How to Create a Business Plan in 10 Simple Steps

Starting your own business can be a truly exciting time of your life, but it does not come without challenges, or at the very least, prior preparation. 

One part of such preparation is the creation of a business plan – or the strategic document that will provide a roadmap to your business creation, development, and growth. 

But what is a business plan and how can you create one? 

This post offers you some useful tips on information that should be included in your plan to help you persuade investors, pique their interest, and offer all the right information to help them invest in your business as opposed to others out there.

What Is a Business Plan?

Simply put, a business plan is a roadmap that helps you navigate the startup, development, and growth stages of your business. 

Business plans look at all the different angles of running a business and lay the groundwork in preparation for actually running it. 

Some refer to this document as the “Bible” of any large or small business because it’s an asset that you’ll continue to refer to time and time again as your company takes off the ground and matures. 

When preparing this plan, it’s vital to sit down and take your time with it. You are not in a race so you do not need to rush. Taking the time out to prepare all the different aspects of your business plan together with supporting documentation and forecasts will help you stand a stronger chance of getting noticed and getting that valuable initial investment in your business.

Why Should You Prepare a Business Plan?

If you’re thinking that many entrepreneurs started out without a business plan and were successful, you’d be partially right. 

However, preparing one comes with many advantages. 

Here’s why you should invest your time in building a business plan when creating a new company:

• It guides you through each stage of starting your own business.
• It helps you structure, run and grow the venture.
• It helps you think through all aspects of your business.
• A solid business plan can help you secure funding or get a business loan, alternatively, it can help attract new business partners.
• It helps you recognise potential obstacles prior to the business’ set up and how to overcome them.
• It can help you throughout the duration of running your business and not just during the startup phase.
• It acts as a great check to validate your business idea.
• You can improve your plan for sales, marketing, and business operations.
• You will be able to set solid objectives as well as action steps on how to achieve them.
• It helps you identify any gaps you may not have thought of before. 
• It acts as a benchmark for business performance. 
• It can help you identify and attract top talent, new partners, distributors or agents, securing key personnel. 

Beyond these points, one of its most important benefits is that it aids in setting up your strategy, mission and vision for the years to come. In that way, you will have a clearer direction of where you are headed, what success looks like, and what your business will be doing in the short-term and long-term future. 

Whether you need more structure or you need to present a more detailed outlook on your business in front of investors, a business plan is always a great tool to have at hand.  

When it comes to building a business plan, you need to think about several overarching themes, which are covered in more detail below. 

Ultimately, you’ll want to figure out what problem or gap your business is aiming to address and what solution you have in mind for this. You’ll also need to do a competitive analysis as well as a SWOT analysis to see where you currently stand in the marketplace.

Before doing this, you’ll need to think about whether you’re going to prepare a traditional or a lean business plan. 

Lean business plans are usually one page and are less common. They are used often by startups and usually only focus on the most important elements of your plan. 

The traditional business plan is the most common one and can go over a dozen pages, depending on the information and details you’re providing your target audience with. Because it’s a more common format, this will be the main focus of this post. 

So, without further ado, here’s what you need to consider including in your business plan. 

1. Executive Summary

Although the executive summary is usually the very first page of a business plan, it’s often written last after all the other details have been ironed out to help give investors or lenders a more thorough idea of what to expect. 

In fact, some investors typically only request to see the executive summary and only ask for the rest of the plan later, if they feel convinced the business has potential. 

Ultimately, the executive summary should focus on these key details:

• What the company is, what makes it different and why it will be successful.
• A description of the offered products or services.
• A summary of objectives and the business’s goals
• An overview of the target market
• Mission statement and value proposition
• How you’ll market your ideas
• Information about the ownership structure, leadership team, and employees
• Location
• Financial information such as high-level growth plans and how much you expect to earn and spend

What’s important to note with an executive summary is that it shouldn’t try to hype up the business, but rather speak in a logical, informative, and neutral tone that’s balanced and presents all the facts. 

2. A Thorough Company Description

The company description is the place where you give a more detailed overview of your business and its structure (owners and legal structure). You need to also mention here the problem that you’re going to be solving or the opportunity you’ll be seizing as well as your ideal target market and why you think your business will be a success. 

Regarding the target market, it’s essential to identify whether you’re going to be a B2B or B2C business. 

Alternatively, you might be among the nonprofit business structures or small businesses serving organisations instead. You need to make this point clear. 

Other features of this part of your business plan could include the following key elements:

• Name of the business;
• Your history or the experience you bring to the table;
• Your competitive advantages;
• Your leadership structure and specific expertise;
• Location and address;
• Details about offered products or services;
• Overall strengths;
• Short- and long-term business goals;
• Your need for funding;
• Plans on achieving growth targets.

