During the last few years, we have been seeing great shifts in the regional startup ecosystem with a huge focus and support from governments and ventures in the MENA region for startups and small businesses. According to Magnitt’s 2019 MENA Venture Investment Summary, 2019 saw $15M of funding in 5 venture deals, whilst the number of deals increased by 60% over the last 10 years. However, as tempting as it may seem, starting a business isn’t a walk in the park. It is a decision with long term implications that require passion, enthusiasm, and good planning skills. In this guide, we will help you learn how to build a solid and effective business plan.
But first, what is a business plan?
A business plan refers to a written document that comprehensively outlines what your business is, where it is going, and how it will get there. The business plan outlines in specific terms the nature of the business, the sales and marketing strategy, and the financial background, and contains a projected profit and loss statement, and how it will position itself to achieve those goals in the context of the current market environment. At its heart, a business plan is a plan for how your business is going to work, and how you’re going to make it succeed. For more information about this topic, check this guide from Bplans.
Tips for writing an outstanding one:
1. Keep it short
Your business plan should be a tool you use to run and grow your business, you will need to use it over time and others will need to read it, an excessively long business plan is a huge hassle to revise.
2. Know your audience
Use a language that your audience will understand. For example, if you are running a chemical business and you are looking for partners or investors do not use chemical and scientific acronyms because most likely they will not understand it. You can try to simplify the scientific terms or explain them in simple words for non-scientific individuals.
3. Don’t be scared
The majority of business owners are not business experts. And they have never wrote a business plan before. Writing a business plan may seem challenging, but it doesn’t have to be. You know your business well, so you can do it!
And in case you’re hesitant or not confident in your business planning skills the below guide covers all what you need to write an effective plan for your business.
How can you write a business plan?
First, you need to know the basic components of the business plan.
- Business concept: The description of your business, its market, products, and organizational structure and management.
- Market analysis: Where will your business operate? Which market place? Who are the target customers and customer persona (demographics, preferences, needs, and buying behavior), and whom are your competitors?
- Financial analysis: If your business is new, this will include projected cash flows, capital expenditures, and the balance sheet. It will also include forecasts as to when the business will break-even.
1. Executive summary
The executive summary gives an official overview of your business. It comes first in your plan and is ideally only one to two pages. Most people write it last, though. You can check this guide from Forbes to find out what should you include in the executive summary.
2. Company Description/ Opportunity
The business description section usually begins with a one-sentence overview of your business that sums up the essence of what you are doing. Then complete with the industry and the market size. You will need to do your homework and analyze the trends of the market first. Include references to new products or developments that could benefit your business. And do not forget to cite your sources of information when necessary. Continue with information that answers these questions: What are you selling? How are you solving a problem (or “need”) for your market? What is unique and exciting about your company (Value Proposition)? What is your target market and who are your competitors?
Do you need help in writing your value proposition? Check this article from Hubspot on “How to write a Great Value Proposition”.
If your business plan will be used as a financing proposal, you’ll need to explain why the additional equity or debt you’re requesting will make your business more profitable.
Remember to keep your business description section to the point, describing the industry in one paragraph, the product in another, and the business and its success factors in two or three more paragraphs.
3. Market analysis
The market analysis is extremely important, as it outlines demographics and segmentation, target market, market need, competition, barriers to entry, and regulations.
It determines how your business will gain market share. The market analysis helps you in determining the price, distribution, and marketing strategy. Start by defining the market in terms of size, demographics, structure, growth prospects, trends, and sales potential. Then determine how often your products or services will be purchased and figure out the potential annual purchases. Work on a competitive analysis and identify both direct and indirect competitors.
You have to understand your competitors, list their strengths and weaknesses and the potential impact on your business. To make it easier, use the SWOT analysis chart.
4. Company structure and management
Even outstanding ideas need great execution and teamwork in order to become a reality. Therefore, provide a brief overview of the team, talk about your team’s expertise and why you and your team are the right people to take your idea to market. If the owners and managers have extensive backgrounds in the industry or a track record of success, highlight it. Mention the responsibilities of the management team, the tasks assigned to each division within the company. If you have an organizational chart, include it.
5. Marketing and Sales
In this section, describe how you’ll attract and retain customers, distribute your products and services, manage growth, and how the sale will actually happen. Be clear in defining your sales and marketing strategies, define which channels you will use, why, and how? Make sure to thoroughly describe it, as You’ll refer to this section later when you make financial projections.
6. Financial Components and Projections
Here you need to mention the three main financial statements, the income statement, cash flow statement, and balance sheet. Also, if you will use your business plan to secure funding, you have to mention how much money you need to start and maintain your small business. Provide an itemized summary of how the capital will be used. Give a timeline for your funding request and Include projected cash flows for at least 6 years or until the breakeven point is achieved. For the first year, provide monthly and quarterly statements. Each year after that, yearly statements.
That’s the final section and it includes documents that support claims made in other sections of the business plan. Such as: your resume, contracts with suppliers, customers, or clients, letters of reference, letters of intent, copy of your lease and any other legal documents, and anything else relevant to your business plan.
A business plan will help you avoid some common causes of business failure, it is your road map. Take your time to prepare it and never be afraid to ask for help.