How To Write A Traditional Business Plan – The Step-By-Step Guide

How To Write A Traditional Business Plan – The Step-By-Step Guide

Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template.

The business plan admits the entrepreneur to the investment process. Without a plan furnished in advance, many investor groups won’t even grant an interview. And the plan must be outstanding if it is to win investment hearts.

Does a business plan make a startup successful? Absolutely not. But great planning often means the difference between success and failure. Where your entrepreneurial dreams are concerned, you should do everything possible to set the stage for success.

And that’s why a great business plan is one that helps you succeed.

Not every business launches with a formal business plan, but many founders find value in taking time to step back, research their idea and the market they’re looking to enter and understand the scope and the strategy behind their tactics.

That’s where writing a business plan comes in.

What is a business plan?

A business plan is a document describing a business, its products or services, how it earns (or will earn) money, its leadership, and staffing, its financing, its operations model, and many other details essential to its success.

A business plan in any company is a document with every crucial detail. It covers the following information: what you are going to sell or produce, the structure of your business, your vision on how to sell the product, how much funding you need, information on financial projections, among other details.

Why write a business plan?

Business plans help you run your business.

A good business plan guides you through each stage of starting and managing your business. You’ll use your business plan as a roadmap for how to structure, run, and grow your new business. It’s a way to think through the key elements of your business. And help you to make your vision more clear and understand your business.

Business plans can help you get funding or bring on new business partners. Investors want to feel confident that they’ll see a return on their investment. Your business plan is the tool you’ll use to convince people that working with you — or investing in your company — is a smart choice. Also if you’re going to handle your business yourself (individuals), you get to understand yourself, your business motto, it’s building your confidence towards your business and confidence that you can do it.

The critical perception of a business plan of any company is to show you that your business is worth starting and the idea is worth pursuing. It provides you with the possibility to get a detailed look at your goals. In case there is something to change and improve, it’s high time to do it before the business plan of your company becomes implemented.

A business plan is integral in selling your company to potential investors and bankers. But as important, the process of writing involves you and your partners taking a real look at what you want the future of your company to look like and how you’re going to make it happen.

  • Planning. Writing out your plan is an invaluable exercise for clarifying your ideas and can help you understand the scope of your business, as well as the amount of time, money, and resources you’ll need to get started.
  • Evaluating ideas. If you’ve got multiple ideas in mind, a rough business plan for each can help you focus your time and energy on the ones with the highest chance of success.
  • Partnerships. If you plan to approach other companies to collaborate, having a clear overview of your vision, your audience, and your growth strategy will make it much easier for them to identify whether your business is a good fit for theirs—especially if they’re further along than you in their growth trajectory.
  • Research. To write a business plan, you’ll need to research your ideal customer and your competitors—information that will help you make more strategic decisions.
  • Recruiting. Your business plan is one of the easiest ways to communicate your vision to potential new hires and can help build their confidence in the venture, especially if you’re in the early stages of growth.
  • Competitions. There are many business plan competitions offering prizes such as mentorships, grants, or investment capital. To find relevant competitions in your industry and area, try Googling “business plan competition + [your location]” and “business plan competition + [your industry].”

Points by Shopify.

There’s no right or wrong way to write a business plan. What’s important is that your plan that meets your needs.

Most business plans fall into one of two common categories: traditional or lean startup.

Traditional business plans are more common, use a standard structure, and encourage you to go into detail in each section. They tend to require more work upfront and can be dozens of pages long.

Lean startup business plans are less common but still use a standard structure. They focus on summarizing only the most important points of the key elements of your plan. They can take as little as one hour to make and are typically only one page.

Because we are going to writing the Traditional Business Plan we will cover the Lean Business Plan in next post.

Traditional business plan format

Prefer to a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.

  • Executive summary
  • Company description
  • Market analysis
  • Organization and management
  • Service or product line
  • Marketing and sales
  • Funding request

So without having further delays let’s get started.

1. Executive summary

Executive Summary - Write Traditional Business Plan - Guidehut.in

The executive summary is the main part of the traditional business plan. This is essentially a quick summary that knocks out all questions that the full document will encase. The Executive Summary is a brief outline of the company’s purpose and goals.

Additionally, this section of your business plan shouldn’t exceed two pages and must answer these nine questions.

