A business plan brings ideas to life. It is the backbone of your business. In a written document it describes your business, its strategies, objectives, the marketplace you are targeting, and financial forecasts.
A Tangible Version of Your Idea
With a business proposal or plan you finally jot down abstract ideas, creating a concept of where you intend to go. It is the first time you show others a tangible version of your idea, something they can identify with, invest in, and get behind.
A Business Proposal has Many Functions
- Helps test the financial viability of your idea.
- Secures external funding.
- Measures performance.
- Can forecast and judge success within your business.
Primarily, a business proposal provides a logical structure for contemplating the business. It also answers the question: Can the business achieve profitability without running out of cash?
How to Write a Business Plan
Certain elements are required, and a business plan must include:
- An executive summary
- A business description
- A clear plan for how you expect to manage and market the business
- Financial projections
- Supporting documents
Simplify the Process
For writing your first business plan, here is an outline of the following elements:
- Cover sheet
- Executive summary
- Table of contents
- Document body
- Business description
- Financial data
Capital equipment + supply list
Break even analysis
Profit and loss statements
First year detailed by month
Second and third years detailed by quarters
Assumptions that are the basis for projections
Cash flow proforma
- Supporting documents
Principals’ (partners) tax returns for the last 3 years + personal financial statements
Franchise contract copy + all supporting documents provided by the franchisor (if this is a franchise business)
Proposed lease (copy) or purchase agreement for building space
Licenses (copies) + other legal documents
Resumes (copies) for all principals
Letters of intent (copies) from suppliers, etc.
A business plan should address issues of interest to the reader and user.
A Business Proposal Suitable for Finance Providers
Since it is likely the business plan also addresses potential finance providers such as a business angel, a bank, or venture capitalist, it should provide realistic and convincing answers to their questions.
- What is the business opportunity? What is the idea behind it?
- Describe your product (or service) and what is unique about it.
- What is the target market segment?
- Describe the target market, its current and potential size.
- Present a profile of potential customers.
- How much are customers expected to buy and at what price?
- Who are the potential competitors?
- Describe your competitors’ pricing.
- Outline what it is expected to cost to produce and sell your product?
- Can you show that the product be made and/or sold profitably?
- At what stage is the business expected to break-even?
- What do you believe are the likely profits?
- How much investment is required to launch and establish the business?
- What type of financing is required?
- Where do you expect the capital will come from?
- What do you perceive as the main risks facing the business and how will you handle them?
It’s a Learning Process that Helps Your Business
Writing a business plan is not easy when you do so for the first time. However, the process itself has you asking many pertinent questions, which when answered point you towards success.
- What is a business plan
- Writing a business plan
- How to make a business plan
- Business plan template
- Business plan examples
- One page business plan
- Sample business plan
- Free business plans
- Business proposal
- Business proposal template
- How to write a business proposal