How to make a business plan? Well, here is the step-by-step process of making a perfect business plan to get a “Hell Ya” from investors.
Having a well-thought-out business plan is like laying a strong foundation for your business.
It defines how you structure, run, and grow your business. Also, a perfect business plan can help to build trust and get the attention of the investors.
Here are the 9 steps to make a perfect business plan
Follow these 9 steps to make a perfect business plan
- Decide whether you need a traditional or a lean business plan
- Make a basic framework for your business plan
- Write an executive summary of your business
- Find about your target market
- Check for any applicable regulations
- Identify your unique selling point to dominate the market
- Determine how to create your product or service
- Define how to handle the marketing process
- Make a budget for your business
⚠️ Before you start a new business…
There are 11 steps that are required to start a business successfully. We have curated a step-by-step guide to help you with the process. Check out our beginner’s guide about how to start a new business for more information.
Step 1. Decide whether you need a traditional or a lean business plan
There are two basic types of business plans.
- Traditional business plan –
If you need to present it to a financial institution (for example, to get a loan), you will need to make a traditional business plan. It is a more structured, detailed, and in-depth plan about your business.
- Lean business plan –
If you just need a business plan to define your process of starting a business, you can go for a lean business plan. Usually, it is one or two paged business plan to highlight the major functions. Some investors might be happy to get only a lean business plan.
Step 2. Make a basic framework for your business plan
Once you decide which type of business plan that you are going to make, you can create a basic framework. Having a basic framework helps you to find and fill in the information quickly.
???? There is no right or wrong way to make a business plan…
Unless your financial institution provides a specific template, you can have the flexibility of making a business plan that can fit into your requirements.
Here is a basic framework for a traditional business plan
- Title page –
The name of your business and the details of the owner goes here.
- Executive summary –
This works as an elevator pitch for your business. Include a short overview of your products, customers, and goals. Also, make sure to get the best copy for this section. Most of the time, the investors lose their interest right after reading this section. Here are a few tips to get the yes from investors.
- Company description –
Now it is the time to go into details and write about your mission, location, company structure, etc. Divide the information into subheadings. So, it will be easier to understand.
- Market research –
Hope you already did market research for your business idea. If so, you can write about the findings in this section. Tell the reader about your target customers, your unique selling points, and the applicable standards/regulations for your business.
Having detailed and accurate information in this section shows that you have done your homework well. So, it will help to build trust.
- Design and development plan –
Tell them how you are planning to design and develop your product or the service. Also, you can talk about different variants, price structures, production facilities, etc.
- Marketing and sales –
Here you can tell your reader how you are going to market and handle the sales for your product. Make sure to research the proper marketing strategies for your business, and to include them.
- Financial factors –
Banks will grant loans and investors will fund your business, only if you can prove that your business will be stable and financially rewarding for the years to come. Therefore, use this section to discuss your financial projections, budgets, and forecasts.
Here is a framework for a lean business plan
|Business Plan Company Name:|
|Vision of the business||What are the hopes and dreams of your business?|
|How are you going to achieve your vision?|
Which products are you going to sell?
What is the target market?
How are you going to sell your products?
What is the pricing strategy?
|Marketing overview||Which marketing channels you will be using?|
What are the promotional methods that you are planning to use?
Which specific marketing tools and services that you will be using?
|KPIs||Set specific, timely, and practical KPIs for your business. For example:|
– Reply to all social media inquiries within 30minutes.
– Maintain a 30% customer retention rate for the first three months.
|Action plan||Include the major milestones that you are going to complete. For example:|
– By “date” launch a business website with product listings.
Step 3. Write an executive summary of your business
As we have mentioned earlier, this part of your business plan is like an elevator pitch. Therefore, you should make the executive summary of your business plan in a way that it can grab and boost the interest of your investors.
???? What is an elevator pitch?
Think you met a potential investor in an elevator. You only got a minute or two to sum up and pitch your business idea to that investor within that brief elevator ride.
So, your business pitch should be short, but engaging!
Here is an example of an executive summary of a business plan
Doing market research for your business…
If you haven’t done market research for your business idea, now it is the time to do it. Steps 4, 5, and 6 are focused on how to do market research for your business.
If you have already done market research, you can skip to step 7 and continue.
Step 4. Find about your target market
The target market is the specific set of people that you are going to sell your products or services. It is the foundation to build marketing strategies for that business. Also, all your audience building techniques should be based on the target market of your business.
Therefore, by defining your target market on your business plan, a knowledgable reader can evaluate the effectiveness of your marketing strategies.
There are four steps to identify a target market for any business
Define – Refine – Research – Assess
- Define, what problem you solve.
You can easily identify your target market by defining the problem that you solve from your product or service. In this way, you can create a perfect buyer persona by identifying the demographics of the people who would benefit from your solution.
- Refine, to narrow down your target market.
Use demographics and psychographics to refine your selected target market further. You can use online tools like Facebook audience insights to refine perfect demographic data.
- Research, to validate your selection.
The next step is to validate your selection using online data, customer surveys, and face-to-face interviews. You can use online data sources like Statista, NAICS, USA.gov Statistics, U.S. Census Bureau to get support for this step.
- Assess, by doing a trial run.
Do a simple trial run to test and proof your target audience. For example, before I list a product on my eCommerce stores, I always try to sell a product or two on eBay to test. This pre-test information is proof that your business idea is going to be a hit!
Selecting a generic target market is useless
Don’t just select generic target markets like “40-year-old moms” for making your business plan. You cannot say anything about your potential buyer from that kind of target market.
For example, if you select “40-year-old moms” as your target market, is there a way for you to know their likes and dislikes? Or, can you know about their income level and purchasing power? Nope!
That is why you need to define, refine, research, and assess to find the perfect target market to include in your business plan.
