How To Write A Business Plan

Time to write a business plan? Learn which business plan is right for you and how to write a business plan step-by-step. PLUS! How to brand and differentiate your business ready for a successful launch.

In a hurry? Skip ahead to your favourite part:

- What are the 4 types of business plans? - How to write a comprehensive business plan step-by-step - How to brand your business - How do you differentiate your business? - How to launch a small business

The majority of business owners fail because of lack of effort or lack of brains. Or to put it another way, they fail because of a lack of persistence in creating new plans to take the place of those which fail.

Whether you're just starting out or you've been in business for years, business planning can be the key to your success. Having a business plan can help stakeholders prioritise the direction, goals and strategies. It steps back from the day to day and shows what's working and what could be improved. And it can help when seeking finance, whether through a bank or investors.

## What are the 4 types of business plans?

Your business plan is typically tailored to who it's intended for, and generally there are four types of business plans.

- **The Snapshot Business Plan** — a summarised version of your full length business plan, containing only enough detail for communicating the key aspects of the business. - **A Pitch Deck or Presentation** — used by early businesses when seeking funding. This type of business plan is usually more concise, often doesn't include all the operational complexities, and is designed more visually. It sells the investor on the vision, finances and growth potential, and details how you'll use the new capital. - **The Working Business Plan** — used internally, typically by stakeholders and management, to set the course for the year ahead. Most often used by established businesses as a quick reference guide and to stay focused. - **The Contingency Plan** — looks at the same details as your Working Business Plan but through the lens of "what if this part of the business was derailed," to help create a contingency plan for worst case scenarios.

## What are the elements of a business plan?

- **Executive Summary** — This is intended and written for investors or banks when seeking finance, and needs to be written for them and the questions they'll have, not for your own benefit. It's usually designed very attractively and includes the business's mission and brand story. It also includes all the major information about your business and what you're doing. What's the story of your business? Aim to summarise what the business does in one sentence, then expand on the business opportunity, unique selling points, a basic version of the total addressable market (TAM), expected income and expenses, total capital needed and exit plan, while limiting this section to no more than 3 pages. Remember, it's easier if you write this last. - **Business Description** — Your business description should build confidence in the investor's mind that you know what you're doing, by demonstrating you have all the pieces of the puzzle worked out. You'll include how the business came about, the type of business, the business's legal structure, products and services you sell, location(s) and the core departments, such as storefronts, website, telesales etc., as well as the experience of your strategic team members that will make it happen. - **Operations Plan** — This is where you dive into the details, starting with your brand's vision, mission, values and promise, which set the course for your day-to-day operations. Most importantly you'll include key financials, including your current balance sheet, cash flow forecasts, path to profitability, operating budgets, variance report, current position and financial trends, as well as how you'll put the investor's capital to work, and what the expected return and payback period will be. You'll also include a bird's-eye view of the core roles in the business and describe the hiring procedure, performance evaluation, compensation and incentive for each role, with the aim of providing context for how you'll execute your mission and financial plan. - **Organisation & Management** — All business operations can be reduced to three words: people, product and profits. Here you'll focus on the people. You'll detail the management team and who is part of the board, as well as include an organisation chart to give a bird's-eye view of the team and core roles in the business. Then the position, description, primary responsibilities, hiring procedure, performance evaluation, compensation and incentive for each role, along with the education and experience of key team members. - **Legal Structure & Insurances** — Here you'll describe the legal structure of the business — whether you're a sole proprietor, in a partnership, a corporation or a limited liability corporation — who your legal counsel is, and the insurance policies you have in place to protect the business. - **Products & Services** — This is where you dive into the products and services you provide, and describe core products, your brand's unique selling points, differentiators, and which product lines are your best sellers. - **Sales & Marketing Strategy** — Here is how you plan on generating revenue and sales. It includes your go-to-market strategy if you're a new business or launching a new product, your monthly goals and milestones, a detailed buyer persona, key performance indicators and revenue projections, as well as a monthly action plan that will ensure your goals and milestones are met. Investors will be looking for market adoption and recurring revenue if you're a new business, and your overall annual revenue, cost per acquisition, churn and customer lifetime value, in order to calculate an estimated payback period for their investment and assess it against the inherent risk of your business, product or service. - **Competitive Analysis** — Your competitive analysis categorises your top competitors, their products or services, marketing strategies, and their strengths and weaknesses, as well as a SWOT analysis of your own business. A SWOT analysis details your strengths, weaknesses, opportunities and threats, and is used to inform many of your strategies. - **Brand Position & Unique Selling Proposition** — What are your USPs and how do you differentiate from your competitors? The key differentiators to consider are your responsiveness, product superiority, efficiency, natural resources, market dominance, short-term profit, method of sale, distribution methods and technological advantages. - **Financial Plan** — This is where you detail your current financial position, include your balance sheet and cash flows, and determine the funds needed for the next phase of growth.

