Best Business Plan Guide The Latest Trend

 

Perhaps you believe that a step-by-step guide to drafting a strong business plan is unnecessary. Perhaps you believe that developing a business plan does not require the use of a template. After all, even without a business strategy, some entrepreneurs prosper. Some entrepreneurs develop flourishing firms without even writing an informal business plan, thanks to exceptional timing, good business skills, entrepreneurial passion, and a little luck.

However, the chances of those entrepreneurs failing are higher.

Is it true that having a business strategy ensures startup success? Certainly not. Great planning, on the other hand, may frequently make the difference between success and disaster. When it comes to your business aspirations, you should do everything you can to ensure that they come true.

As a result, a fantastic business strategy assists you in succeeding.

The following is a step-by-step method to writing a successful business plan. We'll begin with a summary of essential ideas.

 We'll then go through each part of a standard business plan:

• Summary of the report
• Introduction and Goals
• Products and services are two different things.
• Market Developments.
• Sales and marketing are two different things.
• Analysis of the competition.
• Operations.
• The Management Group.
• Analysis of the financial situation.

So, to begin, let's take a look at why you need a business plan.

Important Concepts

Many business concepts are little more than imagination. That's because many prospective entrepreneurs regard a business plan as merely a tool—full of tactics, predictions, and hyperbole—for persuading lenders or investors that their venture is viable.

That's a major blunder.

First and foremost, your business plan must persuade you that your idea is viable, as your time, money, and effort are at stake.

As a result, a great business strategy should serve as a roadmap for success. It should flesh out strategic ideas, build marketing and sales plans, provide the groundwork for seamless operations, and perhaps, just maybe, persuade a lender or investor to join in.

For many entrepreneurs, writing a business plan is the first step in determining whether or not to establish a company. A potential founder might avoid wasting time and money on a firm that has no realistic chance of success by determining if a concept fails on paper.

So, at the very least, your strategy should include:

• Make an effort to be as impartial and rational as possible. After considerable thinking and research, what appeared to be a promising business concept may turn out to be unviable due to intense competition, insufficient capital, or a nonexistent market. (Even the finest ideas might be years ahead of their time.)
• The initial months, and sometimes years, serve as a guide to the firm's activities, laying forth a blueprint for company executives to follow.
• Communicate the company's mission and goal, as well as management roles, staff needs, a summary of marketing plans, and an assessment of present and future market competitors.
• Create the groundwork for a funding proposal that will be used by investors and lenders to assess the firm.

A solid business plan should include all of the aforementioned topics, but it should also achieve additional goals. A good business strategy, above all, is persuasive. It establishes a case. It gives real, factual proof that your company idea is sound and sensible, with a good possibility of succeeding.

Who do you need to persuade with your business plan?

First and foremost, your business plan should persuade you that your business concept is more than a pipe dream but a possible reality. Entrepreneurs are by nature self-assured, optimistic, and capable. You'll have a far better understanding of your possibilities for success after objectively evaluating your capital needs, products or services, competitors, marketing strategy, and profit potential.

And if you're still not sure, that's fine: take a step back and fine-tune your thoughts and goals.

Who is your business proposal likely to persuade?

1. Funding sources that may be available. Your business plan might help you make a strong case for seed money from a bank or friends and family. Financial statements may show you where you've been and where you're going. Financial predictions show you where you want to go financially.

Your business strategy lays out the steps you'll take to get there. Lending is risky by nature, and a strong business plan may help lenders understand and quantify that risk, enhancing your chances of getting approved.

2. Potential investors and partners. It may not be necessary to share your company strategy with friends and relatives (although it certainly could help).

To evaluate your firm, other investors, such as angel investors or venture capitalists, typically demand a business plan.

3. Employees with specialized knowledge. Since you're still in the startup phase, you'll need something to show prospective workers when you need to attract talent. Because your firm is still a concept rather than a reality at this stage, your business plan may help potential workers understand your objectives—and, more importantly, their role in assisting you in achieving those objectives.

4. Joint ventures that might be formed. Joint ventures are similar to business partnerships. A joint venture is a legal agreement to share the work—and the money and profit—in the same way, that a partnership does. You will most likely be an unknown quantity in your market as a new firm. Creating a joint venture with a well-established partner might be crucial to getting your firm off the ground.

Above all, your business strategy should persuade you that moving forward is a good idea.

You may come upon obstacles or challenges that you hadn't expected while you sketch out your strategy.

Perhaps the market isn't as big as you imagined. After analyzing the competition, you may discover that your strategy to be the lowest-cost supplier isn't realistic since your profit margins aren't high enough to cover your expenditures.

Alternatively, you may recognize that your business's underlying idea is fine, but that the way you implement it has to alter. Perhaps opening a storefront for your business isn't as cost-effective as delivering your items directly to customers—not only will your running expenses be reduced, but you'll be able to charge a higher price because you're providing more consumer convenience.

Consider it this way: Successful Businesses do not stay the same. They learn from their mistakes and adapt to changing circumstances, such as the economy, the marketplace, their clients, their products and services, and so on. Successful businesses recognize and respond to opportunities and obstacles.

Developing a business strategy allows you to identify possibilities and difficulties without taking any risks. Make use of your strategy to dip your toe into the corporate world. It's the ideal technique to go over and edit your ideas and notions before spending any money.

Many individuals regard developing a business plan as a "necessary evil" that must be completed to obtain funding or investors. Instead, think of your plan as a free tool to test the feasibility of your possible firm and avoid costly errors.

Let's take a look at your business plan's first section: The Executive Summary of the report.

