How to Write a Business Plan: A Comprehensive Guide

ByMilica Milenkovic
July 11,2022

Are you thinking of starting a business? If so, you will need to create a business plan, i.e., a comprehensive guide outlining your business goals and strategies. This document is useful for onboarding new people or securing financing from investors or banks.

Since it's often the key to securing funding, we will walk you through everything you need to know about a business plan and when you will use it. Most importantly, we'll show you how to write a business plan and break down the typical components of a business plan template, so you don't get overwhelmed. And, as always, we'll provide you with tips for creating a successful one.

What Is a Business Plan?

A business plan is a document laying out a business's objectives and the planned tactics for achieving them. In short, this business strategy outline is your roadmap for success. While there is no one-size-fits-all business plan, there are certain elements that all successful programs should include.

So, what does a business plan look like? It typically includes an executive summary, company overview, market analysis, competitive analysis, and financial forecasts.

However, it's important to remember that a business plan is not set in stone. As your business grows and evolves, you will need to revisit it and make adjustments. Think of it as a living document that will continue to evolve as your business does.

When Is a Business Plan Useful?

Using a business plan as a roadmap streamlines business growth. A company can always reference it, i.e., use it as a guide to prioritize tasks and objectives, and form future strategies. These are just some of the reasons it’s worth taking the time to write a business plan.

However, as mentioned before, a business plan is not set in stone - it should be updated regularly, improved when needed, and adjusted to maintain usefulness. It can only be as valuable as businesses make it. Some companies might go for an extremely detailed document, while others might opt for a brief business plan outline focusing on financials to present to investors.

In the same vein, it’s a valuable tool for communicating with potential business partners, customers, and venture capitalists, as well as hiring new employees. Everyone would rather work with an established business with a developed business model, so a good business plan is often crucial to establishing these relationships.

Why Is a Business Plan Important for Investors?

A business plan is essential for securing investments, as it outlines the company's goals, strategies, and the procedures to achieve them.

Creating a business plan is essential for presenting your business to investors because it

  1. allows them to see the big picture,
  2. understand the risks and potential rewards involved,
  3. evaluate whether the company is a good fit for their portfolios.

A well-crafted and detailed business plan shows you've done your homework and are serious about making your business a success. It also demonstrates you're aware of the risks involved and have thought through how to overcome them. In short, a business plan is a foundation upon which a successful investment deal can be built.

So, if you're looking for an initial investment, make sure to create a business plan. It will make the difference between getting funded and getting rejected.

The Components of a Business Plan and How to Write Them - a Step-by-Step Guide

It's time to break down the components of a business plan. As mentioned, there is no one-size-fits-all template to use. However, all successful plans should include certain elements, so here is how to write a business plan, step by step.

Executive Summary

This is a brief overview of your business, its products or services, market, and financials.

The summary is the first (and often only) chance to make a good impression on potential investors. It is vital to ensure that the summary is well written and free of errors.

How to Write an Executive Summary?

Here are a few tips for writing a practical executive summary:

  1. Start with a bang: The first sentence of the summary should be attention-grabbing and give a brief overview of the business.
  2. Keep it short and sweet: The summary part of a business plan should be no longer than one page.
  3. Focus on the essentials: The executive summary should highlight the critical points of the business plan, including the company's mission, products or services, target market, and financial projections.
  4. Use simple language: Avoid jargon and technical terms in the executive summary. Stick to plain language all readers can understand.
  5. Proofread carefully: Proofread the executive summary before sending it off to potential investors to secure funding. Use a reliable grammar and spelling checker to fix every mistake to make your business look more professional.

Company Description

This covers your company description, history, structure, and management team.

When writing the company overview section in a business plan, there are a few things to consider. First, it's important to briefly describe the company's history and how it got to where it is today. This will give readers a better understanding of the company's mission and values.

Second, it's essential to describe its current structure and management team. This will help potential investors see that the company is well-organized and has a solid foundation.

Finally, it's important to highlight any recent accomplishments or awards that the company has received. This will show that the company is growing and thriving.

Product or Service Description

This is a detailed description of the product or service you are offering, and is an indispensable aspect of every well-researched business plan.

