Writing a business plan forces you to review your assumptions about your company, Entrepreneur Magazine says. To write one requires looking analytically at the strengths, finances and challenges of your business and setting specific goals for the future.
- Make a thorough analysis of your market. Your research should cover your industry's size, historic growth rate and the expected future growth, says the Small Business Administration. Using the results of your research, identify the target market you plan to pursue -- age and demographics, buying power, what drives them to make purchases.
- Conduct a competitive analysis. Draw up a list of the major players in your industry, the market share they command, and their strengths and weaknesses. Identify the assets your company has that make it possible to compete with bigger names. Also list problems that could make it harder.
- Crunch numbers and project your finances over the next five years. You can use your income, expenses and growth from previous years as the basis for your projections. This is useful information for you as the owner, and essential if you're soliciting loans or investments, says the SBA.
Write the Plan
- Describe the business. The business description, Entrepreneur Magazine says, should tell readers whether you're a sole proprietorship, partnership, corporation or any other business structure. It should explain what you do, the market you're operating in and how you're going to succeed in the face of your competitors.
- Talk about your products or services. Spell out the benefits they offer to customers and what makes your offerings better than the competition. If you have patents or copyrights or important R&D under way, don't forget to point this out.
- Explain your strategies. This includes not only how you promote and advertise your products, but also how you distribute them to customers -- mail-order or through mall kiosks, for example. Your marketing strategy should detail not only your target market but how much of the market you can realistically capture as well.
- Combine all the different sections together in a single document. Entrepreneur recommends that you provide footnotes or other references for any factual statements because that shows readers your information is as accurate and up-to-date as possible.
Websites such as Bplans.com offer dozens of sample business plans from companies in a variety of industries. These samples serve as guides to what your finished plan should look like.
Create the Executive Summary
The executive summary goes at the beginning of your business plan, providing a condensed, Cliff's Notes-like version. A busy reader might glance at the executive summary and nothing else. It should be crisp, concise and filled with pertinent information:
- Mission statement. This is an elevator pitch that sums up your vision for the company.
- Basic information. The executive summary should describe your company, its history, its ownership, the number of employees and the location.
- Growth highlights. If you have any growth successes to brag about, include them here, says the SBA. Charts or graphs that make the point visually bring these high points home.
- Products and services. Whatever you do, describe it here.
- Your goals. Describe future plans for growth, new products or expansion.
- Financial information. If you're seeking new financing, include up-to-date information about your current financing, banks you deal with and investors who've already bought in.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.