Summary of the Report

The Executive Summary is a concise summary of the company's mission and objectives. While it might be difficult to put everything on one or two pages, a good summary should cover the following:

• A succinct explanation of the items and services available.
• An overview of the goals.
• A thorough analysis of the market.
• Viability justification at a high level (including a quick look at your competition and your competitive advantage).
• A picture of the possibilities for growth.
• A summary of the financial needs.

That may seem like a lot, but it's why it's so critical that you do it right. The Executive Summary is frequently the piece of your business plan that makes or breaks your success.

A great company handles customer issues. If your Summary can't clearly define how your firm will address a specific problem and create a profit in one or two pages, it's quite likely that the opportunity doesn't exist—or that your strategy to capitalize on a real opportunity isn't sufficiently established.

As a result, consider it a snapshot of your company plan. Don't attempt to "hype" your company; instead, concentrate on giving a busy reader a good sense of what you want to achieve, how you intend to do it, and how you intend to succeed.

Because a business plan's primary goal is to assist you in starting and growing your company, your Executive Summary should first and foremost assist you in completing the following tasks.

1. Fine-tune and hone your notion.

Consider it a written elevator pitch (with more detail, of course). The highlights of your strategy are described in your Summary, which covers just the most relevant aspects and leaves out less important concerns and factors.

As you write your summary, you'll naturally concentrate on the topics that have the most impact on your chances of success. Go back and start over if your notion is too hazy, wide, or intricate. The majority of outstanding enterprises can be explained in a few phrases rather than many pages.

2. Prioritize your goals.

Your company plan takes the reader on a journey through your strategy. What is the most important thing to you? Are you working on a new product? Research? Getting the ideal location? Developing strategic alliances?

The rest of your plan may be written using the summary as a guide.

3. Make the rest of the procedure as simple as possible.

You may use your Summary as an overview for the rest of your plan after it's finished. Simply add more details to the highlights.

Then work to accomplish your secondary objective by focusing on your readers. Even though you may be creating a business plan solely for your own purposes, at some point you may decide to seek financing or to bring on other investors, so make sure your Summary meets their needs as well. Work hard to set the stage for the rest of the plan. Let your excitement for your idea and your business shine through.

In short, make readers want to turn the page and keep reading. Just make sure your sizzle meets your steak by providing clear, factual descriptions.

How? The following is how an Executive Summary for a bicycle rental store might read.

Introduction

Blue Mountain Cycle Rentals will rent road and mountain bikes in a convenient location near a George Washington National Forest entrance. Blue Mountain Cycle Rentals' principal objective is to establish itself as the most convenient and cost-effective rental option for the thousands of people that visit the region each year.

We'll broaden our scope to take advantage of high-margin new equipment sales and use our current labor force to sell and service those goods once we're up and running. Within three years, we hope to establish ourselves as the area's foremost riding destination.

Management and the Company

Blue Mountain Cycle Rentals will be located at 321 Mountain Drive, which offers excellent visibility and convenient access to and from a major national park entrance route. Marty Cycle, the company's owner, has over 20 years of experience in the cycling industry, having worked for Acme Cycles as a product manager and Epic Cycling as the general manager.

Initial equipment inventory will be obtained at great savings from OEM suppliers as well as through obtaining overstock inventory from shops around the country, thanks to his strong industry relationships.

Because of the business's seasonal nature, part-time personnel will be employed to help with demand spikes. Competitive compensation and discounts on products and services will entice these workers to join the company.

Opportunities in the Market

In the last year, 460,000 individuals visited the George Washington National Forest. While the outdoor tourist sector as a whole remains stagnant, the park hopes to see an increase in visitors in the coming years.

• Due to the current economic climate, fewer cyclists from Virginia, West Virginia, North Carolina, and Maryland will venture outside of the area.
• The park has expanded its camping and housing facilities, which should bring in more people.
• The park has opened up new regions for trail discovery and building, guaranteeing that there are more single-track alternatives and, as a result, more tourists.

The market potential of those visits is significant. According to a third-party study, over 30% of all bikers, especially those who are visiting the region for purposes other than riding, would prefer rent than traveling their own bicycles.

Advantages in the Market

Direct and established rivals are the bike stores in Harrisonburg, Virginia. Our location and cheaper costs will be our two main competitive advantages.

When it comes to non-park rentals, our location is also a major drawback. We'll solve this problem by opening a satellite site in Harrisonburg for bikers who want to rent bikes to ride around town or on nearby trails.

We'll also leverage internet technologies to further engage consumers, such as allowing them to make reservations and payments online, as well as develop personalized profiles based on their sizes, preferences, and special requirements.

Financial forecasts

Based on predicted sales, Blue Mountain Cycle Rentals plans to make a small profit in year two. The following essential assumptions underpin our forecasts:

• As we gain market awareness, our first growth will be small.
• Initial equipment purchases will last three to four years on average, after which we will begin investing in "new" equipment to replace damaged or old equipment after two years.
• The marketing budget will not exceed 14% of revenues.
• The company's residual income will be used to grow its product and service offerings.

We estimate $720,000 in first-year revenue and a 10% annual growth rate for the next two years. The direct cost of sales is expected to average 60% of gross sales, with 50% of that going toward equipment purchases and 10% going toward ancillary purchases. As sales grow and operations become more efficient, net income is expected to reach $105,000 in year three.

The list goes on...

Keep in mind that this is only a hypothetical illustration of what your Summary may look like. Keep in mind that this example focuses on the rental industry, hence no product descriptions were provided. (They'll appear at a later time.) Include an Items and Services section in your Summary if your company will make or sell products or offer a variety of services. (In this scenario, the products and services are self-evident, hence a separate section would be unnecessary.)