Every business plan needs a description of the products or services the company intends to sell. This part of the business plan is often called the Value Proposition or Unique Selling Proposition.

The product or service description should be clear, concise, and confident. It should explain what needs the product or service fulfills and how it’s better than other options on the market. This section of the business plan is your chance to sell your idea, so make sure to put your best foot forward.

Remember that the product or service description is not a sales pitch - it should be an honest and accurate representation of what you are offering.

How to Write a Product or Service Description

With that in mind, here are a few tips for writing a solid product or service description when making a business plan:

  1. Know your audience. The product or service description should be tailored to your target market. What needs does your target market have that your product or service can address? What pain points can you solve?
  2. Keep it simple. The best product or service descriptions are clear and to the point. Avoid using technical jargon or overly complicated language - you want your audience to understand why what you are offering is valuable.
  3. Be confident. This is not the time to be modest - highlight the unique selling points of your product or service and why it is the best option on the market.

Market Analysis

This is a deep dive into your desired market, including an analysis of other businesses in your niche, and you shouldn’t skip it when you build a business plan.

This analysis is a breakdown of the industry the business will operate in. This includes an examination of the current market landscape and an exploration of the potential opportunities and challenges that lie ahead.

How to Write It?

Here are a few tips to help you get started:

  1. Do your research. Before you can write this part, you need to perform market research. Be sure to examine both the current landscape and the potential future trends that could impact your business.
  2. Know your audience. It's always important to keep your audience in mind, especially when starting a business plan. After all, not everyone will be familiar with the ins and outs of your industry. As such, it's essential to make your market research and its findings both informative and accessible.
  3. Keep it concise. Analyses are integral to any business plan, but they shouldn't be overly long or convoluted.

Competitive Analysis 

No business exists in a vacuum, and understanding other companies in your niche is critical for pinpointing competitive advantages and crafting a winning strategy.

But what exactly should this part of the business plan format include? In essence, it should provide an overview of the key players in your field and assess their strengths and weaknesses. It should also identify any gaps in the market your business could exploit and use within its marketing and sales.

While this may sound like a lot to cover, don't worry - with a bit of planning, you can easily produce an analysis that will impress potential investors and help you start your business off on the right foot.

Financial Forecast 

Whether you're starting a new business or forecasting for an existing one, the process of writing a financial forecast is essentially the same. However, if you haven’t written one before, we suggest using a business plan template to guide you through the writing.

The first step is to gather historical data, if available. This could include sales data, financial statements, expenses, inventory levels, and everything else that can help you gauge your business' financial health. If you are a small business and don't have any historical data to work with, don't worry - you can still produce a reliable forecast using market analysis and industry trends.

Once you have your data, it's time to start creating your forecast. Begin by estimating the net income you expect your business to generate in the upcoming year. Then, evaluate your expenses and investment needs. Finally, use your estimates to calculate your desired profit margin.

When writing a financial forecast to create a business plan, it is important to be realistic and conservative. Include all expected sources of revenue and expenses, including one-time costs, such as new equipment purchases. Be sure to include a buffer for unexpected payments, such as repairs or slowdowns in sales.

Finally, don't forget to account for seasonal fluctuations. If your business is dependent on the holiday season, make sure to account for that in your forecast.

Business Goals

Every business plan should have a section dedicated to goals. You’ll often find this section marked last on most business plan examples. This is where you lay out what you hope to achieve in the short- and long-term. However, simply stating your goals is not enough. The goals need to be specific, measurable, achievable, relevant, and time-bound (SMART):

  • Specific: Vague goals are of little use, especially to you. Instead, focus on specific targets you can realistically achieve. For example, rather than setting a goal of “increasing sales,” good examples of business plans will aim for a more specific target like “boosting sales by 10% within the next year.”
  • Measurable: A good goal is something that can be measured. This way, you will know whether you are on track to achieve it. For example, rather than setting a goal of “improving customer satisfaction,” go for something like “reducing customer complaints by 25%.”
  • Achievable: Ensure your goals are realistic and attainable, in line with your resources and timeline. For example, you can write something along the lines of: "Increase year-over-year sales by 20% by Q4 2022."
  • Relevant: Make sure your goals are relevant to your business's overall mission and strategy. If your business is based on subscriptions, "Increase the number of subscribers" could be a better goal than "increasing daily sales" in the business plan, for example.
  • Timed: Giving yourself a deadline will keep you focused and motivated. Without a deadline, it is all too easy to put off taking action on your goals. For example, rather than setting the goal of “launching a new product” whenever, aim for a specific timeline.

