What Is a Business Plan?
A business plan is a formal document that outlines your vision and acts as a guide to drive your business activities. It can significantly increase your chances of obtaining financing and achieving your goals by helping to communicate your vision to potential investors, lenders, and stakeholders.
What Does a Business Plan Include?
When creating your business plan, by including key performance indicators (KPIs) or benchmarks in your business plan, your progress can be tracked over time and ensure that you are on track to meet your objectives. That will help you make better decisions about your business, ensure that you are making the most of your resources, and assure any interested partners or investors that you are making a sound business decision.
A typical business plan includes the following serve as benchmarks:
- Financials: These benchmarks gauge your profitability and stability while tracking your financial performance. These include revenue targets, gross profit margin, break-even point, and cash flow.
- Customer Acquisition: These benchmarks track customer acquisition and retention costs, rates, and customer satisfaction levels. It is your ability to attract and retain customers.
- Market Share: These benchmarks evaluate your market position and help you assess your competitive performance. Consider including market share percentage targets, and regularly analyze your competitors’ share and progress in comparison.
- Employee Productivity: These benchmarks track employee productivity, such as the number of units produced per hour or daily sales.
- Operational Efficiency: These benchmarks track and improve your operational efficiencies, such as the time it takes to process an order, the number of errors made per month, or your inventory turnover ratio.
- Marketing and Advertising: These benchmarks, such as social media engagement or website traffic and conversion rates, assess the effectiveness of your marketing efforts.
You can tailor the specific benchmarks you include in your business plan depending on the nature of your industry and your business’s overall goals. However, it is always wise to have SMART benchmarks — Specific, Measurable, Achievable, Relevant, and Time-bound.
Here are some examples of SMART benchmarks for a Canadian business:
- Revenue: Increase by 15% in the next year.
- Customer Satisfaction: Increase new customer reviews by 30% year-over-year.
- Financial Health: Pay off $50,000 in business debt within 30 months.
- Online Marketing: Increase website traffic by 25% by the end of the fourth quarter.
- Efficiency: Reduce order processing time by 50% in the next month.
Business Plan vs Strategic Plan: What’s the Difference?
Let’s take a bet to clear up any confusion between two planning powerhouses, the business plan and a strategic plan.
A business plan is an overall vision, the grand master plan that covers all aspects of your business — from objectives, operational details, and marketing to finances — in a comprehensive document.
On the other hand, a strategic plan is more focused. It zooms in on specific strategies and actions required to achieve your business’s long-term goals. It provides a more in-depth analysis of the tactics and initiatives necessary to fulfill them. It’s all about the details that make your business plan come to life.
In a nutshell, the broader business plan is the comprehensive document providing a more detailed roadmap for achieving long-term objectives that encompass your strategic plan, and a strategic plan is a subset of that business plan.
Writing a Business Plan: Step by Step
To develop an impressive business plan, be prepared to do the following:
- Brainstorm and research to define goals and strategies, gather market data, and analyze your industry.
- Create and write a compelling overview of your business.
- Analyze and identify your place in the market.
- Develop and prepare marketing and sales strategies, organizational structures, financial potential and needs.
- Hone and lay out your step-by-step process for success.
- Review and revise your business plan to ensure it is clear, consistent, accurate, and up-to-date.
- Get feedback from trusted advisors or mentors and make necessary refinements.
The result should be a package that captures these elements:
1. An Executive Summary
An executive summary is a concise overview of your business plan, highlighting its mission, key objectives, unique selling proposition, strategies, target market and financial projections. Capture the essence of your business and why it’s worth everyone’s attention.
2. Your Company Description
What’s the backstory of your business? Consider the legal structure, products or services, location, target market, and competitive advantage. Include some unique selling points!
3. Products and Services
Craft a comprehensive description of your products or services, including their features, benefits, and pricing.
4. Market Analysis
Size up your competition — analyze their strengths and weaknesses — and identify your target market, including customer demographics and needs. It should also showcase your market research. Enhance it with innovative insights and trends and identify your business’s opportunities and challenges.
