A business plan is your path from an idea to generating real income and maintaining its stability. We will tell you how to draw up a business plan yourself, give samples – read the article to move from a business idea to real action.
A business plan can become a base or ruin a new business in the bud. A strong, detailed plan provides a clear roadmap for the future, makes you ponder over the soundness of your business idea, and can give you a much better understanding of your business’s financial performance and your competition.
Already when writing a business plan, you can add new ideas or, conversely, abandon deliberately unprofitable actions.
A business plan is usually three to five years long and contains a detailed description of all the goals and how you intend to achieve them.
Whether you are applying for a loan or looking for investors, the business plan shows that you are prepared and fully analyzed your business idea. It’s not a shame to show a good business plan to your friends – this way you can find additional support in your endeavor.
Analyzing business plans for different areas, we have put together a structure that will help create the most complete document. Include the following points in your business plan:
- company description;
- objective statement;
- business and governance structure;
- goods and services;
- marketing and sales plan;
- business financial analysis;
- financial forecasts;
Before moving on to drawing up your strategy, let’s take a look at why you need a business plan at all and whether you need one.
Why do you need a business plan
A business plan is always needed. Even if you do not plan to attract investors, a specific list of actions and activities will help you achieve your goals faster.
And even if you are engaged in copywriting or other type of earnings on the Internet, a business plan will help you achieve results faster than not having one. With its help, you can answer your own questions:
- what will I do;
- what will be the costs;
- why I will do it;
- who will be my clients;
- how much income can i get.
Along with this, the document will help you calculate profitability, calculate risks and evaluate the project itself.
A business plan is needed for investors (those who are ready to invest in your business) and lenders.
For example, you want to start your own business of sewing soft toys and sell them through social networks. The document will show what expenses are needed, in what terms the project will pay off.
For investors, a business plan is necessary, it confirms the seriousness of intentions.
For example, you have a startup (new venture) idea.
Both YouTube and Instagram were once startups, but a clear roadmap helped turn them into stable and profitable businesses.
You may be using the social network Vkontakte. A couple of years ago, advertising was added to music. To disable it, you need to pay for a subscription. I am sure that such changes are pre-written in the business plan of the site, and their implementation brings significant income.
A business plan may also be needed if you plan to involve acquaintances in your business. The strategy will show that you understand what you are doing.
For example, you are planning to open an online gift shop. The business plan will include expenses, necessary resources, income, payback periods. Below we will tell you what types of business plans are.
3 types of business plans
There are three main types of business plans.
Business plan type
For whom it is created
Theses of your project. Basically, this is a sketch before creating a detailed document.
For you and potential investors to assess the degree of interest in the project.
Full (detailed) plan
Contains a complete strategy for running your business over the long term. With numbers, characteristics and sequence of actions.
For you. You can refer to it and synchronize further actions to achieve your goals.
Key aspects that put the project in the most favorable light … You can entrust the work to designers.
For investors and lenders (banks).
Start with a mini-plan, so you yourself will understand how viable your idea is. Each strategy has mandatory points – let’s look at them.
How to write a business plan yourself: a sample
It’s easy to write a good business plan – just put the idea out of your head on paper (well, or in electronic format). Consider what points your business strategy should include.
As the name suggests, this is the summarizing part of your plan. Although it goes first, it is best to write it after the main parts have been written. This will help you to summarize what you have written and briefly describe the project.
This part includes:
- A mission statement that explains the main focus of your business.
- A brief description of the products or services offered.
- Basic information such as business structure.
- A summary of your plans.
For example, when drawing up a business plan for the clothing trade.
This will reflect: the direction of business (trade in affordable clothes for customers with a small budget), types of clothing – outerwear, casual, business, the number of points and the way of implementation, the plan – purchase from wholesale agents or directly from production, sales with a surcharge through online store or delivery to online outlets.
2. Company Description
This section contains important information including registered name, physical location address, names of key people in the business, company history, nature of the business, and more details about the products or services it offers or will offer.
Here you can specify the organizational and legal form of the business (individual entrepreneur, self-employment, LLC or JSC). Future or existing legal address, number and personalities of managers. The main type of activity (OKVED, assigned upon registration with the tax service).
Description of goods and services – photography, writing texts, sewing clothes, advertising, promotion in social networks.
3. Objective statement or business goals
An objective statement should clearly define your company’s goals and contain a business strategy that details how you plan to achieve them. This part should indicate exactly what you would like to achieve, both in the short and long term.