Bottom line: Include some zing in your Executive Summary, but also convey a fair view of the meat.

Introduction and Goals

Giving a high-level overview of your company might be difficult, especially if you're still in the planning stages. It should be reasonably straightforward to summarize your present operation if you currently own a firm; it might be far more difficult to convey what you want to become.

As a result, begin by taking a step back.

Consider what products and services you'll provide, how you'll deliver them, what you'll need to deliver them, who will deliver them, and, most importantly, who you'll deliver them to.

Consider the case of our bicycle rental company. It caters to clients in the retail sector. It has an internet presence, but the heart of the company is centered on face-to-face bike rental and support transactions.

So you'll need a physical space, as well as bikes, racks, tools, and other supporting equipment, as well as other brick-and-mortar-related stuff. To service those consumers, you'll need staff with a certain set of abilities, as well as an operational strategy to direct your daily operations.

Doesn't it seem like a lot? It all comes down to this:

• What you will provide.
• What you'll require to manage your company.
• Who will look after your clients?
• Who are your customers?

In our case, defining the above is quite straightforward. You already know what you'll offer to satisfy your customer's requirements. You will, of course, require a certain number of bikes to meet demand, but you will not require a variety of bikes. You'll need a retail space that's fully equipped to satisfy your company's needs. You'll need semi-skilled workers who can size, customize, and repair motorcycles.

You also know who your consumers are: cyclists.

Answering the following questions in different firms and sectors may be more challenging. If you're opening a restaurant, the type of food you'll offer will influence your labor demands, the site you pick, and the equipment you'll need to buy. Most importantly, it will assist you in defining your consumer. If you can't afford to buy pricey culinary equipment, you'll have to adjust your menu. If you want to attract a high-end customer, you may need to spend extra money on a good location and establish a welcoming atmosphere.

So, where should you begin? First and foremost, concentrate on the fundamentals:

• Determine the industry you belong to. Retail, wholesale, service, manufacturing, and so on are all types of businesses. Define your sort of business in detail.
• Determine who your target market is. You can't promote or sell to clients unless you first figure out who they are.
• Describe the issue you've resolved. By solving challenges, successful organizations add value to their customers. One issue in our rental scenario is cycling aficionados who don't—or can't—travel by bike. Another issue is casual bikers who are unable or unwilling to invest substantial money in their own bicycles. The rental store will address this issue by providing a less expensive and more convenient option.
• Demonstrate how you'll fix the issue. Our rental business will have lower costs and more options, such as remote delivery, equipment returns after hours, and online reservations.

If you're still having trouble, consider answering these questions. Some of them may be relevant to you, while others may not.

• Who is the typical buyer for me? Who am I aiming for? (Unless you're planning to build a food shop, you probably won't say, "Everyone!")
• What problem do I help my customers with?
• How am I going to get past that paint snag?
• What will I do if I fail to fix a client problem, and how can I avoid it? (One difficulty in our rental scenario is a possible lack of convenience; we will address this by providing online reservations, on-resort delivery, and drive-up equipment returns.)
• What will be the location of my company?
• What goods, services, and equipment will I require to operate my company?
• What are the talents that my staff require, and how many do I require?
• How am I going to outsmart my rivals?
• From the viewpoint of my clients, how can I set myself apart from my competitors? (You can have a fantastic strategy for beating your competitors, but you must also win the perception war with your consumers.) If your consumers don't think you're unique, you probably aren't. It's all about perception.)

When you're finished with this list, you'll probably have a lot more information than you need for your business strategy. That isn't an issue: Begin by describing the most important topics. For instance, your Business Overview and Objectives section may begin with the following:

The Past and the Future

Blue Mountain Cycle Rentals is a new retail venture set to open at 321 Mountain Drive, immediately across from a popular riding destination. Our primary objective is to establish ourselves as the leading bicycle rental company. We'll then make use of our existing customer base and market position to offer new equipment sales, complete maintenance, and servicing, bespoke equipment fits, and professional trail advice.

Objectives

1.  Obtain the highest market share in the area for bicycle rentals.
2.  After the second year of business, generate a net profit of $235,000
3.  Maintain a 7% attrition rate on existing equipment to reduce rental inventory replacement expenses (industry average is 12 percent)

Success Factors

• Provide high-quality equipment at a low cost by leveraging existing partnerships with equipment manufacturers and other bike shops.
• Use signs to draw tourists to the national forest by emphasizing our low cost and excellent level of service.
• Create extra customer convenience aspects to compensate for a perceived lack of convenience for consumers who plan to bike roads and trails far from our business.
• Create customer reward and loyalty programs to capitalize on customer connections and generate favorable word-of-mouth.

The list goes on...

You may go into further depth in each part; this is just a brief guide. Furthermore, if you want to build a product or service, you should define the development process as well as the final product in detail.

The most important thing is to articulate what you will do for your clients; if you can't, you won't have any.

Read also: Best 6 Tips To Start a Small Business At Home

Services and Products

You will clearly describe—yes, the items and services your firm will provide—in the Products and Services part of your business plan.

Keep in mind that extremely extensive or technical details are neither essential nor desirable. Avoid industrial jargon by using straightforward language.

Defining how the company's products and services will distinguish from the competitors, on the other hand, is crucial. Describing why your products and services are needed in the absence of a market is also important. (Before Federal Express, for example, overnight delivery was a specialized market handled by small businesses.) FedEx had to identify the market for a new, large-scale service and demonstrate why consumers needed—and would use—it.)