5. Marketing and Sales
Share your marketing and sales plans, including strategies for reaching your target audience and generating sales. Highlight your promotional activities from social media to email marketing, distribution channels and pricing strategies.
6. Organizational Structure
Provide an overview of your business’s organizational structure, introducing your key personnel, their roles and responsibilities, and how they’ll contribute to the overall success of your venture. Add a little something to make them stand out.
7. Financial Projections
Lay out your detailed financial projections for your business, including revenue projections, expenses, cash flow, and break-even points. It’s time to show off your numbers game.
8. Funding Requirements
If seeking financing, specify the amount you need and how you’ll use it, and let potential investors know why they should jump on board.
9. Implementation Plan
Outline the step-by-step process of turning your business dreams into reality. From setting key milestones to actionable steps to allocating resources, make it clear how you’ll execute your business plan effectively.
10. Risk Assessment
Every business has its challenges. Identify all potential risks and show off your preparedness and strategies to mitigate them. Turn obstacles into opportunities!
Here are some additional tips for writing a business plan:
- Be Concise. Your business plan should be easy to read and understand; avoid jargon and technical terms. And never overpromise and underdeliver.
- Be Detailed. Be specific and clear about your goals, strategies, and financial projections.
- Do Your Research. Use data and evidence to support your claims and charts and graphs to illustrate your points.
- Be flexible. You may need to change your business plan, especially if you have requested help or feedback from trusted people.
Protect Your Finances and Future: Get Business Insurance
Business insurance is an essential investment for any business owner. It can help you protect your hard-earned assets and keep your business running smoothly even in the event of unexpected mishaps or even a natural disaster.
Here are a few examples of the things you are protected from with business insurance:
- General liability insurance covers claims made against you by others for injuries or property damage. For example, if a customer visiting your store or office falls and is injured on your property, general liability insurance may cover their medical expenses.
- Product liability insurance shields your business from potential third-party property damage or bodily injury claims caused by the products you make, distribute, or sell.
- Professional liability insurance, or errors and omissions (E&O) insurance, covers claims against you for professional negligence, misconduct, or failure to deliver services as promised.
- Commercial property insurance covers your business premises, contents, and inventory if damaged by fire, a natural disaster, water damage, theft, or vandalism.
- Business interruption insurance covers your overhead costs if you’re forced to close due to an insurable loss.
- Cyber liability insurance covers costs associated with a cyber-attack or data breach.
Here are some suggestions to help get you covered quickly and efficiently:
- Assess the Liability Risks You Face. What specific risks are associated with your business and industry? Knowing your risks will help you choose the right insurance coverage.
- Provide Your Company’s Details. When filling out an insurance application, insurers want to know about your business, including your products and services, where you’re located, your industry, and annual and projected revenue to accurately price your policy.
- Get a Free Quote. Finding the best coverage at the lowest price means shopping around for insurance from different providers. That’s easy to do with Zensurance. We have over 50 insurance providers in our partner network.
- Get Your Policy Customized. Businesses are all different, so your insurance policy should be different. Your Zensurance broker will tailor a policy that meets your unique needs.
- Understand Your Policy’s Terms. Don’t just skim your insurance policy documents – read the fine print carefully and understand the coverage limits, deductibles, and exclusions. That will help you avoid surprises if something unexpected happens. A Zensurance broker can help review your policy, explain it, and answer your questions.
- Review and Update Your Policy Annually. Your insurance needs may change as your business grows and evolves. Regularly reviewing your coverage is vital to ensure it’s aligned with your current needs and protects you from new risks.
A well-written, thoughtful business plan is essential for establishing and growing a successful small business. It can help attract investors, secure loans, and guide business decisions along your entrepreneurial journey. It is a worthwhile exercise and an investment that can help you achieve your business goals.
Simon Sinek is a leadership expert best known for his TED Talk, “Start With Why“. There is a reason why he famously says, “Always plan for the fact that no plan ever goes according to plan.”
And when things don’t go according to plan, a business insurance policy can protect you from potential risks and damages.