For example, you decide to create a PR agency with like-minded people.
Here you can specify what you plan to do, the intensity of the activity and the desired result. You will conduct advertising campaigns, negotiate publications in the media, increase the number of subscribers on social networks, increase the media index (the number of brand mentions on the network) and the recognition of client companies.
If you are looking for outside funding, you can use this section to explain why you have a clear need for funds, how funding will help your business grow, and how you plan to achieve your growth goals.
The key is to clearly explain how a loan or investment will help your company grow.
For example, if your business is launching a second product line (new webinars or training courses), you can explain how the loan will help your company launch a new product and increase sales by 50% over the next three months.
4. Business and management structure
This is where you list the legal structure of your business – for example, a sole proprietorship, partnership, or corporation. As well as key employees, managers or other business owners.
It should also include the percentage of ownership of each owner and the degree of participation of each owner in the company, in the case of a joint stock company.
If you are planning to organize studio photo sessions, here you can specify the head of the organization, photographer, stylist, hairdresser. All those who will perform the main functionality.
For each person, you can briefly indicate the merits, certificates – this will help justify the presence of these people and their benefits for the business.
5. Products and services
In this section, you can describe in detail the products or services that you offer or plan to offer. The description should include the following:
- an explanation of how your product or service works;
- the pricing model for your product or service;
- the typical customers you serve;
- your sales and distribution strategy;
- why is your product or service better than the competition;
- how you plan to fulfill orders.
Your brand can be entered here. If you come up with an original name, you can register a trademark in order to be sure that your competitors do not work under your name.
If you come up with something innovative – an application, a training program, a computer program – they can be patented and confirmed as copyright.
Let’s consider the content of the section using the example of a web studio. Activities – website development and promotion:
- We create turnkey websites and fill them with text, audio and video content. We are engaged in promotion in search services and social networks. This functionality is performed by SEO specialists and SMM managers. We agree on promotion through other sites through links to client materials (PR-support).
- The cost of creating a website starts from 15,000 rubles, depending on the complexity of the project. The full price list is available on the website and in the app. Each operation comes with additional cost. When buying a package offer, the cost is reduced by 25%.
- Our clients are young entrepreneurs who have not yet created their website or social media pages. We increase their brand awareness and attract new customers.
- We advertise in search engines and social networks, call entrepreneurs (databases from open sources).
- We offer a turnkey solution – we not only create a website or a page on a social network, but also undertake its promotion and monetization. There is no need to look for specialists in different agencies. We conclude an agreement in which we write down our obligations – the client will be sure of the result.
- We plan to accept orders remotely, conclude an agreement between legal entities. We send documents by mail or courier. Terms of execution depend on the complexity of the work. The result is a ready-made website indexed by search services, or a page in social networks with a certain number of subscribers and publications.
And when you start writing this part, you have a deeper understanding of what you will be doing. Everything falls into place, and the project becomes more real.
6. Marketing & Sales Plan
This will explain what your marketing strategy is and how you will execute it. You can indicate here how you plan to convince customers to buy your products or services.
Or how you will develop customer loyalty, leading to repeat referrals and referrals for new customers.
This section can also highlight the strengths of your business and focus on what sets your business apart from the competition.
In fact, this is a detailed disclosure of the previous paragraph in terms of sales strategy. You have a cool idea, and you know that you write great texts, or create websites, design objects – logos, postcards, illustrations for brands, presentations.
How will you attract customers? How do you get them to tell their friends about you? Why should they choose you? Think about it – then it will become clear in which direction to move when promoting your own business.
For example, you are going to make furniture with your own hands. You enjoy working with wood and want to turn your hobby into income. What should I write here?
It is clear that your clients will refer new ones to you if they like your work. But where to find the very first customers?
Social networks, advertising on websites, your own website, distribution of leaflets will help here. The most original option is to go to furniture stores and pick up customers from there, offering an exclusive solution for their home. 🙂
If you do design, copywriting, social media or PR, be sure to create your own portfolio.
This can be a web page or a PDF that you can send to your customers.
7. Business financial analysis
If you are just starting or planning your own business, you may not yet have information about the financial results of your business.
However, this can include projected profit and loss information, a balance sheet of assets and liabilities, and a cash flow statement showing how the money will flow in and out.
If you want to do SMM promotion, you can specify:
- equipment costs (laptop, scanner, photo or video camera);
- payment of utilities;
- transportation costs;
- the cost of advertising and promoting a personal brand in social networks;
- projected profit.