This part should also include any patents, copyrights, or trademarks that you possess or have filed for.

Your Products and Services section might be very extensive or very brief, depending on the nature of your firm. If your company focuses on items, you'll want to devote more time to discuss those things.

You generally don't need to disclose much product description if you're selling a commodity item and the key to your success is, say, competitive price. Alternatively, if you plan to offer a widely available product, the key to your success may not be the commodity itself, but rather your ability to promote it more cost-effectively than your competitors.

However, if you're establishing a new product (or service), make sure you properly describe the nature of the product, its applications, and its worth, among other things—otherwise, your readers won't be able to assess your company.

Answer the following questions:

• Are there any products or services in the works or already available (on the market)?
• How long will it take to bring new products and services to market?
• What distinguishes your goods or services? Are there any competitive advantages as compared to other rivals' offerings? Will you have to overcome any competitive disadvantages? (And, if so, in what way?)
• Is cost a concern? Will your running costs be low enough to allow you a reasonable profit margin?
• What method will you use to obtain your goods? Are you the one who makes the product? Do you construct items with third-party components? Do you buy things from wholesalers or suppliers? Is there a consistent supply of merchandise accessible if your business takes off?

Products and services might be a simple item to fill in the bike rental business example we've been discussing, or it could be a very comprehensive piece. It is dependent on the items that the corporation intends to rent to clients.

Because "high-end cycling rentals" is meant to be a market difference, defining those bikes—and the suppliers for those bikes—is vital if Blue Mountain Cycling Rentals aims to position itself as a provider of high-end bikes. If the organization intends to be a low-cost service, it is unlikely that specific equipment brands will be mentioned.

Keep in mind that if a supplier runs out of capacity or goes out of business, you could not have enough supply to satisfy your demand. Plan to establish several vendor or supplier connections and properly detail each one.

Remember that the main purpose of your business plan is to persuade you that the firm is feasible and to provide you with a road map to follow.

For our bike rental firm, the Products and Services section may begin like this:

Description of the product

Blue Mountain Cycle Rentals will provide a wide range of bicycles and riding accessories for people of all ages and abilities. We will focus on brands like Trek cycles, Shimano gear, and Giro helmets since the typical client is looking for medium-quality equipment and outstanding service at a reasonable price. Unlike equipment generally available in the rental market, these manufacturers have a reputation for producing equipment of mid-to high-quality.

The following is a list of expected rental pricing points, broken down by day and week:

• $30/$120 for a bicycle
• Helmets range in price from $6 to $30, depending on the situation.
• Etc

Notes:

• Customers may extend their rental period without visiting the store by doing so online.
• All rentals will have a two-hour grace period; clients who return equipment within that time frame will not be charged an extra price.

Competition

Blue Mountain Cycle Rentals will have a distinct edge over its main competition, Harrisonburg's bike shops:

1. Inventory of newer equipment with a greater perceived quality
2. Price points that are 15% lower than the competition
3. Renewals may be done online, which is more convenient.
4. A generous return grace period will help us maintain our image as a customer-friendly rental company.

We will be able to expand our product offerings into new equipment sales as a result of Future Product Expansion. We'll also look at providing maintenance and installation services, utilizing our current maintenance workforce to offer value-added services at a premium pricing.

The list goes on...

Consider your readers like someone who knows nothing about your company when writing your Products and Services section. Be succinct and to the point.

Consider the following scenario: The Products and Services part of your company plan addresses the "what" question. Make sure you grasp the "what" element; while you may be the boss, your goods and services are the lifeblood of the company.

Opportunities in the Market

Market research is essential for a company's success. Customer demographics, purchasing behaviors, buying cycles, and propensity to accept new goods and services are all examined and evaluated in a solid business strategy.

Understanding your market and the opportunities that exist within it is the first step in the process. As a result, you'll need to perform some research. Before starting a business, make sure there is a market for what you want to sell.

Several questions must be asked, and more crucially, answered, as part of this procedure. You will have a better understanding of your market if you answer the following questions completely.

Begin by assessing the market at a high level, answering the following high-level questions about your market and industry:

• What is the industry's size? Is it gaining, maintaining, or losing ground?
• Is the industry as a whole expanding, steady, or declining?
• What market sector do I intend to target? What are the demographics and habits of the market I'm going after?
• Is demand for my products and services increasing or decreasing?
• Can I set myself apart from the competition in a way that clients will value? If that's the case, how can I set myself out at a low cost?
• How much do clients anticipate paying for my goods and services? Are they regarded a commodities or one-of-a-kind, unique items?

Fortunately, you've already put in some effort. Your items and services have already been identified and mapped out. The Market Opportunities section serves as a check on that analysis, which is especially crucial given how vital it is to choose the appropriate products and services for a firm to succeed.

However, your study should go even further: amazing goods are fantastic, but they must also have a market.

So let's take a closer look at your market and quantify it. Your aim is to learn everything you can about potential clients in your market, including their traits and purchasing power. A little Googling can turn up a lot of information.

