Owning a good business plan comes with a lot of advantages for the entrepreneur. It’s more of a strategic tool that allows business owners to focus on specific steps, which are much needed to make business ideas succeed. That’s not all; a good business plan will also enable entrepreneurs to achieve their short- and long-term business objectives.
Depending on the amount of information you have at your disposal, writing an excellent traditional business plan to completion could take several hours or even days. For a basic business plan, since you’re still pretty much likely to adjust it over time, it shouldn’t take more than 3 hours to write.
What is a business plan, and why is it essential for you to have one? How long does it take to write a business plan? When is the ideal time to write your business plan? What are the components of a good business plan? These and more are the questions that you’ll find answers to as you read through the rest of this article.
Understanding What A Business Plan Means
There’s no denying that many of us have seen business plans before or understand what they mean. However, if you don’t know, a business plan is a formal written document containing the details of business objectives.
A business plan is usually standard for startups. Of course, that’s so because one of the very first steps of starting up a new business from scratch is to craft a business plan.
Why Is It Important To Have A Business Plan?
As earlier mentioned, owning a business plan comes with tons of excellent benefits for people. Let’s have a quick look at some of them below:
- See the entire business
A business plan, as previously defined, is a type of document that contains the goal and objectives of your business. One of the benefits of crafting this type of document is that it will offer you a clearer picture of the whole industry. Furthermore, owning a clearly and effectively crafted business plan will allow you to quickly connect the dots in your business.
- Business plans will help you create a marketing roadmap
A marketing roadmap is more of a specific plan and timeline that allows business owners to finish their projects at the right time frame. It will enable you to develop a long-term view of how you will promote your business and achieve success.
Apart from seeing your entire business, crafting a good business plan will provide you with a good marketing roadmap. With that, you’ll be able to highlight your key projects and set priorities for your company’s marketing department.
- Accountability
The importance of accountability in business can’t be overstressed, and this factor is essential as it helps entrepreneurs eliminate the time and effort often spent on unnecessary activities. That said, with a well-crafted business plan, you will undoubtedly develop accountability for your business.
Having a good business plan will help you set expectations for yourself, and it’ll also enable you to understand what to do and exactly when to do it.
- Recruit top talents
As a business owner or someone interested in turning an idea into a business, I’m sure you’ll agree with me that having top talents in your company is one of the critical factors for business success. It’s one of the few factors that venture capitalists look for before deciding to fund businesses.
Since capital is essential for every business, owning a solid team is also crucial. One of the best ways to attract top talents to your business is by crafting a good business plan. Here’s the thing; every employee looking to make a shift to a new company wants to understand the vision and objectives of the business. Interestingly, that’s exactly what having a business plan will do for you.
- Secure funds
As you know, securing funds for your business is pretty much essential. You can always get capital for your business using several different approaches. However, in most cases, you’ll need a good business plan for you to do that.
So, one of the benefits attached to owning a standard and well-written business plan is that it’ll boost your chances of getting funds for your business.
What Are The Different Types Of Business Plans?
There are several different types of business plans. Some of them are internal business plan, strategic business plan, feasibility business plan, operation business plan, and start-up business plan.
Furthermore, business plans are grouped into two main categories; traditional business plan and lean startup business plan.
The traditional business plan is usually very detailed and requires a longer time to craft. It’s the type that you need to own to attract venture capitalists to your company.
On the other hand, lean startup business plans are pretty quick and easy to draft, and they usually contain the necessary details needed to keep a new business growing fast. To many investors, however, having this type of business plan isn’t always enough.
How Long Does It Take To Write A Business Plan?
Compared to lean startup plans, traditional business plans often take more time to be drafted. Well, that is because the document needs to be detailed, including several different things.
A properly written traditional business plan should have about nine different sections, including an executive summary, market analysis, company’s description, management, service line or product line, funding requests, marketing & sales, and a few others.
That said, it could take several working hours or even days to draft an excellent traditional business plan. Yes, it’s not a day job as it requires a lot of readjustment before reaching completion.