  1. Who are you?
  2. What is your business?
  3. What does your company do?
  4. What industry is your company entering?
  5. When will you start doing business?
  6. Where will your business be located?
  7. Why will consumers want to pay for your product/services?
  8. How the business will make money?
  9. Will your business need extra funding, and if so, how much?
  10. What motivated you to start your company? Why now?

A great business solves customer problems. If your Summary cannot clearly describe, in one or two pages, how your business will solve a particular problem and make a profit, then it’s very possible the opportunity does not exist–or your plan to take advantage of a genuine opportunity is not well developed.

So think of it as a snapshot of your business plan. Don’t try to “hype” your business–focus on helping a busy reader get a great feel for what you plan to do, how you plan to do it, and how you will succeed.

2. Company description

Company Description - Write Traditional Business Plan - Guidehut.in
Image by Patriot.

The company description is a high-level review of your business. Also, it’s a great elevator pitch! This section quickly and clearly explains your small business and its goals so investors, financial lenders, or potential customers can understand more about your startup and what it offers.

Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.

Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.

3. Market analysis

Market analysis - Write Traditional Business Plan - Guidehut.in

It’s no magnification to say your market can make or break your business. Choose the right market for your products—one with plenty of customers who understand and need your product—and you’ll have a head start on success. If you choose the wrong market or the right market at the wrong time, you may find yourself struggling for each sale.

You’ll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now’s the time to answer these questions.

How big is your potential market?

A potential market is an estimate of how many people potentially could buy your product. Since this can be a daunting process, here are some general tips to help you begin your research:

  • Understand your ideal customer profile.
  • Research relevant industry trends and trajectories. 
  • Make informed guesses.

Some sources to consult for market data include government statistics offices, industry associations, academic research, and respected news outlets covering your industry.

SWOT analysis

A SWOT analysis looks at your strengths, weaknesses, opportunities, and threats. What are the best things about your company? What are you not so good at? What market or industry shifts can you take advantage of and turn into opportunities? Are there external factors threatening your ability to succeed?

These breakdowns often are presented as a grid, with bullet points in each section breaking down the most relevant information—so you can probably skip writing full paragraphs here. Strengths and weaknesses—both internal company factors—are listed first, with opportunities and threats following in the next row. With this visual presentation, your reader quickly can see the positive and negative internal and external factors that may impact your business.

StrengthsPrevious experience scaling ecommerce businessStrong ad management experiencePatented productExclusive deal with manufacturing companyWeaknessesNo team management experienceBreakable product, making shipping more expensive
OpportunitiesStrong growth in product category salesNo “market leader” in category; many smaller firmsThreatsRegulation pending for product category in international markets


Competitive analysis

There are three overarching factors you can use to differentiate your business in the face of competition:

  • Cost leadership. You have the capacity to maximize profits by offering lower prices than the majority of your competitors to maximize profits. Examples include companies like Mejuri and Endy.
  • Differentiation. Your product or service offers something distinct from the current cost leaders in your industry and banks on standing out based on your uniqueness. Think of companies like Knix and Qalo.
  • Segmentation. You focus on a very specific or “niche” target market and focus on building traction with a smaller audience before moving on to a broader market. Companies like TomboyX and Heyday Footwear are great examples of this strategy.

To understand which is the best fit, you’ll need to understand your business as well as the competitive landscape.

You’ll always have competition in the market, even with an innovative product, so it’s important to include a competitive overview in your business plan. If you’re entering an established market, include a list of a few companies you consider direct competitors and how you plan to differentiate your products and business from theirs.

5. Organization and Management

Organization and Management - Write Traditional Business Plan - Guidehut.in

Create biographies for any partners or other individuals in your startup. When writing this section of your business plan section includes information about their position and responsibilities.

Tell your reader how your company will be structured and who will run it.

Describe the legal structure of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you’re a sole proprietor or LLC.

The operations and management plan is designed to describe just how the business functions continuously. The operations plan will highlight the logistics of the organization such as the various responsibilities of the management team, the tasks assigned to each division within the company, and capital and expense requirements related to the operations of the business.

Use an organizational chart to lay out who’s in charge of what in your company. Show how each person’s unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team.

Then describe any steps for your staff to expand. Also, reflecting on it in your financial plan, discuss any new hires you want to make and why. Your business plan isn’t just about where your company is, but where its future is headed.

6. Service or Product Line

Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you’re doing research and development for your service or product, explain it in detail.

Your products or services will feature prominently in most areas of your business plan, but it’s important to provide a section that outlines key details about them for interested readers. If you sell many items, you can include more general information on each of your product lines; if you only sell a few, provide more detailed information on each.