Types of Business Plans

Your company can rely on different business plans, depending on its stage of development and needs. The most common types of programs are:

The Operational Plan

An operational plan covers all aspects of how a business will operate on a day-to-day basis. These business plans include everything from a company's organizational structure to its operating procedures.

Operational plans are important for small businesses because they provide a presentable roadmap, which is especially helpful if you're seeking funding from investors or lenders. After all, it shows them you clearly understand your business and its operations.

Operational plans are also important for internally managing a business. They can be used to track progress and ensure everyone is on the same page, working towards the same goals.

The Strategic Plan

A strategic plan is a high-level roadmap for a company's overall goals and how it plans to achieve them. This vital aspect of small-business plans is the basis for building an operational plan and assigning daily tasks according to long-term objectives.

Strategic plans are important for businesses of all sizes because they guide decisions about where to allocate resources and how to prioritize initiatives. Strategic plans are also useful for communicating a company's direction to its employees, shareholders, and other stakeholders.

The Marketing Plan

A marketing plan provides an outline for how you will promote and sell your products or services. It can also be a standard part of a regular business plan format. Marketing plans are essential for businesses of all sizes but can be especially helpful for small businesses that have yet to establish their sales strategies.

These could include overall company plans but also go into detail. For example, you can write down which website builder your business should use, or add "selling advertising space" as a goal. Marketing plans can also be used to track progress and measure results over time.

The Financial Plan

A financial plan outlines a company's financial goals and how it plans to achieve them. Financial plans are an essential part of any business plan, and outline how you will generate revenue and manage expenses. If your results aren’t in line with your financial plan, chances are, you’re in trouble.

Special Business Plans

While the plans listed above are used to navigate the business strategies and quickly onboard new people in any company, some documents are specific to a type of business or one of its purposes. Let’s discuss those briefly as well.

Lean Startup Business Plan

A lean business plan is a shortened, more agile version of a traditional business plan. Lean startup business plans are designed for businesses that are moving quickly and need to adapt their strategies on the fly.

It’s typically around 20 pages long, whereas your typical traditional business plan would contain about 50 pages. The lean one focuses on the company's value proposition, its market, and its financials.

This type of business plan is especially helpful if you're a startup or have a new business idea because it allows you to quickly adapt your methods as you learn more about your customers and market. On the other hand, traditional business plans don't leave as much room for growth in their outlines.

Venture Capital Business Plan

A venture capital business plan is a document that describes a new business venture, typically one with high growth potential. The plan should include information on the company's products or services, target market, team, and financial projections.

For example, all plans should have a clear mission statement about the problem the company is solving. This is followed by a description of the proposed solution, overview of the market opportunity, and detailed plan for how the company will reach its goals.

The last section of venture capital business plan forms is typically a financial analysis, which shows how much money the company will need to get started and how it expects to generate revenue.

While VC business plans can vary significantly in length and format, they all share the same goal: Persuading investors to provide funding for the new venture.

Micro-Business Business Plan

A micro-business business plan is a document that outlines a small business's goal, strategies, and tactics. This type of business plan should include the following aspects:

  • Business's mission and vision
  • Market opportunity
  • Target market
  • Company competitive advantage
  • Sales and marketing strategy
  • Operational plan
  • Financial projections

A micro-business plan should be updated regularly as the business grows and changes. It is an essential tool for any small-business owner.

Tips on How To Write a Business Plan

Now that we've gone over the different business plans, let's look at some tips you might benefit from.