Don’t get it twisted; writing your initial or basic business plan is different from writing an excellent traditional business plan. Unlike the latter that could take several days, the former can be concluded within 2 to 3 hours. Again, this is only possible if you already have the necessary data to create the document.
As for a lean startup plan, this shouldn’t take you much time to write. This type of document is pretty much easy to come by because it doesn’t always contain all the long-form writing of a traditional business plan. It’s usually short and precise, containing only superficial descriptions of business strategies and tactics. You can always write this type of document in a couple of hours.
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How Long Should Your Business Plan Be?
It varies and depends on the type of plan you’re looking to create.
You can always measure your business plan using readability as a yardstick. When I say “a good business plan,” I mean a type of document that has enough information regarding your business goals and objectives.
That’s not all; the formal document should also leave anybody reading it a pretty good general idea of what it contains. This also extends to when the reader is only having a quick skimming of the document.
That said, in terms of readability, a good business plan provides a good general idea of its contents and shouldn’t take longer than fifteen minutes to read quickly or skim.
When Is The Ideal Time To Write Your Business Plan?
When is the best time to start writing a business plan? According to Harvard Business Review, writing a good business plan makes a startup business more likely to succeed. However, the probability of that happening also depends on the timing of writing the program.
First, you need to understand that there’s no exact time to write your business plan.
However, according to a study carried out by Francis J. Greene and Christian Hopp of the hbr.org, it was revealed that, on average, the most successful entrepreneurs out of 1,000 of them (which the study was based on), were those that drafted their business plan between 6 and 12 months after deciding to start a business.
That said, the bottom line is that there’s no ideal time to write your business plan. However, based on past success, writing your plan between six months and a year after considering starting a business is okay.
What Are The Components Of A Good Business Plan?
As you now know, there are two main types of business plans. There’s the traditional business plan, which usually takes a long time to draft. There’s also a lean startup plan, which takes little time to create. Below, we’ll be looking at the components of an excellent traditional business plan.
Here Are The Components Of A Traditional Business Plan
A traditional business plan should contain an executive summary, market analysis, company description, and many more. You can check below to see each of them and how they should be drafted:
- Executive summary
An executive summary is one of the nine sections that an excellent traditional business plan should contain. This part should address everything a reader needs to know about your company. That’s not all; an executive summary should also tell people why the business will be successful.
Furthermore, other vital elements often included in an executive summary of a business plan are your company’s mission statement, information regarding its leaders and staff, where it’s located, what you offer (product or service), and your growth plan.
- Company description
The second part that shouldn’t miss out on a traditional business plan is the description of your company. This section needs to provide the readers with detailed information regarding your company. Here’s where you’ll need to state the target consumers and other businesses your company is looking to serve.
It doesn’t end there; you also need to include the advantages your business has over its competitors that’ll make it successful.
- Market analysis
The third section, market analysis, is the part where you’ll talk about your target market. Let your readers understand how you’ll stand out from other corporations in your target market.
- Management
What structure will be used to develop your company? Who will be the CEO and the head of departments in your company? Here are the questions you’ll need to provide answers to in this section.
So, for this section, you need to describe in detail your business’ legal structure. What type of business will you be choosing for your business? Is it a limited liability company (LLC), an S corporation, or a C corporation?
- Product- or service-line
What type of product or service are you looking to offer your target audience? In this section, you’ll need to describe in detail what you’re going to be selling and how it will benefit your consumers.
- Marketing and sales
The ” marketing and sales ” section is another element you need to include in your traditional business plan is the “marketing and sales” section. For this part, you need to describe your marketing strategy, including how you will attract and retain potential customers to your company.
Here’s a quick question, how will your company provide sales to your customers? This is another factor to consider when writing the marketing and sales section of your traditional business plan. The strategies you will most likely use for your marketing and sales campaign are much. So, ensure you list all of them in detail in this section.
- Funding request
Capital is an essential factor for every successful business. Since you won’t be funding the company by yourself every time, it’s necessary to write how you’ll go about sourcing funds in your business plan.