This part includes information on what you do and what you plan to sell it for. This is also where you sell the benefits of your business.

This being a business plan and all, it’s important to list the cost of the products/services you are providing:

  • How much does it cost to produce? Versus How much will you sell each piece for?
  • Is there packaging?
  • How will the client purchase the product?
  • What system will you use to bill them?
  • Are there extra costs in getting it to the customer? How will it be transported?

The products/services section should also differentiate your new business:

  • What makes your business different?
  • What gives your company’s product or service an edge in the marketplace?
  • What distinguishes it from competitors?

Key questions to answer:

  • Are products or services in development or existing (and on the market)?
  • What is the timeline for bringing new products and services to market?
  • What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome? (And if so, how?)
  • Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin?
  • How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers? If your business takes off, is a steady supply of products available?

In the cycling rental business example, we’ve been using, products and services could be a relatively simple section to complete or it could be fairly involved. It depends on the nature of the products the company plans to rent to customers.

7. Marketing and Sales

Marketing and Sales - Write Traditional Business Plan - Guidehut.in

Providing great products and services is wonderful, but customers must actually know those products and services exist. That’s why marketing plans and strategies are critical to business success. (Ahh, right?)

There’s no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.

Your goal in this section is to describe how you’ll attract and retain customers. You’ll also describe how a sale will actually happen. You’ll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.

Here are some of the basic steps involved in creating your marketing plan:

  • Focus on your target market. Who are your customers? Who will you target? Who makes the decisions? Determine how you can best reach potential customers.
  • Evaluate your competition. Your marketing plan must set you apart from your competition, and you can’t stand out unless you know your competition. (It’s hard to stand out from a crowd if you don’t know where the crowd stands.) Know your competitors by gathering information about their products, service, quality, pricing, and advertising campaigns. In marketing terms, what does your competition do that works well? What are their weaknesses? How can you create a marketing plan that highlights the advantages you offer to customers?
  • Consider your brand. How customers perceive your business makes a dramatic impact on sales. Your marketing program should consistently reinforce and extend your brand. Before you start to market your business, think about how you want your marketing to reflect on your business and your products and services. Marketing is the face of your potential customers–make sure you put your best face forward.
  • Focus on benefits. What problems do you solve? What benefits do you deliver? Customers don’t think in terms of products–they think in terms of benefits and solutions. Your marketing plan should clearly identify the benefits customers will receive. Focus on what customers get instead of on what you provide. (Take Dominos; theoretically, they’re in the pizza business, but really they’re a delivery business.)
  • Focus on differentiation. Your products and services have to stand out from the competition in some way. How will you compete in terms of price, product, or service?

8. Funding request

Funding Request - Write Traditional Business Plan - Guidehut.in

If you’re asking for funding, this is where you’ll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you’ll use it for.

When requesting funding from investors and lenders, be direct about the amount that you will require to successfully run your business. Additionally, include information on why, how, and where you will spend the money to help grow your business.

When requesting funding from investors and lenders, be direct about the amount that you will require to successfully run your business. Additionally, include information on why, how, and where you will spend the money to help grow your business.

The level of detail required in your financial plan will depend on your audience and goals, but typically you’ll want to include three major views of your financials: an income statement, a balance sheet, and a cash-flow statement. It also may be appropriate to include financial projections.

Income statement: Your income statement is designed to give readers a look at your revenue sources and expenses over a given time period.

Balance sheet: Your balance sheet offers a look at how much equity you have in your business.

Cash-flow statement: Your cash-flow statement is similar to your income statement, with one important difference: it takes into account when revenues are collected and when expenses are paid.

9. Make It Happen

So, First of all Congrats! You complete the first step of your success.

Now, it’s time to make your hard work and dedication come back with the great results. It’s time to make your vision reality.

So for that the next step after Business Planning is to make your Business Legal. If you don’t know the steps on How to Start Your Business you can visit our site and find the best In-Depth post on How To Start a Business.

Conclusion

Congrats to you again! You have done it…..

Now, it’s time to take next step and make your dream come true.

Write your business plans by looking outward to your key constituencies rather than by looking inward at what suits you best. You will save valuable time and energy this way and improve your chances of winning investors and customers.

If you still have any problem writing Business Plan comment me down or ask us from the contact page. I promise Our team will help you very well and in your comfort zone.

This Post Has 2 Comments

Leave a Reply