How To Write A Business Plan? Step-By-Step Instruction
How To Write A Business Plan: One of the most pressing questions at Google is how to write a business plan? For some reason, I thought that finding a brilliant business idea was much more important than describing and calculating it. Okay, since I have written many business plans that have been successful and attracted investments in my life, I have something to share with you.
Startups and small companies tend to take inspiration from how large organizations are run and copy their systems and processes. And the list is astounding: strategy development, business planning, budgeting, risk management.
All of these systems exist to improve the efficiency of the company. However, these systems very often have the opposite effect. They transform agile companies into slow, rigid, and highly bureaucratic organizations.
Nowhere is it stated that you need to prepare a business plan to open your own business unless you need to find an investor or loan. Then you cannot do without this document.
I’ll start with my story, how I opened a business back in 2003.
Background. I was fired from my job, where I worked as a CFO and chief accountant in one person. By the way, they were fired for leadership. The shareholder told me that he is the only leader and people should follow him, not me. I had received an auditor’s certificate and even opened an audit company by that time. As you can see, the choice was made unconsciously, long before the dismissal. But there are no accidents.
On the day of my dismissal, I realized that I did not have time for reflection. I would be studying business in the process, and I had to go straight to the action. I counted the available money, distributed it to rent an office and a secretary, and bought a computer and basic furniture – a table and a chair. And I invested a considerable amount in developing a brand name and logo, which I am still proud of.
I didn’t write any business plans, didn’t keep budgets. All the numbers could be counted in my head.
Honestly, I still believe that action is more important than the highest quality miscalculations and plans. Therefore, if your money is enough for you to start a business, do not waste time developing a strategy and writing a business plan, win the hearts of consumers with your quality, invest in technology and innovation.
And only if the search for investments is critical for you, write down step-by-step instructions on how to write a business plan.
To begin with, any business plan must contain a clear structure – content and familiarization start with it.
Remember, as we were told at school, an educated person begins to read a book from the content and does not look for the necessary information in the text. It is not required to read the business plan first. The investor can select the chapter that interests him and refer to it immediately.
At the same time, I adhere to the key rule – you need to start a business plan with the most important thing.
Therefore Step # 1.
Write what value your product or service gives to the consumer, specify as much as 1,2,3 that you or your product is better than others on the market.
This should be convincing not only for you but also for the investor.
And with that, you will start your business plan. An investor, be it a private investor or a banking institution, must have a momentary desire to dive into details. Consider this the first and most important impression of you and your product.
Remember, you will never get a second opportunity to create a first impression. That is why I am asking you to give this step due consideration.
You may need a day or two, or even a month. Do not rush. Give yourself time and make this text not only honest but also delicious.
Step # 2 – The Cost Of The Project.
In this section, you should indicate the cost of the project as a whole, dividing the table conventionally into two columns:
The first is your investments and resources (it is good when at least 30% of the project cost is your funding). The second is the need for financing and what it will be spent on.
Why do I draw your attention to the fact that you cannot seek 100% funding for your project? The question here is your willingness to share business risks with the investor. If you, conventionally, have nothing to risk, why should one investor take risks? Answer yourself honestly to this question. Therefore, your investment of money and personal time is critically important.
And only if your business idea can blow up the market and improve the lives of at least a million people, the investor will be ready to take risks, but there are very few such ideas, especially in Ukraine.
Step Number 3 – Conduct A Market Analysis And Draw Up A Marketing Strategy,
Show how you will conquer the market, sell your product or service. This should not be a list of standard tools from the Internet. In a word, look for creative approaches – be out of the box. This attracts not only investors but everyone around, in every sense.
A few years ago, I remembered I studied marketing on the Coursera platform, and our task as an exam was to draw up a strategy on how to bring a Japanese menswear brand to the local market in our country.
The students themselves checked the work and gave feedback. I have to tell you, sales strategies, like marketing tools, vary greatly from country to country. How To Write A Business Plan Therefore, Google will not help you here. Look for working tools, do not treat this task formally.
Step Number 4 – Preparing A Feasibility Study Or Financial Plan, Budgeting.
In this part of the business plan, you draw up a detailed estimate and budget, focusing on developing the business for three to five years. The first year is as straightforward as possible, and the second and subsequent years are enlarged by quarters or by the year as a whole.
I recommend that you separately display the resources you invest in and those that the investor invests in – individually.
The costs should be as detailed as possible, the purchase of equipment, administrative fees, sales costs (marketing, advertising), price – everything should be calculated and displayed in complex tables. Be ready to answer any questions and give reasons.
If your idea interests a potential investor, marketing tools will be understandable. He will immediately move on to your calculations, and here he will be as skeptical as possible, asking many questions.
Show ROI, business profitability, and capital turnover – financial indicators will help you here.
The investor also pays attention to the movement of money for the project (Cash Flow) – a statement of cash flows, which is the final consolidated report of the business plan and shows the movement of all company cash flows for all activities for each period.
This document displays the cash gaps, how much money each of the project participants receives, and how the company’s operating, investment, and financial activities are reflected in the company’s finances.
Step # 5 – Risk Assessment.
This section should provide for which risks can significantly affect the implementation of the project and how these risks will be addressed.
It’s simpler – how you, as an ideologist and manager, will react to business risks, what exactly will you do in new circumstances.
An investor must, first of all, make sure that you are a reliable partner, ready to respond promptly to new challenges, and take responsibility.
And finally. I hope I don’t need to say that a business plan should not contain stylistic and spelling errors. Therefore, check everything before sending your document to print. Of course, the creative presentation of the material is also important, but the essence is much more important.
On my own – when choosing between beautiful or clear, I will select both options. Everything should be both clear and beautiful, in a word – tasty. Avoid complex sentences, do not pour water, be as close to the subject as possible.
As my professor at KNEU, Yuri Kuzmina sky, said, a candidate of economic sciences can express his thoughts in two sentences, a doctor of sciences in one. After all, a one-page format can be more valuable than a 200-page dissertation.