The company description serves ultimately as a high-level overview of your venture without going into the specific details of each activity. 

3. Market Analysis

Another step in the process of how to make a business plan is undertaking an in-depth market analysis. This entails several aspects. 

First off, you will want to take a closer look at the industry in which you’re operating. You’ll be able to show potential investors what your competition is currently doing and how you plan on addressing any gaps while acknowledging their strengths. 

All the market research (whether qualitative or quantitative) you’ve done up until this point should be summarised and presented here. 

You can also emphasise industry trends and key, underlying themes. For example, in what way do you observe changes in the market? Is there growth in it? Are you seeing changes in tastes and if so, what are the underlying reasons for these?

Then there’s the target market. Ideally, answer these questions: where is your business going to be selling from, and importantly, to who? What are the demographics and characteristics of your potential customers, what growth in your customer base do you foresee as well as on what grounds?

Consider indicating here what the user benefits are, showing there’s a marketplace interest, documenting market claims, or all of the above. 

4. SWOT Analysis

We are all familiar with the strengths, weaknesses, opportunities, and threats (SWOT) analysis. But now it’s time to put it into action. 

When starting out, consider breaking up a single page into four equal squares, each one dedicated to a different aspect of the SWOT analysis. 

This type of analysis can really help to exemplify the fact that you know your industry and your business inside out because you’ve studied all the potential threats and know how to capitalise on your strengths. 

Regarding strengths, ask yourself how these will help you make the most of opportunities. Ask yourself what the quality level of the product or service you’re offering is. List what management experience young bring to the table. 

Regarding weaknesses, ask yourself how these (such as lack of finance or few customers at the outset) could potentially amplify threats and how your strengths may be able to overcome them. 

As for opportunities, look out for increasing demand in your specific industry as well as whether any of your competitors have gone bust. Finally, the threats can be identified by observing economic downturns or even the entry of new competitors in your marketplace. 

Another useful idea is to do a SWOT analysis for your competitors in order to determine how you might win a larger share of their existing market pie. 

5. Management, Staff and Leadership 

Unless you plan on being a solopreneur, or a one-man show, your business will require the skills of an experienced team. This is why you’ll want to prepare an organisational structure and identify the key leaders, their experience, educational background as well as skills. 

Mention whether these leaders also have industry experience and if they do not, mention what they can bring to the table. Discuss the duties of each position as well as the respective responsibilities. 

Mentioning the percentage ownership of the business or even adding their CVs to the business plan are also good ideas.

As for staff (and management, too), think about the salary levels that will be required. Will you need to attract qualified candidates for the positions you’ve outlined or do you have people in the wings to get started? How would you keep your employees motivated?

Other factors to consider include plans for business continuity in the event of the loss of a key employee, job market analysis and pressures on pay levels, or even plans for maintaining productivity. 

6. Products or Services

Now it’s time to get to the nitty-gritty – the actual product or service offering you’re planning to provide. It’s important to describe this in as much detail as possible.

Furthermore, you will want to explain how your product or service works by listing the following elements: 

• Pricing model; 
• Typical customer; 
• Product life cycle;
• Customer benefits;
• Order fulfilment;
• A sales and distribution strategy; 
• Your competitive advantage. 

Intellectual property, copyright, patent or trademark reservations and filings, and their legal aspects should also be presented here. 

7. Marketing and Sales

You can implement no marketing plan or sales strategy without a thorough understanding of the market in which you’ll operate. 

Therefore, it’s crucial to outline the following in your business plan these marketing and sales aspects: 

• The size of the market you ar targeting (its growth, stability, or decline).
• How you are positioned in your industry.
• The market segment you’re targeting (make sure to split ideal buyers into customer segments).
• The demographics your product or service will ultimately serve (think total households, median income or income by demographics, age and location of target customers). 
• Whether there’s demand for the product or service. 
• How you are differentiating from the competition.
• The cost structure of the product and service which is market-related.

When you’ve determined this information, it’s time to put together a sales and marketing strategy. This strategy will outline how you intend to attract and retain customers. It will also include information on the process of making a sale via sales strategies. 

If you are a new venture, it is worth discussing your go-to-market strategy and market entry strategies for launching your products. . 

You may consider including the different marketing channels – online, direct to consumer, or via other retailers – for your product to reach buyers. You will also need to outline any planned marketing tactics and activities. 

It’s always a benefit if you can also list an overview of the online and offline marketing strategies you will be using, whether that is direct marketing, advertising space opportunities, social media or PR.

