10 Steps of Writing an Effective Business Plan

Business planning is one of the four management functions, and it is the first step of commencing any type of business. A good business plan has multiple purposes. Additionally, it is the most important element of any potential business.

This study provides a short list of the essential parts which should be included in a business plan. It also provides the importance and purposes of creating a good business plan. You should follow these to list your business needs, products, and services you are planning to offer, type of business ownership. This includes the minimum information required by institutes and potential investors.

Importance of Writing Effective Business Plan

A plan is a map. It shows the paths the business will be following throughout its life-cycle.

A business plan will include the following questions and elaborate the answers by which running the business will be easier for you. You know the reason.

A good business plan will answer

• Where do you want to take your business in future?
• Where do you want to see it after ten years?
• What are the specific goals?
• What product or services do you want to offer?
• What is your expected profit?
• How much capital will you need to initiate the business?

Determine Required Capital for your Business

As you make a plan for your business, you will certainly make an outline about the future capital requirement. A plan includes the startup cost and the cost which will be needed in the future interval. So, you can have structured capital expenditure that will help you to avoid future uncertainty.

Business Plan Helps You Avoiding Future Uncertainty

You will be conducting a number of operations in the business life. In a plan, you include the list of those operations you will be conducting throughout the business life. And also, you will list a probable risk that you will be facing while conducting the business. These will give you time to think about the problems, and find out a solution.

Making Strategic Plan For Your Business

You need to build your own business strategy in the inception. If you do it, you already have few advantages on how your firm will be operated and gain competitive advantage. A good business plan has room for listing out possible business strategies.

Attracting Potential Investors

What do you do If you need additional investment? You borrow it from a financial institution or you search for new investors who can give you capital. But how do you convince them to invest in your business? Obviously, presenting a good business plan.

You need to make a good business plan to attract investors to invest in your company.

10 Steps Of Writing an effective Business Plan

Executive Summary

You will tell everything about your business within 1-2 pages. It is the snapshot of your whole business and profiles.

Company Description

In this section, few important things should be included. You will include the description, brief explanation of your competitive advantages, your competitors, and the target market your business will serve.

Market Analysis

You will have to provide the details about the industry you are planning to enter, your major competitors and major market players, and an estimation of future sales. Describe your target market in term of demography, geographical locations, target market needs, and how these needs are being satisfied currently.

Service or Product Line

The details about the products and service you are planning to provide. And if you are planning to provide a product, will it need any service along? Describe it in details.

Strategy and Implementation Summary

Write clearly about your business strategy, and how you will be fighting with your competitors to survive the market after entering. You need to answer: What makes your product the best one? How will you build the customer base? And what will be the responsibilities of the management?

Organization & Management

You will show the legal structure, the form of ownership here. Will it be a sole proprietorship or a partnership? You will discuss on the management team you will be needing, the managers background, management resources etc.

Operational Plan

Here you will describe the physical business location of your firm, the needs of employees and equipment, sources of suppliers, descriptions of a manufacturing process, and any other operational details.

Marketing & Sales

You need to answer few questions for this section.

• How will you market your product or services? Promotional Strategies?
• What strategy will you follow to sell those products or services?
• What is the potential pricing plans?
• What benefits will your product or services provide?

Financial Projections

You need to have a financial projection of at least 3 years to backup your business. Create projected financial statements of 3 years. And do not forget to include economic assumptions to support those statements.

Break-even Analysis

Using those financial statements calculate the financial ratios and a break-even point of your business.

The significance of writing an effective business plan are many. You will be benefited by an effective business plan throughout its life-cycle. One thing I must assure you, if you have a strong business plan with you, you can conduct your business efficiently.

An effective business plan is really a great support to achiever business goals. If these steps are followed carefully, you can make an optimal one hopefully.