  • Set realistic goals: It's essential to set realistic goals for your business, both in the short and long term. Be specific about what you want to achieve and when you want to achieve it.
  • Do your research: This may seem like a no-brainer, but it's important to do your research before writing your business plan. You need to understand your industry, market, and competition clearly.
  • Keep it concise: A business plan should be clear and concise. No one wants to read a 50-page document, so focus on the most important information.
  • Make it visually appealing: When you build a business plan, it pays to make it beautiful. A well-designed business plan is more likely to be read and remembered. Include charts, graphs, and other visuals to make your pitch more engaging.
  • Get feedback: Before you finalize your business plan, it's important to get feedback from people you trust. This could be a mentor, advisor, or even a friend who has invested in businesses before.

Final Thoughts

Writing a business plan may seem daunting, but it doesn't have to be. By following the tips above, you can create a well-written, concise, and visually appealing business plan to help you achieve your goals.

If you're still unsure where to start writing a business plan, there are plenty of online resources, like templates, samples, and tutorials. Once you get started, you'll be surprised at how easy it is to write one. And, who knows? You may even find that you enjoy it.

FAQ
What are the four types of business plans?

There are four types of special business plans: Traditional, lean startup, venture capital, and micro-business. Each type has its own unique set of characteristics and is designed for a specific purpose. A micro-business plan, for example, is typically created to serve as the roadmap for the growth of a small business. In contrast, a venture capital plan for a business is geared toward getting the investments a business needs to develop.

What is the most important thing in a business plan?

There is no one answer to this question, as every business plan is different. However, there are a few key things that all business plans should include, such as a description of the business, its products and services, and its target market. Additionally, business plans should outline the company's goals and strategies for achieving them.

Can you start a business without a business plan?

While it is possible to start a business without a business plan, it is not recommended. A business plan serves as a roadmap for the company and to gain investments, so it is crucial to figure out how to write a business plan and create one before you start your business.

