How to Write a Business Plan

Being a business owner is stressful enough, but when money is trickling in from customers only a nice cash cushion will allow you to sleep peacefully at night. Business plans are one of the most effective tools for getting financing, either from a bank or from a private investor. Writing a business plan seems overwhelming but not if you break it into smaller steps.

Executive Summary

This one-page synopsis gives the highlights of the entire business plan, so it should be written last. Address who's running the business, its location and what is sells in this section. Describe whether it is a wholesale, retail, manufacturing or service-based business. You could also talk about your future vision for the business and how it will differentiate from the competitors. How the business will be financed, projected sales figures and start-up expenses should also be mentioned.

Objectives

This section should identify different business goals that you want to be achieved. These goals could cover topics from sales figures to customer satisfaction, as long as they are attainable and allow room for growth within a certain measurable time period

Ex. Our business objective is to have sales of $50,000 within the first year of our operation and $120,000 by the second year.

Mission/Vision Statement

This shows potential investors the essence of your company: what it does and how it adds value to your customer's life. This is similar to the famous "elevator pitch", which is a one-minute summation of your business that can be said in the duration of a quick elevator ride that entices others to know more about your business. The mission statement has to get the person's attention, and show how different you are from your competitors.

Company Summary/Ownership

An overview of daily operations, you could include employee names and backgrounds and business hours. The physical address and/or website address should be revealed as well as the rent possible locations if the company chose to expand.

Go into depth about the owners and their industry experience, what legal entity it is (for instance, a partnership or an LLC) and why that type was chosen. Explain the different positions within the company and their main tasks and responsibilities so that there won't be confusion later.

Ex " John and Sally Couple organized their business as a limited liability partnership since they will be hiring employees and would benefit from the protection of a business structure that would limit risk. They also expect to have moderate-to-high rates of growth during the company's lifetime, and this legal form will allow them to get taxed only once on their personal income statements, while still enjoying the limited liability that are entitled to corporations."

Start Up Expenses

These are one time expenses that allow the business to open. Expenses typically include a business license, and a "Doing Business As" or DBA. Other permits and certificates may be required, especially if your business will be serving food or alcohol or has a physical store that will need signage. Below are some examples of start up expenses.

• Insurance
• Advertising
• Business license
• DBA
• Website
• Beginning inventory/products
• State and possibly federal licenses
• Legal fees to form your corporate entity
• Company vehicle (leased or bought)

Market Analysis

What do your target customers look like? What is their occupation? You should also discover their hobbies and attitudes so that you can market to them better. This information can be found in the library of your nearest university in the pages of academic journals (such as the Journal of Consumer Research) or their research database.

Industry Analysis

This section of the business plan should gather expert insight into the future of the industry, past trends and where the current industry stands. You can also use industry standards or benchmarks to measure how your business is going.

Competitors

Who are your competitors and how do you plan to differentiate your business from theirs? Discover your top five competitors and try to find out as much as you can about their strategy, products/services and other information.

Marketing Strategy

Now that you've researched who your customer is, create a marketing strategy that would best appeal to them. Advertise in a magazine that your customers would read. What are the rates to advertise your business in the local newspapers?

Include information on how you will price your product/service and what sales approach your business will take.

Financial Plan

This section should reveal how your business will be financed. If you would need a line of credit from the bank, address how much. You could also investigate how your business could get a loan from the Small Business Association. The projected balance sheet, cash flow and income statement should be included in this part of your business plan as well as your start up expenses. This is the most important part of your business plan since lenders mostly use projected financial statements in order to make decisions. You may also consider hiring a bookkeeper or accountant to make your projected financial statements.

This how- to guide is a simple way for you to write your business plan, piece by piece, after conducting the necessary research. Even if you don't need extra funding and your business has a cash surplus, business plans help remind you of your original vision and can give you guidance when making a business decision.