Writing a business plan for a startup is indeed an invaluable asset. Basically, it serves as a guide on how to accomplish your business goals and objectives. More so, it allows you to properly allocate resources and map out ways to tackle problems or situations that may arise in the future.
While there are no strict rules for writing a plan, there are some basic guidelines that you must adhere to. Likewise, there are several elements that determine how detailed your business plan should be. These include its intended use and more importantly the target audience.
For instance, If you are seeking external funding from private investors, financial institutions or other agencies, your plan must be well detailed and contain in-depth analysis. Besides, this is one of the primary reasons for writing a plan – to solicit funds from lenders and investors.
Here are steps to follow when drafting a plan
Prior to writing a plan, it is essential that you do a thorough research work. Ultimately, the quality of your plan depends on how much information you have about the business and the industry. You don’t want a big opportunity to slip off because you failed to do your homework. Get detailed information about the following
- Target market
- Business industry
- Location and more
There are lots of resources to help you in this regard. These include web pages, company report, questionnaires etc.
2. Critical Analysis
Of course, when the idea first came to your mind you were overly excited; and it’s normal. But first, you need to be sure if the business stands any chance of survival in this highly competitive business world. In this case, a SWOT analysis comes in handy. This includes critical analysis of the Strengths, Weakness, Opportunities, and Threats facing the industry. Capitalize on the strength and opportunities and minimize the threats and weakness.
By now, you should know what you’re up against. If after completing both steps one and two and in the end there is a positive result then you can move to the next step
3. Financial Forecast
At this stage, you need to explain in detail how the money will be spent. Virtually all investors and lenders attach much relevance to this section. This is where your accounting skills come to play. Even if you don’t know how to go about it, at least, you should have an idea of the total amount you need. Write it down as well as every single thing required.
The financial forecast should contain either three or five years of the statement. Here are some relevant details that it should contain
- Cash flow statement
- Profit and loss statement
- Balance sheet
- Break-even analysis
Remember to indicate the source of the initial capital.
Now that you have all the information you need, it’s time to put them into writing. Proper use of grammar and punctuation is necessary. Go straight to the point and keep it short if you want your business plan to be read. It should contain compelling facts that emanated from your research and analysis.
State clearly the weakness and threats in your SWOT analysis and how you intend tackling the threats facing the industry. Don’t make your opinion the loudest. Of course, we know you like the idea but you need to impress your readers with facts. For ease of reading, use headings, bullet list, graphs, table etc appropriately.
5. Review the Plan
Now that you’ve done the bulk of the job – drafting the plan - the next thing is to review and revise. By now, you are exhausted already. You can send a copy to your friend or any close ally to help review for errors. Make sure you fix any problem before sending it to an investor or lender.
To conclude, approach your target audience in a sensible manner. Keep in mind that there are diverse audiences out there. And as such, ensure your proposal meets their specific need.