In case of opening a photo studio, this will include:
- projected profit (order value multiplied by the number of customers per month / quarter / year);
- studio rental;
- transportation costs in case of on-site filming;
- purchase of equipment (cameras, light, props, furniture, software for photo and video processing);
- costs for specialist services (stylists, hairdressers, operators);
- payment for utility services;
- fundraising (loans).
We often talk about projected profits.
It is important to write real, but ambitious numbers here. Visualization will work – when you write them down, you will subconsciously do everything possible to get the planned income.
8. Financial forecasts
This is an essential part of your business plan if you are looking for funding or investors. It tells you whether your business will be profitable enough to pay off the loan or how you will generate decent returns for investors.
Your goals may be ambitious, even aggressive, but they also need to be realistic.
This is where you will provide monthly or quarterly estimates of the sales, costs and profits of your business for at least a three-year period, with future figures provided that you plan to take out a loan.
Accuracy is key, so carefully analyze the market and historical experience before making any predictions.
The purpose of this section is to show that your business can generate strong enough cash flow to cover recurring loan payments or dividend (profit) payments to investors. But you should also consider the various business risk factors and take them into account.
For loan officers and those who want to invest in your business, calculating risks and methods to eliminate them is very important. It is on this section that the decision will be made.
For example, when purchasing goods from China, the risk may be an increase in customs duties, or too high customs fees if the flow of goods increases with active trade.
The recent situation with the epidemic of the disease in China has significantly reduced the tourist flow, and travel agencies are suffering losses. 60% of agencies have completely stopped selling tours – losses are expressed in billions of rubles.
The same thing happens with goods from the famous Aliexpress trading platform – no one wants to risk it.
You might want to make handmade soap.
How many units of a product can you make in a day? What is the cost, markup and final price? What are the costs and profits per month? Net profit? Is there a risk to go on sick leave and be left without income? Or will you have a replacement?
It is important to put everything in numbers – this way you will see a clear picture and understand whether it is worth starting such a business. This might be a great idea, but the math may reveal that it won’t be worth the candle.
I love making simple wood furniture – shelves, whatnots, tables. At one point, it seemed to me that I could make it a source of income.
I calculated the cost of materials – and it turned out that even without extra charges, the desktop cost me several thousand rubles. While a ready-made table can be bought at a price of 800 rubles. Yes, not natural wood, but nonetheless. I gave up on this idea and continue to make things only for my home.
Returning to the business plan – here you can specify alternative sources of goods or alternative services. And then the risks will be minimized.
List any supporting information or other additional information that you might not be able to post elsewhere.
For example, resumes of key employees, licenses, lease of premises or equipment, permits, patents, receipts, account statements, contracts, and personal and business credit history. If the appendix is long, you may want to consider adding a table of contents at the beginning of this section.
Here you can also add a portfolio, product catalog, information about successful deals or large projects, about key customers.
Tips for writing a business plan
Now that you know how to write your business plan, here are some tips to help you stand out:
- Avoid being overly optimistic: If you are applying for a business loan from a local bank, the loan officer probably knows your market well. Providing unreasonable sales estimates can lower your chances of loan approval.
- Keep it short: all you need is 15 to 25 pages for a good business plan. Less water – provide more facts, analytical data, and describe your strategy in detail. Even if you do not plan to attract banks or investors – in the first place, it will be useful for you. There will be a clear picture of what you plan to do and what result you will get in the end.
- Focus on the key elements of your business plan and avoid getting too caught up in the technical aspects of your business. It is not necessary to indicate which texts you will create with some nausea, as well as talking about your favorite masks on Instagram or about the resolution of wedding photos.
- If you plan on showing someone a business plan, make it clear. Highly specialized terms (nausea, wateriness, sepia) will not help you understand what you want to do.
- Check the finished text: spelling, punctuation and grammatical errors can distract lenders and potential investors from your business. If writing and editing isn’t your forte, you can hire a professional business plan writer, copywriter, or proofreader. When you see errors in a business plan, the question may arise: even if there are errors here, what will happen to the business? Although, of course, there is no connection between literacy and business.
Let’s summarize. In order to draw up a business plan yourself, you do not need special knowledge and skills. Basically, it is a document that, in writing, reflects an idea that has arisen in your mind.
Yes, you have to add details to it – which is great in terms of visualizing your goals. Now you can start drawing up your business plan and implementing it!
Sincerely, Dmitry Smirnov
specially for the proudalenku.ru project