A strong business plan isn’t just a roadmap for your budding business — it can also help you attract investors and secure funding. If you’re facing hefty startup costs or competitive headwinds, it can also be the key to your success. These seven tips can help you create a clear, concise and compelling business plan.
1. A clean layout
According to the U.S. Small Business Administration (SBA), there are two main types of business plans:
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Traditional business plan: This is a comprehensive business plan that takes a deep dive into the details. If you’re seeking funding, most investors and lenders will want to see a traditional business plan.
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Lean startup business plan: This is less detailed and takes more of a big-picture view of your business. It covers the most important information, but investors and lenders may want to know more before making a commitment.
Going with a traditional business plan is probably your best bet. It’s always better to have too much information than not enough.
2. A strong executive summary and company description
These elements tell potential lenders and investors what your company is all about. The executive summary should describe your company and its mission. Take this time to introduce your products, services and leadership team. That includes the way your business is structured in terms of management.
Your company description expands on your executive summary. This is where you’ll share details around what makes your offerings special. Who is your ideal customer, and how do you plan on serving them? How is your business uniquely qualified to fill a market need? If you have a specific edge over the competition, now is the time to highlight it.
3. A comprehensive market analysis
If you’re starting a new business, a thorough market analysis is crucial. It can help you:
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Get a feel for the current market demand — and how your products or services fit into it
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Identify potential customers
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Better understand the needs of your target demographic
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Clarify your competition so you can figure out what sets you apart
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Pinpoint potential challenges that may lie ahead
Salesforce offers some actionable tips for gathering market data. That includes conducting interviews, distributing surveys and meeting with focus groups. You can also leverage social media to call on potential customers and get their feedback. Would they be interested in what your company has to offer? You could even go as far as to send out free products to see how they’re received.
Depending on your budget, you might consider working with a market research firm. No matter how you collect information, the goal is to glean valuable insights and use them to guide your next steps as a business.
4. A snapshot of your services and products
Your business plan is an opportunity to go in depth about your offerings. Be sure to include:
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Thorough descriptions of your products and services
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How they will benefit customers
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The product life cycle
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Any research or development you’ve conducted (or plan on conducting)
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Any plans for a copyright or patent
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Price points
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How you plan on measuring your profit margin
5. A sales and marketing plan
This section of your business plan is important because it outlines how you’ll attract and retain customers. The first piece is marketing. You’ll want to outline your:
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Approach to branding
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Advertising plans
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Content marketing strategy
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Social media strategy
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Sales and promotion plans
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Strategies for growing your online presence
How will you build an ongoing relationship with your customers? And, most importantly, how will you quantify your marketing efforts? You may choose to partner with a marketing consultant or handle these tasks in house. This section is also where you’ll describe the logistics of closing sales. Your business may operate online, in person or a mix of both.
6. A SWOT analysis
This can help you evaluate your business’s strengths, weaknesses, opportunities and threats (SWOT). The idea is to take an unbiased approach so you can really understand each of those areas. According to HubSpot, a strong SWOT analysis can guide your branding, market positioning, new initiatives and specific campaigns. That’s because it’s designed to uncover your strengths, as well as areas of your business that may need improvement. Strengths and weaknesses are internal factors to consider, while opportunities and threats have to do with external factors like your competitors or market conditions.
Including this information in your business plan can help lenders and investors better understand your business. It also shows that you’ve covered all your bases and are doing your research.
7. Detailed financial information
If you’re seeking funding, this part of your business plan is key. You’ll ideally provide a financial outlook that goes five years out. If you’re already in business, you can include projected income and cash flow statements, company budgets and balance sheets. If you’re still in startup mode, use whatever financial data you have to make these projections. You want to paint a picture of your business’s financial health and expected revenue. Be realistic and avoid exaggerating your numbers. (It could come back to bite you later on.)
Your business plan is also where you’ll make a formal funding request. This allows lenders and investors to understand your needs. Share how much money you’re seeking, what it will be used for, and what terms you have in mind. Some entrepreneurs may be comfortable trading equity for funding, while others might prefer a traditional loan.
There’s no such thing as a perfect business plan, but including these seven key factors can put you on solid ground — and help you secure funding.