Determine the following for the market you want to serve:

• Customers who might buy from you. Potential clients are the people in the market sector you want to target in general. Anyone under the age of 16 and over the age of 60 is unlikely to be a customer if you sell jet skis. Furthermore, in general, women account for a tiny fraction of jet ski purchasers. If your product or service does not meet the demand for the entire population, determining the total population for the market isn't very useful. The majority of goods and services do not.
• A total number of households. Depending on your industry, establishing the total number of homes is necessary for various circumstances. If you sell heating and air conditioning equipment, for example, knowing the number of households in your region is more significant than merely knowing the overall population. HVAC systems are purchased by individuals, yet they are consumed by "households."
• Median household income. The ability to spend money is crucial. Is there enough purchasing power in your market to buy enough of your products and services for you to earn a profit? Some parts of the city are wealthier than others. Don't assume that every city or town has the same spending power. A service that works in New York City might not work in your area.
• Demographics and income Income levels can also be broken down by age group, ethnicity, and gender. (Again, prospective spending power is a crucial figure to calculate.) Senior folks may have a lesser income than men and women in their prime working years, ranging from 45 to 55 years old. For example, if you want to offer services to local firms, attempt to figure out how much they presently spend on similar services.

The idea is to first grasp the market in broad terms, then delve deeper to see whether there are particular segments within that market—the sectors you want to target—that may become clients and help your company develop.

Also, keep in mind that the worldwide marketplace is quite crowded and competitive if you want to sell things online. Any company may sell a product online and transport it anywhere in the globe. Don't think that just because "the bicycle industry is a $62 billion company" (a figure I made up) that you'll be able to grab a significant portion of it.

On the other hand, if you reside in a town of 50,000 people with only one bicycle shop, you might be able to break into that market and attract a significant share of the local cycling consumers.

Always keep in mind that serving a market that you can define and measure is considerably easier.

You might feel a bit overwhelmed once you've finished your study. While data is beneficial and more data is desirable, sorting through and making sense of an excessive amount of data may be difficult.

Narrow your emphasis for the sake of your business strategy and concentrate on addressing the following key questions:

• What is the size of your market? If you're selling to businesses, provide regional descriptions, demographics, and corporate biographies. In summary: Who are your clients?
• What market sector will you concentrate on? What niche are you going to try to carve out? What share of that market do you expect to capture and expand?
• What is the size of your target audience? How big is the population, and what are their spending patterns and levels?
• Why do customers require your products and services, and why would they be prepared to pay for them?
• What will you charge for your goods and services? Will you be a low-cost supplier or will you charge more for value-added services?
• Is it probable that your market will expand? How much is it? Why?
• How do you gradually build your market share?

The Market Opportunities section for our cycling rental business could start something like this:

Market Summary

Consumer spending on cycling equipment reached $9,250,000 in the states of VA, WV, MD, and NC last year. While we expect sales to rise, to perform a conservative analysis we have projected a zero growth rate for the next three years.

In those states, 2,500,000 people visited a national forest last year. Our target market includes customers visiting the Shenandoah National Forest; last year 120,000 people visited the area during spring, summer, and fall months.

Over time, however, we do expect equipment rentals and sales to increase as the popularity of cycling continues to rise. In particular, we forecast a spike in demand in 2021 since the national road racing championships will be held in Richmond, VA.

Market Trends

Our enterprise is favored by participation and population trends:

• Recreational sports in general, as well as family-oriented and "extreme" sports, are gaining in popularity and visibility.
• Western Virginia and eastern West Virginia have had population growth rates roughly twice those of the rest of the country.
• Cycling has grown at a faster rate than most other recreational pursuits, according to industry data.

Market Development

According to recent surveys, leisure expenditure in our target market has increased by 14% each year over the previous three years.

In addition, due to the growing popularity of cycling events like the Alpine Loop Gran Fondo, we expect higher-than-industry-average growth rates for cycling in the area.

Market Needs Our target market has one fundamental requirement: the possibility to hire bicycles at a reasonable price. Our only other competitors are the bike stores in Harrisonburg, VA, and our position will give us a leg up on them and any businesses attempting to serve our market.

The list goes on...

Depending on your industry, you may wish to add more categories to this area.

You may, for example, elect to include details on Market Segments. The bike rental industry, in our instance, does not need significant segmentation. Rentals aren't usually divided into categories like "low-cost," "midrange," and "high-end." Rental motorcycles are, for the most part, a commodity. (As you can see in our Products and Services section, we chose to offer "high-end" rentals.)

However, let's imagine you want to create a clothes business. You may concentrate on high fashion, children's clothing, outdoor wear, or casual wear—the market could be segmented in a variety of ways. If that's the case, give specifics on segmentation to back up your strategy.

The idea is to first identify your market and then demonstrate how you will serve it.

Marketing and Sales

Providing excellent products and services is fantastic, but buyers must be aware that they are available. That is why marketing strategies and plans are so important to a company's success. (Isn't that self-evident?)

Keep in mind, though, that marketing is more than just advertising. Advertising, public relations, promotional literature, and other forms of marketing are all investments in the success of your company.

Money spent on marketing must yield a return, just like any other investment. (Why invest if you don't have to?) Good marketing strategy bring in improved sales and profits, even if the reward is merely more cash flow.

As a result, don't only intend to spend money on a range of advertising campaigns. Do your research and come up with a clever marketing strategy.

Here are some of the fundamental phases in establishing your marketing strategy:

• Concentrate on your intended audience. Who are your clients? Who would you choose as your target? Who is in charge of making decisions? Determine the best way to reach out to potential consumers.
• Examine your competitors. Your marketing strategy must set you apart from your competitors, and you won't be able to do so until you know who they are. (It's difficult to stand out in a crowd if you don't know where everyone is.) Gather information on your rivals' products, services, quality, price, and advertising strategies. What does your rival do well in terms of marketing? What flaws do they have? How can you design a marketing strategy that emphasizes the benefits you provide to customers?
• Take a look at your brand. The way clients view your company has a significant influence on sales. Your marketing strategy should reinforce and extend your brand regularly. Before you begin marketing your company, consider how you want your marketing to reflect your company, goods, and services. Marketing is your company's face to potential clients; make sure you present yourself in the best light possible.
• Concentrate on the advantages. What kinds of issues do you deal with? What services do you provide? Customers don't consider items; instead, they consider advantages and solutions. The benefits that clients will obtain should be clearly identified in your marketing campaign. Instead of focusing on what you supply, consider what your consumers receive. (Take Dominos; they're ostensibly in the pizza industry, but they're actually in the delivery business.)
• Concentrate on differentiating yourself. In some manner, your products and services must stand out from the competitors. In terms of pricing, product, or service, how will you compete?

