You should consider writing a business plan before registering your business or seeking financing. It may seem unnecessary to write out your business plan, many business owners think it’s better to get started as fast as possible, but businesses with plans grow faster and are more successful.
A business plan precisely defines the business, identifies goals, and serves as the firm’s resume. It is also:
- The management and financial “blueprint” for a business start-up and profitable operation.
- The explanation of how the business will function and depicts its operational characteristics.
- A detailed view of how the business will be capitalized and managed.
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Writing a Business Plan
Writing a business plan is an important first step to getting your business up and running. An effective business plan will serve as a roadmap for your business and the decisions you make along the way, and help you to obtain financing, build relationships, attract good employees, and boost your confidence as a business owner. As a living document, your business plan may require revisions as your business changes and grows.
The structure of a business plan may vary depending on your business and needs, but it often incorporates the sections below.
- Executive Summary
The executive summary is the first (and sometimes only) part of your business plan people will read. The executive summary should provide information about your business and incorporate the highlights of the below sections. Ultimately, you want to leave the readers with a strong understanding of what your business is and why it will be successful.
Provide a high-level overview of your business, how it will be structured, and what your goals are for your business.
- Business Description
Describe your business, the specific product or service you will offer, and the features that make it special or different from your competitors. This section should describe each product or service including any brand names and unique features. Analyze the competitive advantages and disadvantages of each. Make sure to include a description of product lines, any patents, copyrights, legal and technical considerations, opportunities, or plans for expanding, or redesigning product or service lines. Explain if the company’s customers may be the final users or may resell to someone else. In the latter case, the business owner should know both, the identity of the ultimate consumer as well as immediate customers.
Demonstrate why your business model is relevant and timely. This section should ideally include information about industry trends, your target customers and their demographics, and your competitors in the region. The market analysis should highlight the opportunities for the company to achieve its goals by asking: To whom are you trying to sell? What are the trends in your target market? Who are your customers and what are their product/service preferences and reasons for purchasing? This information will not only be essential to help you think about how to differentiate your product, but also where and who to market to, and different locations where your business might be most successful.
Define your overall marketing strategy, pricing policy, sales terms, and method of selling or distributing products and services. To generate sales, consider what product or service attributes the company will emphasize, and how the company will advertise and otherwise promote its products or services. Provide a plan of action to market and sell your product or service to the target customers you identified in the Market Analysis. Identify the different strategies you can use to build and grow your business over time. In this section, consider the risks the business faces, problems that may hinder marketing execution, and potential backup strategies.
- Operational Requirements
Focus on the ownership, business structure, and human resources side of your business. Use this area to introduce your team and the skills and expertise they bring to the table. Consider listing the Board of Directors (with their affiliations and experience), sharing an organization chart, and identifying key staff roles, responsibilities, and resumes of key personnel. Consider your staffing plan, number of employees, any facilities needed, or capital improvements. If your business requires manufacturing, explain the materials, sources of supply, and production method.
- Financial Management
Show your financial history from the last five years (if applicable). Include your projections for the next five years. This first year should show projects on a quarterly basis and the remaining four years on an annual basis. Include balance sheets, a cash flow statement, and capital expenditure estimates. In simple terms: how much do you need to earn each month to cover wages, rent, loans, equipment, and other expenses? It's important to consider assumptions in the projection, assumptions may be the cost of a material or the demand for a product. If you have investors, this section should include an explanation of the use and effects of the investors' funds, and the potential return to investors compared to competitors and the industry in general. Financial statements and projections must be consistent with descriptions elsewhere in the business plan, your marketing assumptions, and your strategy.
- Appendix or Supporting Documents
Include additional documents that support your plan.
Organizations that can Help with Your Business Plan
The Federal government and the State of New Jersey offer additional services that can help you write a business plan. These include:
- The U.S. Small Business Administration provides a Business Plan Tool, which provides a step-by-step process to update the status of your business plan.
- New Jersey Small Business Development Centers: NJSBDC has regional offices covering every county in New Jersey. They provide free (taxpayer-supported) assistance to entrepreneurs and can help you write a business plan.
- SCORE: Score also offers assistance to NJ entrepreneurs. SCORE is staffed by volunteers, and each chapter has a less formalized process than NJSBDC.
- Women’s Center for Entrepreneurship (Northern New Jersey): The WCE services northern New Jersey and can help you write a business plan. The WCE's services are not strictly for women entrepreneurs.
- Latin American Economic Development Association (Southern New Jersey): LAEDA services southern New Jersey and can help you write a business plan. LAEDA's services are not strictly for Latin American entrepreneurs.
- Union County Economic Development Corporation: The UCEDC provides free classes and paid business mentoring services and can help you create a business plan.