So, for this section, you need to highlight all your funding requirements for your readers to see. In addition to that, you also need to outline how you’ll be utilizing the funds raised for the business.
- Financial projection
The financial projection section of your business plan has to focus on the cash flow of your business. Let the reader understand that your business is stable and will be successful financially over time.
- Appendix
Your business plan isn’t complete without the appendix. This is the section where you need to back up all the information written so far with credit histories, CVs of your members, reference letters, licenses, and legal documents.
Conclusion
Writing a good business plan can take some time, and it’s essential to understand the components of a good one and how long it takes to complete them all to make an educated decision about whether or not you have enough time for this process.
Whether you are starting a new business or looking to grow your existing one, you must have a good blueprint for what the future holds.
In this blog post, we’ve covered the essentials of a business plan. We hope you feel more confident about creating your own and that it will be an essential tool for getting started on launching your new small business, startup, or expanding upon an existing one!
Glossary
A marketing plan is a business plan, and it tells you how to get customers and potential investors. The business plan writer may use a template to create a marketing plan, including the business idea, business planning, and details of a small business loan.
Marketing Lean plan is the process of planning and executing everything related to strategic marketing. It’s a business discipline that focuses on effectively using limited resources so that campaigns are in harmony with one another.
A balance sheet summarizes the company’s assets, liabilities, and shareholder equity at a point in time (usually near the end of its accounting period).
A business proposal is a written document that outlines the plan for a type of business and communicates it to potential investors. They provide all the details about what you aim to do, how you’ll do it, and what you need from them to make this happen.
A cash flow statement gives a complete picture of a company’s financial health. Unlike a traditional income statement which looks at revenues, expenses, and net profits throughout an accounting period, the cash flow statement deals with actual cash inflows and outflows.
A company’s income statement is a financial statement that provides detailed information about how the company made money, where it spent money. It’s worth it as of the end of its fiscal year.
Industry analysis is the process of examining a particular industry on many levels and using the info to create a strategy that will help improve your company’s position.
Competitor analysis or competitive analysis is the process of studying the strengths and weaknesses of your competitors, typically as a means to identify market opportunities. Businesses need to check their competition because it can lead to better decisions about pricing, marketing, product development, and more.
A business model is a plan of how the business will make money, focusing on the inputs needed to operate and produce goods or services and the outputs that it can sell.
A financial forecast is an estimate of future expenditures and revenues. It’s a way for you to plan to know how much money will likely come in, over what period, and how much money will probably have to be spent to make ends meet.
A competitive advantage can be used to distinguish a company in the marketplace from a competitor. It comes down to understanding what a potential customer seeks and how that is communicated effectively, so customers know it is available for them.
Strategic planning involves many processes that lead to an organization maximizing time, resources, and opportunities.
A financial plan consists of the steps one can take to reach a specific financial goal. The three essential elements are income, expenses, and a savings plan.
A financial statement is a document by the management team that shows the financial information for a particular company.
A business structure, in a nutshell, is the form under which your business operates for tax purposes (often incorporating as a limited company) and what percentage of your profit the government invokes rates on.
A swot analysis is an evaluation of the strengths, weaknesses, opportunities, and threats a person or organization intends to succeed in achieving a goal.
A one page business plan is just a summary of your primary objectives. It should be no more than one page and ideally should include the following information: What is the business name, what does it do, who are we targeting (demographic), competitors, address/location, contact information, how will your startup. How much does it cost to start? How much money will you need to reach your goal? What’s the long-term growth plan after project initiation?
An operations plan in the business world is a blueprint for handling an operation, what resources will be needed, and who will handle it. The operational plan can also be put as a template for new or existing processes that need to be taken on.
A strategic plan is a blueprint for all areas of your company to make sure they are working together well. The program typically outlines the goals and what will be done to meet those goals.
A target customer is a specific type of customer a company proposal hopes to reach, typically because they have the most potential as being profitable (i.e., business-wise). A target customer is usually based on demographics like age and gender, or they are chosen to buy products at higher rates or just in general. Target customers are often determined through market research data so that marketing can be more effective over time and space.