Then, for your marketing approach, concentrate on offering detail and backup.

Answer the following questions:

• How much money do you have set up for sales and marketing?
• How will you know whether your first marketing efforts were a success? What strategies will you employ if your early efforts fail?
• Will you require sales reps to market your items (internal or external)?
• Are you able to set up public relations initiatives to aid in the marketing of your company?

Our bike rental company's sales and marketing department might begin with the following:

Market You're After

Western Virginia, eastern West Virginia, southern Maryland, and northern North Carolina are Blue Mountain Cycling Rentals' target markets. While the counties around the George Washington National Forest account for 35% of our prospective clients, the majority of our business comes from outside that area.

Marketing Techniques

Three basic efforts will be the focus of our marketing strategy:

• Signage on the road. The forest is only accessible through a few main entrances, which are reached after traveling along with one of many major highways. Because consumers presently rent bicycles in Harrisonburg, road signs will inform all potential clients of our value offer.
• Initiatives on the internet. The resort's website will entice potential tourists. To give discounts and incentives, we will form partnerships with local companies that serve our target demographic.
• Promotional activities are held. We'll host frequent events with professional cyclists, such as demos and autograph signings, to attract more clients and expand the riders' "brand" to ours.

Strategy for Pricing

For our target market, we will not be the cheapest option. Our objective is to supply equipment that ranges from mid-range to high-end. We will, however, develop web-based loyalty programs to encourage consumers to build online profiles, reserve and renew equipment rentals online, and reward those who do so with discounts. We will be able to market to those clients individually over time.

The list goes on...

You might wish to add a few additional categories, much like in the Market Opportunity section. Describe your Sales Programs and incentives, for example, if your company employs a commission-based sales force. Lay up your Distribution Strategy if you distribute items to other firms or suppliers and those efforts will have an influence on your entire marketing goals.

The idea is to demonstrate that you understand your market and how you plan to reach it. Consumers must be acquired and retained as a consequence of marketing and promotions; your objective is to adequately define how you will attract and retain customers.

Remember to include samples of marketing materials you've previously created, such as website descriptions, print ads, and web-based advertising campaigns. While examples aren't required, spending the effort to generate genuine marketing materials may help you better understand and convey your marketing strategies and goals.

Make sure the "How will I contact my customers?" question is answered in your Sales and Marketing section.

Read also: 5 Marketing Strategies To Increase Your Sales

The Competitive advantage 

The Competitive Analysis portion of your business plan examines your competition, including present and future competitors that may enter your market.

Every firm faces rivals. Understanding your competitors' strengths and weaknesses—or future competitors' strengths and weaknesses—is crucial to ensuring your company's survival and growth. Even if you simply aim to manage a small firm, you need regularly examine your competitors, even if you don't need to engage a private investigator.

Small firms, in particular, are vulnerable to competition, especially when new enterprises enter the market.

Competitive analysis can be time-consuming and intricate, but it doesn't have to be. Here's a straightforward method for identifying, analyzing, and determining your competition's strengths and shortcomings.

Competitors in the Present

Create a rudimentary profile for each of your existing competitors first. If you want to create an office supply business, for example, your market may have three competitors.

Online merchants will obviously create competition, but unless you also plan to sell office supplies online, properly evaluating such firms will be less helpful. (However, it's possible that they—or, say, Amazon—are your true rivals.) That is something only you can decide.)

Stick to studying firms that will directly compete with you to make the task easier. If you want to start your own accounting business, you'll have to compete with existing firms in your region. If you want to create a clothes business, you'll have to compete with other local clothing stores.

Again, if you own a clothing store, you compete with online retailers, but it isn't much you can do about it other than work hard to differentiate yourself in other ways, such as providing excellent service, having friendly salespeople, having convenient hours, truly understanding your customers, and so on.

Answer these questions about each of your top rivals once you've identified them. Also, remain objective. It's simple to spot your competitors' flaws, but it's far more difficult (and a lot less enjoyable) to figure out how they might be able to exceed you:

• What are their advantages? You might be at risk in terms of price, service, convenience, and a large inventory.
• What flaws do they have? Weaknesses should be viewed as opportunities to be exploited.
• What are their primary goals? Do they want to increase their market share? Do they make an effort to attract high-end clients? Consider your industry from their perspective. What are they attempting to accomplish?
• What marketing tactics do they employ? Take a look at their advertising, public relations, and other marketing materials.
• How are you going to steal market share away from them?
• When you join the market, how will people react?

While answering these questions may appear to be a lot of effort, the procedure should be rather simple. If you know your market and sector, you should already have a sense of the competition's strengths and shortcomings.

