How to Write a Good Business Plan?
A good business plan includes sensible entrepreneurial strategies. It outlines the steps for launching and growing a start-up. According to Professor Sahlman from Harvard Business School, the following four factors are crucial to any new venture and are strongly recommended for inclusion in your business plan.
Here, “people” refers to those who start and run the venture, as well as external third parties providing key services or resources. Without the right team, the venture is unlikely to succeed.
The team should be competent, insightful and have relevant business experience. They should have good knowledge of the market, from competitors to customers. They are familiar with industry players and dynamics.
“Opportunity” describes the profile of the business:
What it will sell and to whom
How fast the business will grow
What are its economics
Who and what are its barriers to success
The opportunity should have a viable, sustainable business model. It is possible to develop a competitive edge and defend it.
A good business plan will focus on two questions regarding the industry of the new venture:
The plan should describe how the company will build and launch its product or service. Important discussions should include ones about customer profile, revenue and the cost of producing and marketing. A sound proposal also assesses the business model from an investment perspective, including the balance sheet and cash flow projection.
3. The Context
Opportunities occur in a context. The context is the big picture about the regulatory and macroeconomic environments. These factors are fluid and beyond the entrepreneur’s control.
Context has an impact on every aspect of the entrepreneurial process. A business plan will describe the context of the new venture and how it will help the business. It also considers what the entrepreneur can do when the context grows unfavourable.
4. Risk and Reward
A good plan will have an assessment of everything that can go wrong and right; and how to manage risk. People, opportunity and the context are likely to change over time as a company evolves from start-up to ongoing enterprise. A good business plan will address these as investors will want to know the kind of risk and reward they can expect with a new venture.
Other business plan writing tips
These are some additional tips for writing a good business plan:
Be clear about your selling points
Know your audience
Knowing why you need the plan, whether for potential investors, your own benefit or new employees, will make you create something constructive.
A plan for investors includes specific financial projections and clear explanations of your business goals.
Break down your vision into actionable goals
- List down your core competencies and limitations.
Aim for substance over form
- It is important that your plan has substance – a marketable product, a systematic plan for increasing revenue and a good knowledge of competitive pressures.
Cantero-Gomez, Paloma. (2019, July 4). “How to Get Started With a Business Plan”. https://www.forbes.com/sites/palomacanterogomez/2019/07/04/how-to-get-started-with-a-business-plan/
Sahlman, William A. “How to Write a Great Business Plan”. In HBR’s 10 Must Reads on Entrepreneurship and Startups, 13-33. Boston, Massachusetts: Harvard Business Review Press, 2018.
Young Entrepreneur Council. (2020, June 15). “10 Entrepreneurs Share Their Top Business Plan Writing Tips”. https://www.forbes.com/sites/theyec/2020/06/15/10-entrepreneurs-share-their-top-business-plan-writing-tips/