Step 5. Check for any applicable laws and regulations
⚠️ Pay special attention to the regulations!
Usually, every business is governed by many different regulations. Also, these regulations vary from location to location, and business to business. Therefore, always check with your local authorities to identify the list of applicable regulations for your business.
Here is a list of usual government regulations on businesses
- Tax code
Usually, all businesses have to pay federal taxes. Also, in some cases, you will have to pay the state taxes too. There are a lot more to taxes than just paying them. For example, knowing which taxes to pay, how to pay, and when to pay can help you to manage your taxes.
- License and permits
The license and permit requirements vary from industry to industry and from location to location. By getting the required license and permits, you can start to operate your business without any legal disturbances.
- Employment and labour law
If you are hiring someone for your business, there are a ton of employment and labour laws to adhere to. For example, there are laws to regulate wages, hours, workplace safety, equal opportunities, etc. If you are starting a business in the US, you can check in the FirstStep employment law advisor guide provided on the US department of labour website.
- Antitrust Laws
Basically, you cannot conspire with your competitors, buyers, or suppliers against another party. For example, there are regulations applied to fix market prices, boycotting, allocating markets, monopolization, etc.
Advertising is an essential part of any business. However, there are a ton of regulations to govern this process too. For example, it is illegal to advertise untruthful or deceptive marketing material. Also, you will have to comply with the digital marketing regulations too.
- Email marketing
Having a proper email marketing strategy is a great growth hack for small businesses. However, there are some regulations to govern the use of false, misleading, and deceptive content in your emails. Also, you should clearly mention that your email is an advertisement, and honour the opt-out requests.
- Environmental regulations
If you are selling chemicals, food, or a product which claims to be eco-friendly (or organic) there are certain environmental regulations applicable for your business. Check out the EPA.Gov website. They provide a good set of resources to find the applicable environmental regulations for small businesses.
Even before you start the business, you will start gathering a lot of sensitive and private data about your employees, customers, suppliers and many others. So, you have to adhere to the privacy laws to avoid spreading any of this information.
In most of the states, as soon as you hire the first employee, you will have to purchase a worker compensation insurance. Also, in some cases, if you are planning to obtain a business loan, you will have to get business insurance too.
- Collecting sales tax
Usually, in most of the sates, you will have to collect the sales tax for the products that you sell to your customers and payback to the revenue department.
Step 6. Identify your unique selling point to dominate the market
Your unique selling propositions are the reason for your business to be better than your competitors, and those are the reasons that make you stand out from the competition.
Here are the steps to find unique selling propositions for your business
- Identify your target market (We have already discussed this in step 4)
- Create a list of problems that your audience have.
- Make a list of your competitors.
- Go through the customer reviews, comments, and other feedback sections to identify the problems that your competitors do not solve.
- Decide how your business can solve those problems.
By identifying the unique selling propositions, you are basically looking for a void to enter into the market.
So, when you make a business plan, you can include these information to let your reader (the investor) know about the chances of your business idea to become successful.
Step 7. Determine how to create your product or service
Having a clear and sensible production timeline on the business plan is essential to convince your investor about your ability to make the business idea a reality.
Also, if you are getting a bank loan, in some cases, the bank will release payments according to your time plan. If this is the case, you will also need to include the budget requirements together with your product development time plan.
Here is an example of a product development timeline for a business plan
???? Work ahead of your time plan…
You can make a better case to your investors by researching and including more information about potential suppliers, tooling requirements, and possibilities of scaling up, even during the initial stages of business planning.
Step 8. Define how to handle the marketing process
It is better to research and define your marketing strategy during the planning stage of your business. Once you have started running your business, you will get overwhelmed by day-to-day sales and marketing will fall behind.
Therefore, it is always better to structure your marketing strategies in advance; and, follow those strategies for a few months straight to test them against your KPIs.
30 essential marketing skills for every small business owner
Marketing is a tedious task. However, by understanding these 30 essential marketing skills can save you from headaches!
We have compiled a list of the easiest and DIY type marketing skills in this beginner’s guide for marketing. Check it out to learn more.
Step 9. Make a budget for your business
We are almost done making a business plan for your business. Now, before we present our business plan to the investors, we need to make a budget for our costs and future income forecasts.
Here are just 3 steps to make a small business budget
In the beginning, you will not have accurate data to fill in. So, you can talk to the mentors and other business owners to create forecasted values.
- Calculate the fixed costs
Fixed costs are the spendings of your business that are charged the same amount for each month. For example, rents, utility bills, salaries, bank fees, website hosting charges, etc. fall into this category.
- Determine the variable costs
Variable costs fluctuate with the performance of your business. For example, in some months, you will need to spend more advertising than the other months.
- Include one-time costs
One-time costs usually consist of the purchase of machinery, tooling, designer fees, legal fees, application costs etc. There can be unexpected one-time costs while running the business. For example, replacing a crashed laptop can be an unexpected one-time cost. Other than that you can budget everything else in advance.
Create an income and expense forecast on your business plan
After calculating all the above costs, you can put them all together to calculate the final budget. Then, you can predict a sales forecast based on the information collected through market research and from the other business owners to make an income and expense forecast in your business plan.
It is understandable that the actual figures can vary from the budget. However, by making a forecast budget, you can foresee some of the major expenses and be ready to handle them, rather than making them a financial burden in the later stages.
Now you know how to make a business plan for your business
Congratulations! Now you can make a perfect business plan for your business to attract investors and structure the growth of your business.
Having a well-thought-out business plan is like having a strong foundation for a building. Planning reduces the risks of starting a business. So, make sure to make an iron-fist business plan for your business.
What should be your next step? In the next step, we’ll talk about a few tips to find money to start a business. Until then, subscribe to our email updates or follow us on Facebook to stay in touch!