How to Write a Business Plan

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How to Write a Business Plan

Writing a business plan is a critical step toward running a successful company. The business plan will outline what the company does, who will run the company and what competitive advantages it has over the competition. While such a plan doesn’t have to be dozens of pages long, it should provide as much direction for the business as possible.

Start With an Executive Summary

This is a general profile outlining what goods or services the company provides, who the management team is and where the company is located. It can be considered an introduction to investors or potential partners who will want to know right away who and what they are dealing with. An executive summary should also touch on where the company is headed in the future and what it hopes to add to the marketplace.

Where Will the Company Get Financing From?

It is critical to know how much money the company will need and where it will get that money from. Common sources of funding for new companies are personal lines of credit, loans from family or friends or cashing out retirement accounts to provide capital for the business. Knowing how much money the company will need and where it will get it from enables the company to create a plan that will appeal to venture capitalists or major outside investors.

How Strong Is the Competition?

Knowing what a business is up against makes it easier to create a successful business plan. This is where a business owner will look at how many competitors are out there, the likelihood of achieving a tangible share of the market as well as any other obstacles that may be unique to the industry that the company is in. For example, a company that wanted to provide domain hosting services may need to learn the technology behind hosting a site, understand how much people are willing to pay for a particular amount of storage or whether or not it would make sense to license its product or services to other groups.

Who Is Running the Company?

A company won’t get far unless there is a clear leadership structure in place. Knowing who reports to who can stave off internal struggles that could doom a new company. Additionally, having a clear CEO makes it easier for investors to understand who makes decisions within the company or for the media to know who to contact to do a story about the company.

Writing a business plan is a mandatory step toward creating a thriving company. The plan should answer questions regarding who is in charge of the company, where the money to run the company comes from and how likely it is for a new business to succeed in its industry. With these questions answered, the company can forge ahead in the marketplace confident that it is doing everything it can to one day make a profit.

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