Creating and retaining customer loyalty should also be included here for repeat business. Important to note is how your competitors approach this and see whether you can not only take key takeaways from them, but also how you might do better in building customer relationships with shoppers and turning them into repeat buyers. 

8. The Business Operations

In this part of this article on how to create a business plan, we take a look at the actual operations and processes you will need to set up for your company. 

Efficiency, capacity, and planned improvements will be a must here. 

Key to operational processes will be the premises and the location of the business. Consider current and future needs or long-term commitments to the property. In addition, determine what the advantages and disadvantages of the present location are so that you determine whether you should eventually stay put or move to another location. 

Other factors to keep in mind for your operations are your: 

• Facilities and the organisation of production; 
• The information systems in place and their management; 
• The reliability of your IT systems; 
• Conformity to quality or regulatory standards; 
• Inventory;
• Supplier relationships. 

For extra convenience, you can create a key resources list that outlines everything you’ll need to run your operations as a successful company. 

9. Funding and Financial Forecastin

A successful business plan must also feature information about the financial side of running a business. This part can be divided into two – the funding request part and the financial forecasts part. 

We take a look at each one in turn. 

With funding requests, you’ll want to explain with clarity the amount of funding you’ll require over the short- to medium-term as well as what this funding will be used for. Also, clarify whether you’re looking for debt or equity plus the length of time it will be applicable. You will also want to plan if you will be obtaining these finances from venture capital firms or other forms of funding. 

Regarding financial projections, you need to focus on providing detailed information about future earning potential over the next five years, by which time you’ll be an established business. 

Financial statements like balance sheets are useful here. If you do not have any financial activity yet, it’s a good idea to present forecasts on potential revenue and profit earnings.

This is a great way of creating the foundation for negotiating how much investors will get back in return for their initial investment. Make sure your financial projections are realistic and accurate. 

Financial documents and data you may want to include in this financial plan are:

• Sales forecasts;
• The cost of goods sold;
• A forecast of profit and loss;
• A cash flow statement;
• A balance sheet;
• Anticipated net profit margin;
• Current ratio;
• Accounts receivable turnover ratio;
• Gross margins;
• Major capital expenditure;
• Cash flow statements;
• Monthly sales and revenue forecast;
• Income statement;
• Break-even analysis.

Make sure that you have a solid understanding of the financial side of your business as it’s one of the most important ones. It’s fundamental that the entire management team is on the same page regarding financial data included in the planning process and the business plan. 

10. Appendix

The appendix should be used as the place where you provide supporting documents. 

Additional information to provide in the appendix may include:

• Credit history;
• Resumes;
• Organisational charts;
• Product images;
• Reference letters;
• Licences, permits, and patents;
• Contracts;
• Legal documents and agreements;
• Graphs, tables charts, and notes;
• Definitions;
• Legal notes;
• Marketing and advertising collateral;
• Financial projections and documents. 

Make sure to leave the appendix at the end of your business plan as a source of reference and additional clarifications. Prior to creating your business plan, It is best to decide what essential details you will add in the main sections as all supportive data and documentation can simply be added to the appendix. 

Useful Tips When Writing a Business Plan

You now have an idea of the information that’s required in a business plan. But are there any additional tips to keep in mind when preparing it?

If you haven’t started your venture yet but you want to start working on a business plan, it is worth spending time to precisely identify the activity of your future company. Ask yourself what the nature of your business idea is and how you will be serving customers. 

This will help you have clearer ideas when writing, whether you are making a business plan for a restaurant, a bar or a retail store.   

Here are a few guidelines we recommend when making your business plan: 

• Know why you’re writing the business plan in the first place.
• Keep your target audience in mind.
• Don’t go overboard with text, rather keep it concise.
• Keep the text simple, avoid buzzwords or complicated phrases.
• Focus on the presentation – make it easy to understand difficult figures or concepts.
• Don’t be over-optimistic but rather realistic.
• Proofread and edit the document when you’re done.
• Automate part of the work by investing in business plan software solutions.
• Save time and avoid gaps by relying on a pre-made business plan template for your industry.
• Make sure your company plans are easy to access. 

Regardless of the nature of your company, these tips are applicable for any business plan. 

Wrapping Up

And there you have it – some of the most important components required when you’re thinking about how to put together a business plan that outlines your company’s goals and sets out a road for achieving them. 

It may seem like a lot of work at first, but if you break it down into smaller sections and work on each one at a time, the task of preparing your business plan will not seem as arduous as you thought.

Disclaimer: Please be aware that the contents of this article and the myPOS Blog, in general, should not be interpreted as legal, monetary, tax, or any other kind of professional advice. You should always seek to consult with a professional before taking action, since the particulars of your situation may materially differ from other cases.