You may also use the following methods to obtain information:

• Examine their websites and promotional materials. The majority of the data you want on products, services, prices, and corporate goals should be easily available. If such information isn't available, you've probably discovered a flaw.
• Take a look at their places. Take a few steps back and take a look around. Examine advertising items and sales materials. Invite friends to come in or call for more information.
• Examine their marketing and public relations initiatives. The way a firm advertises provides a wonderful chance to learn about its goals and tactics. Advertising should make it easy to figure out how a company presents itself, who it advertises to, and what marketing tactics it uses to reach out to potential consumers.
• Browse. Look for news, public relations, and other references of your competitor on the internet. Blogs and Twitter feed, as well as review and recommendation sites, may all be searched. While the majority of the material you obtain will be anecdotal and based on the opinions of only a few people, you may be able to gain a feel of how certain customers see your competitors. You may also be given prior notice of expansion plans, new markets they aim to enter, or management changes.

Keep in mind that competitive analysis is more than just a tool for figuring out who your competitors are. Competitive analysis can also assist you in identifying modifications to your business plans that should be made. Use competition strengths and weaknesses to your advantage, and apply the same research to your own company strategy.

You might be amazed at how much you can learn about your own company by examining others.

Make a list of potential competitors.

It's difficult to forecast when and where new rivals may emerge. To begin, look for news about your industry, your goods, your services, and your target market daily.

There are, however, various techniques to anticipate when competition may enter a market. Others could see the same potential that you do. Consider your company and industry, and if any of the following circumstances occur, you might encounter competition down the road:

• Profit margins are relatively high in this business.
• It is quite simple and affordable to enter the market.
• The market is expanding, and the faster it expands, the higher the risk of competition.
• Supply and demand are out of whack, with little supply and excessive demand.
• Because there is no rivalry, there is plenty of "space" for newcomers to enter the market.

In general, if serving your market appears to be simple, you may expect rivals to enter. New rivals are anticipated and accounted for in a successful company plan.

Now, in your business strategy, condense what you've learned by answering the following questions:

• What are my current rivals? What percentage of the market do they control? What is their rate of success?
• What market is your existing rivals aiming for? Do they cater to a specific consumer type, the general public, or a specialized niche?
• Are competitors expanding or contracting their operations? Why? What does this imply for your company?
• What will set your firm apart from the competition? What shortcomings can you take advantage of in your competitors? What weaknesses will you have to overcome to be successful?
• What will you do if your competitors leave the market? What will you do to make the most of the situation?
• What will you do if there are new rivals in the market? How will you respond to new obstacles and conquer them?

For our bike rental firm, the Competitive Analysis section may begin like this:

Primary Opponents

The bike stores in Harrisonburg, Virginia are our closest and only competitors. Our nearest competition is nearly a hundred miles away.

The local bike stores will be fierce rivals. They are well-known companies with good reputations. On the other side, they provide lower-quality equipment and are located in a less convenient place.

Alternate Competitors

For at least the first two years of operation, we do not intend to sell bicycles. Sellers of new equipment, on the other hand, compete with us indirectly because a client who buys equipment no longer needs to rent it.

When we expand our company to include new equipment sales, we will encounter competition from online sellers. We will compete with new equipment vendors by providing individualized service and marketing to our current client base, particularly through online activities.

Opportunities

• We give consumers the chance to "test out" bikes they may want to purchase at a later date by supplying mid-to-high-end quality equipment, providing an extra reason (apart from cost savings) to use our service.
• When opposed to the trouble of renting bikes in Harrisonburg and bringing them to specified take-off sites for rides, offering drive-up, rapid rental return services will be perceived as a far more appealing choice.
• Online efforts like online renewals and bookings improve consumer convenience and position us as a cutting-edge provider in a sector dominated by early technology adopters, particularly in the cycling industry.

Risks

• Some members of our target market may view renting bikes and cycling equipment as a commodities transaction. We may face more competition from new entrants to the market if we do not differentiate ourselves in terms of quality, convenience, and service.
• One of Harrisonburg's bike stores is a subsidiary of a bigger firm with substantial financial resources. If we achieve our goal of gaining a considerable market share, the company may be able to use those assets to improve service, improve equipment quality, or lower pricing.

The list goes on...

While your business plan's primary goal is to persuade you that your venture is viable, bear in mind that most investors scrutinize your competition research. Entrepreneurs frequently make the error of expecting they would simply "do it better" than their competitors.

Experienced businesses recognize that you will encounter fierce competition; demonstrating that you understand your competitors, your strengths and limitations about that competition and that you understand that you will have to adapt and evolve as a result of that rivalry is vital.

Even if you have no plans to seek funding or bring in investors, you must be aware of your competitors.

The "Against Whom?" question is answered in the Competitive Analysis section.

Operations

The next phase in developing your company strategy is to create an Operations Plan that will service your consumers, keep your operational costs under control, and maintain profitability. Your operations strategy should include methods for management, staffing, manufacturing, fulfillment, and inventory—everything that goes into running your company daily.

Fortunately, most entrepreneurs understand their operations strategy better than any other area of their organization. After all, while analyzing your market or competitors may not seem natural, most aspiring entrepreneurs spend a lot of time thinking about how they will manage their company.

Your objective is to respond to the following critical questions:

• What kind of facilities, equipment, and supplies are you looking for?
• What is the structure of your company? Who is in charge of which areas of the company?
• Our research and development necessary, either at the outset or as a continuing operation? If that's the case, how will you go about completing this task?
• What are your immediate personnel requirements? When and how will you hire more people?
• What strategy will you use to build connections with vendors and suppliers? What influence will such connections have on your day-to-day operations?
• How will your company's operations change as it grows? What initiatives will you take to reduce costs if the firm does not operate as well as expected at first?