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By Danica Djokic · November 22,2022
Do you ever wonder how those little black-on-white lines can hold so much information? Or how do barcodes work, and why are they so important to businesses? In this article, we will explore the world of barcodes and learn how these simple markings can do so much. Stay tuned for an in-depth look at one of the essential pieces of technology in the modern world. What Is a Barcode? A barcode is a machine-readable code in the form of numbers and parallel lines printed on product packaging. Barcodes were first developed in the 1970s from an earlier idea based on Morse code. They have since become an essential tool for businesses of all sizes. Barcodes can be printed on labels or directly onto products and are read by scanners that are connected to a computer system. Barcodes are used extensively in retail and have helped streamline the checkout process. In addition, barcode technology can be used to track inventory levels and product movement throughout the supply chain. As barcodes become more ubiquitous, they are also being used in other industries, such as health care and manufacturing. How Does a Barcode Work? Barcodes are read by optical scanners that use a beam of light to scan the code. The scanner converts the light reflections into electrical impulses sent to a computer system. The computer system then decodes the impulses and translates them into the product information stored in the barcode.  What’s also important to note is that barcodes can store a large amount of information in a very small space. This means that businesses can track a variety of product data, such as price, color, and size. Types of Barcodes All barcodes can be split into two categories - linear and two-dimensional. Linear barcodes, also known as one-dimensional (1D) barcodes, are the most common type. They are composed of a series of parallel lines that represent numbers or other characters. Two-dimensional barcodes are less common but are becoming more popular due to their ability to store more information. These barcodes are composed of a series of dots or squares that can be read in two dimensions. Now, let’s take a closer look at the different barcode types. UPC The most common type of 1D barcode is the Universal Product Code (UPC). UPC barcodes are used extensively in the retail industry and can be found on nearly every product sold in a retail store.  The universal product code consists of 12 digits divided into two parts: The first six are the manufacturer’s identifier, and the last six are the product’s identifier. The UPC barcode is printed on every product sold in stores and is a vital part of the retail industry. Thanks to the UPC, retailers can efficiently track inventory and sales and ensure that customers get the right products. EAN Code The European Article Number (EAN) is another 1D barcode example used extensively in Europe. EANs are very similar to UPCs but have a few key differences.  EANs are composed of eight or 13 numbers depending on the product size. If the product is small, such as a book, it will have an 8-digit EAN. If the product is larger, such as a piece of furniture, it will have a 13-digit EAN. These numbers combine a country code, company code, and article number, while the last digit represents the check digit. EANs are often used on products sold internationally, as scanners in any country can read them. This makes them a vital part of the global supply chain. Data Matrix Code Data Matrix codes are 2D barcodes that can encode a large amount of data in a small space. They are made up of black and white squares that form a big square or rectangle and are used in industries where tracking and traceability are critical. These codes have a maximum encoding capacity of 3,116 numerical characters and 2,335 alphabetic characters. Each Data Matrix has its own perimeter finder and timing pattern, and they are made up of square or rectangular blocks of black and white cells. Data Matrix codes may store both large and small symbols. A barcode scanner can more easily read the code if there is a blank space around its perimeter. PDF417 Code PDF417 is a type of 2D barcode used to store information. The name stands for Portable Data File 417. PDF417 codes are used in various contexts, including but not limited to driver’s licenses, passports, and other identification documents.  The information stored in a PDF417 code can include text, numbers, and other data. These codes are read by scanning them with a barcode reader. The reader decodes the information, displays it on a screen, or prints it out.  PDF417 codes are also used in some financial transactions, such as mobile payments. In these cases, the code typically represents a unique identifier for the transaction. PDF417 codes have been used since the early 1990s and are now one of the most common barcode types. QR Code QR codes are becoming increasingly popular, especially as a way of sharing information or accessing content quickly and easily. But what exactly is a QR code? Simply put, a QR code is a two-dimensional barcode that can be read by a smartphone or other devices with a camera.  When scanned, the QR code will direct the device to a specific website or online content. QR codes can be used for various purposes, including sharing contact information, providing directions, or linking to a video or social media account.  Businesses have also begun using QR codes to offer customers special deals or promotions. While QR codes are most commonly used with phones, they can also be scanned with laptops and tablets. So, the next time you see a QR code, go ahead and give it a try. Benefits of Using Barcodes Barcodes have become essential to modern life, appearing on everything from groceries to library books. While they may seem like a simple way to handle inventory tracking, barcodes offer businesses various financial benefits. Here are some of the key benefits of using barcode systems: Improved accuracy: Barcodes can be read quickly and accurately, which reduces the chances of human error. This is especially important for businesses that need to track a large number of items. Reduced costs: Using barcodes can help businesses save money on labor costs associated with inventory management. Barcodes can also be used to automate the ordering process, which can lead to further cost savings. So if you’re unsure how to use a barcode system, consider hiring a professional to help get you started. Faster transactions: Barcodes can be read quickly, which helps speed up transactions. This is especially beneficial for businesses that experience high volumes of traffic, such as supermarkets and department stores. Improved customer service: Barcodes can help businesses keep track of sales data and customer purchase history. This information can be used to improve marketing efforts and customize the shopping experience for individual customers. Improved security: Barcodes can be used to track products and prevent theft. This is especially important for businesses that sell high-value items or handle sensitive information. As you can see, barcodes offer a variety of financial benefits for businesses, large and small. How Does a Barcode Scanner Work? A barcode scanner is a device that can read and interpret barcodes. It encodes the data from the barcode into a form that a computer can read. The computer then uses this data to look up information about the product, such as the price, in a database. Barcode scanners come in various shapes and sizes, but they all work using the same basic principle. So, how are barcodes read? A barcode scanner contains a light source, a photosensor, and an electronic decoder.  The light source is used to illuminate the barcode. The photosensor is used to detect the reflected light from the barcode. The electronic decoder is used to interpret the data encoded in the barcode. Barcode scanners can be handheld or fixed. Handheld barcode scanners are portable devices that can be held in one hand while scanning barcodes. Fixed barcode scanners are mounted on stands or other surfaces and are used to scan barcodes placed within the scanner’s range. Barcode scanners are commonly used in retail settings for pricing and inventory control. However, barcode scanners can also be used for other purposes, such as tracking assets or collecting data. Final Thoughts Barcodes are essential to many businesses, helping track inventory and product movement throughout the supply chain. By understanding how they work, you can ensure you’re making the most out of them. There are different barcode types, so choose the one that best suits your needs.
By Nikolina Cveticanin · November 21,2022

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