Writing a business plan
Learn how to write a business plan in less time than it takes to brush your teeth.
Before you’ve managed to scrub those pearly whites, spill toothpaste all over your shirt and scramble to find a clean one for work, this article will teach you why you need a business plan and what you should include in it to make it sparkle.
This is a five-minute read.
You’ve decided to start a business. So, what’s next?
A business plan is a good place to start. It’ll help you craft a vision and direction for your business, as well as help you secure funding from potential lenders or investors.
A business plan doesn’t necessarily have to be too detailed or involved, however it does need to be thoughtfully considered to give you the best chance of success.
Here are five areas they should cover.
1. The need you’re addressing
Businesses exist to solve problems for people, so your first step should be to define the problem you are solving. The simpler, the better. Think about the specific need that you’re trying to fulfil.
Next step, the solution. What is the product or service you’re offering and how is it going to solve the problem?
2. Potential customers
Keep in mind that businesses solve problems for people. So, who are they exactly?
You need to find out who will want your product or service. You’ll also want to figure out what will motivate them to buy it. This is where market research comes in.
3. Your competitors
Chances are, there’s already someone selling a product or service that’s similar to your own. You’ll probably want to figure out who they are and what they’re doing.
That will help you find your competitive advantage – that is, why your customers will want to buy from you instead of from someone else.
4. Financial Plan
The idea of going into business is to make some money, right? That’s hard to do if you’re spending more than you make.
Before emptying your pockets, estimate how much it’s going to cost to get your business going.
The best financial plans cover the following three areas, as well as how these projections will change over three years:
a. Costs to start
You’ll find that setting up a business costs a lot, from costs of developing your product and buying the tools you’ll need to start servicing clients, to the initial outlays of licences, permits and insurances.
You’ll need to figure out your cost per unit/service, plus consider your initial outlays to get the business going.
Startup costs will vary from business to business. To get a better idea of how much money you might need to start your business, consult this handy list of costs that you might encounter as a business owner. You can also consider hiring an accountant or bookkeeper to help you figure these out.
It’s also important to consider common planning mistakes and how they may cost you. You can read more about those here.
b. Costs to operate
Once you’re up and running, you’ll find you have many ongoing costs. From cost of staff to rent, consider what costs will stick around for the long haul.
c. Revenue projections
The critical part: calculating how much money your business can make. Consider your revenue per unit/service sold and how this will increase as your business scales and evolves over the years.
5. Distribution channels
How are people going to access your offering?
Whether it’s through a website, on a digital marketplace (like Etsy or eBay) or a physical store front, figure out when, where and how you’re going to sell your products or services. Each option has pros, cons and different costs.
Top 3 takeaways
- Writing a business plan is important for creating a vision and providing direction for your business.
- It should consist of five key elements: the need you’re fulfilling, potential customers, your competitors, a three-year financial plan and your distribution channels.
- Consider your business plan as a living document. Updating it regularly can help to keep you focused on your business objectives.
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