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The Secrets to Writing Executable Business Plans That Investors Love

One of the most important things you need to start and grow your business is a business plan. It is so essential that there are over 22,300 monthly searches related to how to write a business plan on Google Nigeria alone.

And if you are reading this, you’re most likely one of the people doing those searches. But guess what? You won’t have to search anymore as I have prepared this easy guide on how to write a business plan step by step, your true guide to writing a business plan that is indeed a plan.

But first of all, definition.

What is a business plan?

Just looking at the two words, you have an idea of what it means. You know what a business is and you can guess what a plan is too. Hence, in its simplest form, a business plan is the type of plan you make for a business – either to start the business or to expand it. In other words, it is a roadmap or guide for your business where you spell out your goals, objectives and further essential details with regard to your business.

You know what people say about failure to plan and how its product is planning to fail? Perfect – the same applies to a business plan.

You are probably wondering how? I mean, it’s your business, and you are passionate about it. So, why bother putting some writings on paper in the name of a business plan?

Is there any reason why a business plan is so important?

Importance of a Business Plan

Whether you want to start a new small business or you’re looking for ways to expand an existing one, a business plan serves as the compass that guides each of your decisions.

Here are five main reasons why a business plan is essential to your business

1. Business Plan Helps You Avoid Big Mistakes

Most businesses don’t last for long – you know why? It’s simple – lack of a plan. Of course, there a thousand and one reasons why businesses fail. With a business plan (that is a plan), you can predict mistakes, dangers or incidents that can negatively affect your business and come up with a potential solution.

2. It Helps to Direct Critical Decisions

From hiring to partnership, you’re going to have to make different decisions at various points as a business owner. Some of the decisions can be confusing, and you need something to go back to to serve as a compass in your decision making.

One wrong decision as a business owner can destroy your business, ask Nokia.

3. It Helps to Test/Prove Your Business Viability

Most businesses are borne out of passion. And yes, passion is important. But there is something as important, and that’s the viability of your business.

The truth is not all those great ideas that you are passionate about in your head make good business sense. And the only way to test and see this yourself is through your business plan.

4. To Set SMART Goals and Objectives

Where will your business be positioned in the next three years? What will the client/customer base look like 1year from now? What are your business goals for the long and short term?

Your business plan allows you to spell on these out and gradually work towards it.

5. To Get Funding

If you are ever going to approach banks or venture capitalists for loan or investments, better go with your business plan if you want any of them to take you seriously. Anyone who would put their money in your business would like to know for sure that you know what you’re doing and that the business will stand the test of time.

Up next;

What are the Different Types of a Business Plan?

There are different types of a business plan, and no, you can’t use all or any of them. It all boils down to your peculiar needs and current stage of your business.

Marketing91 highlighted six types of business plans. Here is a look at them one after the other so you can decide which is best for you.

  • Start-up Business Plans

As implied by the name, this is the kind of business plan you draw if you are starting. It contains such details as your company description, the products or services you provide, market evaluation, among others.

You may also want to include financial analysis because of potential investors. This covers some crucial economic aspects of your business, including profit, income, projections for cash flow, among others.

  • Internal Business Plans

This is not for everyone. Internal business plans are usually for a department or section of the business. For instance, this can be a business plan for the accounting section of your business.

Your internal business plan should describe the current state of the business, include profitability and operational costs, among others.

Also, your internal business plan should contain market analysis showing your business target demographics, size of the market and the positive effect of the market on your business income.

  • Strategic Business Plans

This one is strictly about strategy. In a strategic business plan, you take a high-level view of your business goals and how you can achieve them. Here, you go as far as laying out what would serve as a foundational plan for the whole business.

While different businesses choose varieties of structures for their strategic business plan, most strategic business plans have five main components which include:

  1. Business vision
  2. Mission statement
  3. Definition of critical success factors
  4. Strategies for achieving objectives
  5. Implementation schedule
  • Feasibility Business Plans

In a feasibility business plan, your goal is to answer two crucial questions about your business:

  1. Will anyone buy this product or service the business wants to sell? If yes, who? And the second which is closely related to the first.
  2. Will this business be profitable?

In this business plan, you describe why anyone would need your products or services, your target demographics and the required capital, among others.

  • Operations Business Plans

This can be considered a type of internal business plan as it contains elements that are related to how the business operates. It specifies how implementations of different plans will be made and the deadlines for them.

