4 Trade Secrets to Create a Great Business Plan

You have a great business idea but don’t know how to implement it. A friend, colleague, or consultant has suggested creating a business plan to strategize your business's launch, but you need to know what goes there. This guide to building a great business plan helps.

You can use the information below as a resource for creating your first business plan—a plan you can use to develop and implement strategies for successfully launching your business and a pitch you can present to banks and potential investors. So, without further ado, let's get into the four trade secrets to create a great business plan.

1. Understand What Goes Into a Business Plan

You need to know what goes into a business plan to be able to do the relevant research or brainstorming.

For example, a sound business plan will include a Market Analysis section that provides industry analysis and current market trends, a target market analysis that defines the demographics and psychographics of your potential customers, and a SWOT analysis outlining your business's strengths, weaknesses, opportunities, and threats.

It is important to research, analyze, and include all this information in your business plan so that you can understand your potential customers and tailor your marketing, sales, and operations strategies to them.

Similarly, the business plan includes a Business Description or Company Overview section that details your business's offerings and the problems it solves. It also consists of your business's mission and vision, short-term and long-term objectives, and core values.

With this information in mind, you can brainstorm with your team the most important goals and objectives for your business and what you are looking to accomplish with it. Performing these steps will go a long way in helping you launch a successful business.

2. Choose an Appropriate Format For Your Business Plan

There is no "one-size-fits-all" format for a business plan. It will vary depending on your needs and why you want to create one in the first place. Suppose you intend to use the business plan as an internal document to support your operations. In that case, it will have a different format than one created for a lending bank or potential investors.

Also, the amount of information you want to include in your business plan will determine its structure. For example, a 10-page business plan will have fewer information and sections than a 40-page plan that dives into every aspect of your business and operations.

A 5-page business plan is often solicited by a lending bank or potential investors to evaluate the viability of the business requesting funding or investment and its ability to repay the capital provided in the form of capital repayments or profit.

These banks and investors typically have many businesses applying for funding or investments and do not have the time to review a detailed business plan. So, they request a shorter or 5-page business plan.

They want to see only the most essential information about the business to evaluate its suitability for funding/investment.

It provides a quick overview of the business in a one-page executive summary; the opportunity section provides a summary of the problem and solution, the target market, and competition, while the company section provides basic information on the company and the products/services it offers as well as the team behind the business.

Finally, the financial plan provides an overview of the business financials, including capital/funding requirements, 1-year revenue projections, expense summary, and profit and loss statement.

A 10-page business plan will include all these things plus a separate marketing, operating, and implementation plan with 3-year projections instead of 1.

However, a 40-page plan will include a lot more, and it is typically created for submitting and pitching to multiple lenders and investors in the hope of securing the required funding. It also serves as a comprehensive tool for planning and executing the launch of your business.

Each section dives deep into the business's operations and plans. Additionally, it has financial projections for the next five years to allow potential lenders or investors to evaluate the business based on its ability to increase revenue over time while keeping the costs under control to generate profits over the long term.

3. Know Your Market Inside Out

A business plan's three most important sections are market analysis, marketing and sales strategy, and financial plan. You can only create a solid and workable custom business plan once you understand your target market. You need to find out the demographics of your ideal customer.

It includes the age, gender, ethnicity, employment and marital status, education, and income level of your potential customers.

You can do this by performing an industry analysis that overviews the biggest customer base for the products or services you plan to sell/offer. You can also look up competitors that match the description of your business to see who their most frequent customers are—find out the gender, age group, ethnicity, or income level that makes up the biggest percentage of customers for that business.

Once you know this, you can establish your target market and then learn about the psychographic characteristics of this market or what appeals to them the most. Based on these findings, you can create marketing and sales strategies tailored to your target market's specific needs and preferences.

4. Analyze Your Competitors

Analyzing your competitors is the fourth and final trade secret to creating a great business plan. Why is this important? Firstly, it will let you know your target market, including their needs and preferences.

Secondly, it will inform you about your competitors' offerings, market share, and why people buy from them. It will allow you to offer everything your potential customers can get from your competitors, plus the one thing they do not provide but you do, which will be your unique selling proposition.

Finally, you can price your products or services using the prices charged by your competitors as a reference. You do not need to set the exact prices as them. Still, you can use their prices to lower your prices if you want to sell yourself an "affordable alternative" to competitors or higher if you're going to set yourself apart from competitors by showcasing your products or services as "premium."

Once you know the prices you want to set, you can create financial projections, including revenue projections and P&L statements, to include in your business plan.

Conclusion

There are many other trade secrets to creating a great business plan besides the above. However, the tips provided above are an excellent place to start if you have never made a business plan before and are looking for a helpful resource or guide to get started. Best of Luck!

Henry Wilson is a part writer and blogger.