysis, (5) details of the management structure of the business, and (6) a description of the business' projected finances.  The sample plan will likely go through the specific elements necessary for each of these sections and explain the importance of each section and the information the reader of the plan expects to gain from it.  Free sample business plans may also make note of the way in which the writer of the plan incorporates research to bolster the validity of the plan, as well as the type of language and syntax the writer uses.

When using a free sample business plan as a model, learners should use the guidance of several different samples.  All business plans will be different depending on the needs of each writer's business idea; it is therefore wise to determine how several different business plan writers executed their plans so that the pupil can see how those various plans modify the basic business plan structure to accommodate the needs of their specific intentions.  Furthermore, it may be helpful for students and other new business plan writers to draw primarily from sample business plans that are for businesses similar to their own proposed ideas.  This will help the student determine how to tailor the business plan to his or her particular audience and industry.

Viewpoint #7

It is a business "best practice" to have a business plan in place prior to opening a business.  A business plan is a basic road map for the direction of a business.  It not only describes how a business will operate and receive revenue, but it also provides information about the metrics that will be used to determine how successful a business is.  Even small businesses require small business plans in order to run effectively.  

A small business plan is easy to write.  Each business owner gets to determine just how extensive his or her small business plan should be.  For example, some business owners pay great attention to the details of their plans, especially if they are seeking funding for their businesses.  In such a case, they may need to include marketing data, market data, profiles of the operators of the business, and more.  Lenders want to know that small business owners have done their due diligence to determine that a business has a good chance of being successful.  

Some business owners may have shorter and less thorough business plans, especially if their businesses are self-funded.  These business plans may only include a few paragraphs about what the business is and how it is operated.  Even these short small business plans will provide guidance for a business owner as he or she pursues the business development.  

While all small business plans are different, one of the major components that should be included is a description of the business.  If a business owner wants to open a clothing store, the business plan should include information about the clothing store, such as whether or not it is a franchise or a boutique.  

All small business plans should also include information about how the business will get revenue.  For example, will be primary revenue stream be clothing sales through the store or online?  Will the store have annual sales or events to boost sales?  Business owners need to take some time to think about these variables.  

A small business plan is not the same thing as a business proposal, though they are similar.  A business proposal is a written document that proposes a certain business to partners or funders.  A proposal, essentially, asks for help or partnership.  However, a small business plan is a statement about what a business is and how it will operate.  It is not as conceptual as a business proposal.

Viewpoint #8

Here is a simple approach to help you cover all the bases when learning how to write a business proposal article.  For each section/requirement that you must address, make sure that you answer: who, what, where, how, when, and why.  Repeat it until it rolls off your tongue and you have it memorized.

  • Who: who will do the work, who will manage the work, who does the customer call if there is a problem, who is responsible for what
  • What: what needs to be done/delivered, what will be required to do it, what can the customer expect, what it will cost
  • Where: where will the work be done, where will it be delivered
  • How: how will be work be done, how will it be deployed, how will it be managed, how will you achieve quality assurance and customer satisfaction, how will risks be mitigated, how long will it take, how will the work benefit the customer
  • When: when will you start, when will key milestones be scheduled, when will the project be complete, when is payment due
  • Why: why have you chosen the approaches and alternatives you have selected, why the customer should select you

This simple phrase (who, what, where, how, when, and why) can help you ensure that your business proposal research paper communicates everything needed to "answer the call."  For each of the customer's requirements, go through the list and you will probably have everything covered.  You can use it for inspiration when writing, and you can use it like a checklist for reviewing a draft proposal.

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