Simply put, the operations plan states the employees’ responsibilities.

  • Growth Business Plans

Also known as an expansion business plan, this one is an in-depth description of the proposed development and can be written for both external and internal purposes.

How to Write a Business Plan Step by Step

Now that you know why a business plan is important and its different types, it’s time for the real deal – the step by step guide to how you can write your business plan.

You are all set to write your business plan. Get a pen and paper or go to your favourite word processing app/software and follow these steps

  • Executive Summary

The first page in your business plan is the title page. The executive summary follows the title page.

Here, you briefly tell whoever is going to read your business plan what your business is and why you are convinced it will be successful. Go on to state your products or services, mission statement, and some information about company leadership, location and employees.

If you intend to ask for financing, don’t forget to include high-level growth plans and financial information quickly.

  • Business Description

This usually starts with a short description of the industry. While doing this, state the current situation of things in the industry and future possibilities.

Follow the above up with a detailed description of your business. Be as straightforward as possible.

Talk about the problems you solve as a business, who your consumers are or would be.

Given the current state of the market and what the future holds, discuss the competitive advantages that would help your business stand out. Do you have experts on your team? This is the time to brag about them? What about your location – perhaps it gives you an edge – state it all under business description.

  • Market Analysis/Strategies

To include this in your business plan, you must have done your homework by researching the market thoroughly. Market analysis helps you to be familiar with different aspects of the market such that the target market is defined correctly, and the company is well-positioned to get its share of the market.

  • Competitive Analysis

A competitive analysis aims to determine the weaknesses and strengths in the market and come up with strategies to beat most of your competitors.

Skype has been in the industry since 2003; Zoom was founded in 2011. Skype started about a decade before Zoom, but today Zoom is more popular. Why?

Zoom did its competitive analysis and came up with strategies to beat its potential biggest competitor. The result is out there for everyone to see today. Go ye and do likewise.

  • Design and Development Plan

This is mostly design for the consumption of investors. Its purpose is to give them (investors) an in-depth description of your product design, chart and development from the perspective of marketing, production and even the company itself. There should also be a development budget that will help the company reach its goals.

  • Operations and Management

This section of the business plan is designed to describe precisely how the business will function regularly. It will highlight the business logistics, including the various responsibilities of different teams, the tasks before each department under the business as well as the expense and capital requirements for the operations.

  • Financial Factors

The last but certainly not least is the financial factors. Most other sections of the business plan already have a mention of finances, but this is where you go all in.

If your business is already running, this is where you state your balance sheets, income statements and cash flow statements.

Give a potential financial outlook for, say, the next five years (this is especially important if your business plan goal is to source funding or investment)

You probably still ask questions – how do I ..? How many …? What if…?

Refer to the business plan FAQs for quick answers to some of your questions.

FAQs on Business Plan

Why does an entrepreneur need a business plan?

A business plan will help in diverse ways as an entrepreneur. However, the most reason an entrepreneur needs a business plan is to help guide in making crucial decisions.

How do you write a business plan?

Refer to the 7-step guide above to see how to write your business plan

How to write a competitor analysis for a business plan?

1. List out your competitors

2. Write a brief overview of each of them

3. State their target audience

4. List their price(s)

5. Figure out and state their marketing strategy

6. Know their competitive advantage over you

7. Know their weaknesses and strengths

What is the financial forecast in a business plan?

It is a projection or an estimation of possible future revenue or income and expenses of the business.

What is the difference between a feasibility study and a business plan?

While a feasibility study helps you to determine whether to go ahead with the business or try another idea, a business plan is designed after you have decided to go with the idea (sometimes after you already started).

How long should your business plan be? How many pages should your business plan be?

As you most likely can guess, the answer to this is – it depends. In most cases, though, the standard expectation is between 30 to 50 pages.

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Quick Summary

Prefer the short version? Here is a concise recap of the key ideas in this article.

The Secrets to Writing Executable Business Plans That Investors Love One of the most important things you need to start and grow your business is a business plan. While different businesses choose varieties of structures for their strategic business plan, most strategic business plans have five main components which include: Business vision Mission statement Definition of critical success factors Strategies for achieving objectives Implementation schedule Feasibility Business Plans In a feasibility business plan, your goal is to answer two crucial questions about your business: Will anyone buy this product or service the business wants to sell? How to Write a.

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