November 30, 2021

Alliance Media

Business and Marketing

Writing Your Business Plan

Writing Your Business Plan Traditional or Online Business

How to Write a Business Plan

In my previous article, I talked about how you can plan your business startup. I define a business plan as a written description of the future of your business. This is a document that shows what you want to do and how you intend to do it. I explained further that if all you have is a paragraph on the back of the envelope outlining your business strategy, you have written a plan, or at least the beginning of a plan. I also said that a business plan consists of a narrative and some financial worksheets.

I mention ‘writing a business plan’ as one of the important steps in setting up a successful business. Now you must understand the need to write a business plan. Writing a business plan, for a traditional brick and mortar business, may take a lot of time. It may take up to 100 hours or even more. For obvious reasons, new businesses need to do a lot of research before a business plan can be developed.

For an online business, a detailed and in-depth business plan is usually not necessary unless you are trying to combine your online business with a traditional business. For most online business startups, the details involved with traditional business planning are unnecessary. However, it will still be useful to you if most of the topics are still covered, even if only briefly. Having a plan written in front of you will help you to focus on the important aspects of the business.

You may not think too much about your competitors or outsource some of your work, but things like that will affect your ability to turn a profit. And you will find this especially in the early phases of your business. Even if you just opened a lemonade stand in your front yard, you still need to know why Susie is selling her lemonade on the next street!

So while a detailed business plan may not be necessary for an online business, I’m going to include it here so you can at least look and consider each section and determine for yourself whether it applies to your business.

Here I will cover the basic steps involved in writing a business plan:

1. Executive Summary:

The first step involved in writing a business plan is the executive summary. Here, include everything you’ll cover in the five-minute interview.

Explain the basics of the proposed business: What is your product? Who will be your customers? Who owns it? What do you think the future holds for your business and industry?

Make it enthusiastic, professional, complete, and concise.

If you are applying for a loan, state clearly how much you need and how you will use it. Also include details on how the money will make your business more profitable, thereby ensuring loan repayments.

2. Business Description:

After the executive summary, you need to write a brief description of the business you will be running. You need to provide an overview of the industry in which your business is located. You will write about your company’s mission statement, goals and objectives, business philosophy, and legal form of ownership (sole proprietorship, corporation, LLC, etc.).

Describe your company’s most important strengths and core competencies. What factors will make a company successful? What do you think are your main competitive strengths? What background, experience, skills, and strengths do you personally bring to this new venture?

3. Marketing Analysis/Strategy:

The next thing to write about (after an overview) is your marketing strategy. For new or existing businesses, market analysis is an important basis for a marketing plan and will help justify sales forecasts. Existing businesses will rely heavily on past performance as an indicator of the future. New businesses have bigger challenges – they will rely more on market research using libraries, trade associations, government statistics, surveys, competitor observations, etc. In all cases, ensure that your market analysis is relevant to establishing the viability of your new business and the reasonableness of the sales forecast.

4. Location:

Writing down the location of your business is very important. Locations with greater customer traffic are usually more expensive to buy or rent, but require less spending on advertising to attract customers. This is especially true for retail businesses where the amount of traffic and accessibility is critical.

If your business is online, you need to go into the details of how you are going to attract customers to your website. General statements like “I’ll use Face Book advertising and email marketing” do little to help your goals unless you have detailed statistical analysis of the tests you’ve done or other similar businesses you’ve been associated with. If you don’t have data on which to base your estimates, it could indicate a lack of proper thinking for the rest of your business plan.

5. Competitive Analysis:

Businesses are competitive by nature, and few businesses are truly new. If there are no competitors, be careful; there may not be a market for your product. Expand your concept of competition. If you’re planning to open the first roller skating rink in town, your competition will include a movie theater, mall, bowling alley, etc.

6. Management and Operations:

Since management problems are a major cause of business failure, it is important to discuss management qualifications and structure. Principal’s resume must be included in the supporting data. If your business will have few employees and rely heavily on outside professionals, make a list of these key people and their qualifications. If you are seeking financing, include personal financial statements for all principals in the supporting data section.

7. Personnel:

The success of any company depends on their ability to recruit, train and retain quality employees. The amount of emphasis in your plan for this section will depend on the number and type of employees needed.

8. Projected Financial Statements:

These reports are usually helpful, but not necessary. You will develop and explain your business strategy throughout your Business Plan. In the finance section, you need to estimate the financial impact of the strategy by developing a projected Income Statement, Balance Sheet, and Statement of Cash Flows.

It is usually recommended that this projection report be made monthly for at least the first twelve months or until the business is projected to be profitable and stable. Activities shown outside of monthly details may be in summary form (such as quarterly or annually). The forecast period for most business plans is two to four years.

9. Summary Section:

This section is where you can attach or explain any details that don’t apply to the previous section. This section should be used to provide financial statements of the Principles involved in the business and other data that you may find interesting for investors to see.

The main thing to remember in this section is not to provide new data, but to explain in detail the data that has been provided and provide support for the data.

As you sit down to put together all the elements of your business plan, make sure you have each piece that stands up for itself. This means that you should not reference other sections that make readers (your potential investors) go back and forth between sections.

Don’t try to write your business plan in one sitting. As I mentioned earlier, for a traditional brick and mortar business, it takes more than 100 hours to gather all the required information into a comprehensive but understandable document. For an online business, maybe not that long. But your final product should be well thought out, well documented, and easy to understand.