Your operations strategy should be extremely tailored to your business, market area, and clients. Instead of giving an example like I have in previous parts, consider the following to establish the essential topics your strategy should cover:

Management of Locations and Facilities

Describe the location in terms of:

• Zoning regulations
• The sort of structure you'll require
• The area you'll require
• Utilities and power requirements
• Customers, suppliers, transportation, and so forth.
• Parking
• Renovations or specialized construction
• Renovating and preparing the inside and outside

Continual Operations

• Methods of production
• Methods of service
• Inventory management
• Customer service and sales
• Receiving and Shipping
• Cleaning, maintenance, and restocking

Legal

• Permits and licenses
• Regulations concerning the environment or public health
• Patents, trademarks, and copyrights are all examples of intellectual property.

Personnel Requirements in the Insurance Industry

• A typical personnel situation
• Breakdown of needed abilities
• Recruiting and retaining employees
• Policies and procedures for training
• Structures of compensation

Inventory

• Inventory levels expected
• Rate of turnover
• Timeliness of delivery
• Seasonal demand variations Suppliers

Major vendors

• Contingency planning and backup suppliers
• Payment and credit policies

Doesn't it seem like a lot? It can be, however not all of the items listed above must be included in your business strategy.

You should think about each area and make a thorough plan for it, but you won't have to share the outcomes with anyone who read your business plan.

Working through each problem and creating solid operational strategies benefits you in two ways:

1. Even if you don't intend to seek outside finance or capital, you may benefit from developing a thorough strategy that includes all of your operating needs.
2. You may not include all of the details in your business plan if you seek to finance or outside resources, but you will have answers to any operational inquiries at your fingertips.

Consider Operations to be your company plan's "implementation" component. So, what exactly do you have to accomplish? How are you going to get it done? Then develop a summary of that strategy to ensure that your milestones and schedule are in order.

The operations section can then respond to the "How?" question.

Management Group

Many investors and lenders believe that one of the most important elements used to evaluate the prospects of a new firm is the quality and expertise of the management team.

However, putting effort into the Management Team part will help more than just those who might read your plan. It will also assist you in determining the abilities, expertise, and resources required by your management team. During implementation, addressing your company's demands will have a significant influence on your chances of success.

Answer the following questions:

• Who are the major decision-makers? (If no specific individuals have been identified, explain the sort of individuals required.) What are their professional and educational backgrounds, as well as their abilities?
• Have any of your senior executives worked in the business before? If not, what relevant experience do they bring to the business?
• What will each position's responsibilities be? (It can be useful to make an organizational chart.) What power is given to each job, and what obligations are expected?
• What would be the minimum wage levels necessary to attract suitable individuals for each position? What is the company's wage structure by position?

Analysis of the Financial Situation

The narrative is told using numbers. Any business's success or failure is determined by its bottom line outcomes.

Entrepreneurs, lenders, and investors or lenders can use financial predictions and estimations to objectively assess a company's chances of success. If a company wants to raise money from the public, it must provide detailed financial records and analyses.

Most importantly, financial predictions tell you if your firm has a possibility of succeeding—or if it doesn't, that you need to do more effort.

At least five fundamental reports or estimates are included in most company plans:

• Assets, liabilities, shareholders, and earnings kept to support future operations or to act as capital for development and growth are all listed on the balance sheet. It is a measure of a company's financial health.
• Profit and Loss Statement: This report, often known as a profit and loss statement, shows predicted income and costs. It determines whether a firm will be profitable over a specific length of time.
• A forecast of cash collections and cost payments is a cash flow statement. It depicts how and when cash will flow through the company; payments (including salary) cannot be done without cash.
• Operating Budget: A precise analysis of income and costs that serves as a roadmap for how the business will function in terms of money.
• Analyze the Break-Even Point: A forecast of how much money you'll need to meet all of your fixed and variable costs. When a firm might anticipate becoming profitable under specified conditions.

All of the aforementioned may be found in plenty. Templates and examples are included in even the most basic accounting software applications. Templates are also available in Excel and Google Docs. (Examples may be found by searching for "google documents profit and loss statement.")

Alternatively, you may hire an accountant to help you develop the appropriate financial predictions and papers. Feel free to do so, but first familiarize yourself with the reports. While you don't need to be an accountant to operate a business, you do need to be able to grasp your numbers, and the best way to do so is to actually work with them.

However, the methods you use to produce your figures are less crucial than whether they are as precise as possible—and if they assist you to determine whether to take the next step and implement your business strategy.

Then Financial Analysis can assist you in answering the most crucial question in business: "Can we earn a profit?"

Appendices

In the Appendix part of certain company plans, you'll find less critical but possibly useful information. You might want to provide the following as backup or supplementary information:

• Resumes of prominent executives
• Additional product and service descriptions
• Agreements on the legal front
• Charts of Organization
• Marketing and advertising collateral examples
• Images of possible facilities, goods, and so on.
• Market research or competitive analysis backup
• Financial papers or estimates that aren't included in the package

Remember that an Appendix is normally only required if you're looking for funding or looking for partners or investors. People reading your business plan may not want to go through reams and reams of charts, figures, and backup data at first. If someone really wants to go deeper, they can look at the documents in the Appendix.

As a result, your business plan will be able to tell your narrative clearly and simply.

Otherwise, you should already have the backup since you made your company plan.

Bringing Everything Together

While your business plan may be used to attract investors, partners, and suppliers, keep in mind that the purpose of your business plan is to persuade you that your idea is sound.

Because, at the end of the day, it's your time, money, and effort on the line.

Do you have any other questions concerning the Business Plan Guide discussed above? Please share your thoughts in the comments box below or join our free forum!