What Is Business Planning?
Although business planning can encompass many aspects of a business from its inception to it being sold or dissolved, it's basically the process that startups and long-time business owners go through to plan the right moves for their business strategically. However, businesses of all sizes and at different stages can benefit from business planning. To start a business, you need a good, solid business plan. On the same note, to continue moving your business forward, you need to keep up on your business planning throughout the lifetime of your company. So what exactly is business planning?
Think of business planning as building a roadmap for your company. You need to define what it is your business does and what your goals are for the future. Write these things out in a formal document explaining to potential investors and customers how you envision growing your company. This not only shows others that you have a viable idea but also gives you a direction so you can move forward with your business plan. Having a great business plan helps find investors and partners that are willing to work with you.
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A solid business plan will demonstrate that you've put thought into your business concept. Make sure you do your research when business planning, as you'll want to provide potential investors with all the information they need to make their decision. Not all investors will be interested in the same aspects of your business plan. Some are only interested in the numbers, while others can see past less than ideal numbers if the idea is innovative and fresh. This is why you need to ensure that every section of your business plan is well thought out and informative.
Some of the things investors will look at in your business plan are:
- The numbers: Make sure you have a clear-cut layout of the financial performance of your business, either projected or actual.
- Your experience in the industry: The more you know about and have experience with your business' industry, the better you look to investors.
- Size of the market: If you have a niche market, it may be more challenging to get funding. However, if it's a good idea, investors will see the potential.
When you're business planning, make sure you're thinking about your idea from an investor's perspective, and ask yourself, "would I invest in this business?" The more honestly you answer this question, the better your final business plan will be.
When To Start Business Planning
If you're reading this, it's likely you've already done some business planning. If you've come up with a business idea of your own or expanded upon one with a friend, consider yourself a business planner. However, to really make something a solid plan, it needs to be written down, preferably in a way that is clear and concise so that anyone can understand it. In some cases, reputable banks and venture capitalist firms won't even consider loaning money to anyone without a well-written business plan. However, this is not universally true for all institutions as some may have different requirements or evaluation processes. Despite what you might think, every company should have a business plan, not just startups.
Business planning begins when you have a great idea for a new business or a unique spin on an already existing business type and you put your ideas down on paper. You'll need to consider the reasons you're writing a business plan. The main purposes for creating a business plan are:
- Give yourself a direction to head with your business idea.
- Secure financing and investors.
- Attract potential partners and customers.
As a company expands, its business planning needs to continue if it wants to keep growing. The business plan a company came up with before it even existed should change just as the needs of that company change. Your business plan will need to contain certain elements if you want it to be taken seriously by investors.
How To Write a Solid Business Plan
Not all business planning is conducted in the same way, so it should come as no surprise that not all business plans look the same. If you search for business plan templates, you'll see a variety of different layouts come up, and that's fine. It's not about how your business plan looks but the content and information it contains. So how do you write a solid business plan?
To attract the widest range of investors, you'll want to ensure that your business plan has some of the key elements that they'll be looking for. The main things you should include are:
- Executive summary: Although this part of your business plan will most likely be written last, it will come first in the final draft. It's the overview of the company you plan to start and should state your mission and give a description of what your company will do.
- Company overview: This will be a more in-depth description of your company and what products or services you'll provide. You can also include your experience in the industry, the unique spin your idea puts on what is already out there, and your management structure.
- Marketing plan: Every business needs to advertise; this is even more so with new businesses. So you need to include your strategy for marketing your startup in your business plan. This will give potential investors peace of mind about how you plan to get the word out about your new company.
- Management goals: Having a strong management team in place is vital to running a smooth business, which is why investors want to know how your company will be managed. No matter how large or small your business, a good management structure needs to be in place.
- Financial projections: All investors are going to be interested in your financial projections. Make sure you calculate and present your numbers as honestly as possible. Inflating your numbers to investors will only get you into trouble in the long run.
- Funding request: You need money to start your business, so including a clear and concise funding request in your business plan will help you achieve your financial goals. Let investors know exactly what you want from them to build trust right from the start.
- Appendix: Use this section to add pictures or anything else that helps support your plan and make it more viable to investors.
Pitching your business idea and asking for money to make your dream a reality can be scary, but with a solid business plan, you'll have the confidence you need to go after what you want. Make sure you include specific information in your business plan about your target market, how you'll maximize profits, your plan for customer interactions, and your goals for the future and growth. With these key elements, you're on your way to becoming a business planning champion.
Business planning is only the beginning of starting your new company. Once you have your business plan, it's time to start showing it to the right people. After you've secured funding for your new venture, make sure you have the right contracts in place for your business. Additionally, you'll want to establish a relationship with the people that will be vital to the operation of your business, such as an accountant, contract lawyer, management team, and financial advisor. Use this information to start business planning your way to a better future.