Depending on your business, you may also include:

- An export plan - A succession plan - An emergency management and recovery plan

## How to write a comprehensive business plan

Your business plan is usually tailored to the intended reader. But in many cases, especially when starting a new business from scratch with a new and untested business model, it'll pay dividends to write a detailed and comprehensive business plan. On top of the fundamental inclusions listed above, here's what else you might include:

**Mission Statement** — Think of your mission as though your team were troops on the ground in a war. You're the commander and you say: "Our mission, should you choose to accept it, is…" It's the reason your troops will go into battle with you. It's the light at the end of the tunnel. The north star. And it often acts as part of your decision tree when making business decisions along the way. It's short, concise, and every word is chosen for a reason.

**History or Background** — Your backgrounder gives context to what makes the business what it is and why you've chosen to embark on this particular mission. It's the story that paints the picture and your motivation for starting the business.

**Markets and Products** — Here you provide an overview of the size of the opportunity. Your market is your customer base. The marketplace is where you sell, and the products (or services) are what you sell. Who are your customers? What problem does your product solve for them? How big is this market? And what approximate value does the market represent?

**Goals** — If your mission determines the direction your business is heading, your goals are the pillar objectives you must achieve along the way. Often it's easiest to start from the end goal and work your way back — for instance, do you plan to sell the business one day, or keep it and hand it to your children, etc.

**Value Propositions** — Value is what a customer gets, and the price is what they pay. The value is often a solution to a problem they have, one that's better than what they can find somewhere else. The price is determined by the amount of value they receive. And whether your customer pays you or your competitor is determined by who offers more value for the same price. So here you list what your competitive value propositions are.

**Customer Segments** — What is the buyer persona of the market you are creating value for? Who are your core customers, the 20% of your customers that make up 80% of your sales? And who are the others?

**Channels** — How will you reach, engage and transact with your customers? This might be your local store, website and telesales. List the different channels here and assign an approximate percentage of how much of your business flows through each channel, so you can assess cost, profitability and risks later on.

**Customer Relationships** — People buy from people, so here you describe the types of relationships you have with each of the customer segments, and the costs involved in maintaining that relationship.

**Revenue Streams** — These are the different ways you make money. Your business is often organised in line with your revenue streams, or the product lines or categories you sell to each customer segment. Your revenue streams can vary vastly, depending on how you sell your product. Creating multiple revenue streams over time is important for long-term success, because nothing lasts forever.

**Key Resources** — What are the essential elements of your business? The must-haves? List each essential resource in association with each revenue stream. For instance, if you're an ecommerce business, your website is a key resource, and so are your unique products.

**Key Partnerships** — Who are your key partners? Which resource do you get from that key partner? And which revenue stream are they both connected to?

**Key Operations** — What unique operational process is essential for the execution of each of these revenue streams, key partnerships and key resources?

**Cost Structures** — What are the core costs of the business? What do each of the key resources, partnerships and operations you've decided on cost? What are the raw costs of what you sell in each revenue stream?

**Market Comparison** — Where does your product or service sit in the market? How is it positioned? How are you different from your competitors and market leaders?

**Proprietary Rights** — Do you have any proprietary rights, like patents or trademarks, that protect your product and the investment?

**Development Roadmap** — What can your product or service do now, and over time, what will be invested in its development? What are the development goals, and what will each step or milestone look like on a step-by-step evolutionary roadmap?