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How to Write a Business Plan For Your Next Big Idea

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How to Write a Business Plan For Your Next Big Idea

June 24, 2024

How to Write a Business Plan For Your Next Big Idea

How to Write a Business Plan For Your Next Big Idea

Not all new businesses survive their first year. Just take a look at these numbers from the Department of Trade and Industry (DTI).

In 2022, there were 827,491 new business registrations in the Philippines, which was a 10-year high at the time. 

How many do you think went on to renew their permits in the following year? 

DTI only recorded 120,132 business name renewals in 2023. A 14% business survival rate within one year alone.

Looking at these figures gives you a sober perspective on what it truly takes to make a business thrive: sound business planning. Writing a business plan helps you identify the key building blocks that can validate your initial ideas. 

This guide will walk you through the nine essential steps of business plan writing — and the very first thing you should do before you dive deep into the process.

📖 In Summary: 

  • Make sure to do the homework on your initial business idea. 
  • A written business plan gives investors a good picture of whether or not your business is worth investing in.
  • For some entrepreneurs, testing a minimum viable product early may yield useful data that makes the business plan more compelling.
  • Demonstrating product-market fit shows you understand target customer needs and why they’d purchase from you.
  • Financial projections and analysis should be grounded in reality and align with the stated business goals.

Before anything else: Clarify the business concept

If there’s only one thing you’ll learn from this post, it’s this: don’t start writing a business plan with half-baked ideas.

Anybody can come up with ideas, but not everybody does the work to build a foundation around those ideas. 

In other words, do your homework. Make sure that you go beyond a surface-level understanding of a problem you want to solve for your target market. This is where pre-business plan preparation comes in handy. 

What comes before writing the business plan? 

In a nutshell, everything — late-night brainstorming, market and product research, talking to potential customers, scoping the competition, and so on. 

Reach out to like-minded peers and let them poke holes at your first few ideas and assumptions. Find online communities that are knowledgeable about the market. Ask existing business owners and more experienced entrepreneurs for feedback and insights.

A traditional vs on-the-fly business plan

At this point, you may not yet have a formal business plan written out, but you may already have the hallmarks of a feasible business idea. If you suddenly bumped into a potential investor, ideally, you’d be able to deliver an elevator pitch. 

But you may also rightly wonder: “If I’ve done all these things, do I still even need to write a business plan?” It depends. 

If you plan on getting financing, a business plan will help you get your big idea across — especially when you’re talking to big-time investors. These stakeholders are particularly keen on seeing your financial projections and knowing when exactly they can cash out. 

On the other hand, you may already have a minimum viable product that you want to test out in the market. In this case, getting more data before writing a complete business plan makes sense.

This isn’t an uncommon strategy, especially for entrepreneurs who see a novel business opportunity in an ultra niche market — where speed can make or break your competitive advantage.

 

Writing a business plan in nine steps

Woman conceptualizing and writing a business plan

1. Describe your team or company

Give a concise overview of the key people in your team or company. Aside from listing down their relevant skills and credentials, you should also explicitly explain how those elements contribute to the larger purpose of the business. 

This is also the part where you state the business’s registered name and official address. Naturally, this will entail describing the business structure as well. Is your business organized as a sole proprietorship, partnership, or corporation? Who are the key decision makers? 

You should also go over the historical and future context around your business. Allocate a short paragraph on the founding story and how you or your team identified a potentially lucrative business opportunity. Lastly, outline the collective vision of how the team and business will grow over time.

💡How to register a business in the Philippines?

Registering a business requires you to submit a proposed business name and essential documents to local agencies, which include the Department of Trade and Industry, Securities and Exchange Commission, Bureau of Internal Revenue, and the relevant local government unit.

Loft offers business registration services to help startups in the Philippines navigate the local regulatory environment with ease. For existing business owners, the Loft Team also offers business renewal services.

Get in touch for a free consultation. Send us an email at [email protected] or call us at +63-917-899-1111.

2. State your business goals

This section is where you’ll need to clearly define what your business will accomplish. What are your short-term and long-term goals? What are the smaller objectives that will contribute to completing those overarching goals?

This is your opportunity to give a glimpse of how the business succeeds in a specific market segment.

Business goals will differ, depending on a variety of factors, including but not limited to:

  • Chosen industry or sector
  • Team skills and experience
  • Uniqueness of solution to a market problem
  • Degree of competition
  • Stage of the business
  • Ideal investor profile
  • Launch of a second or multiple product lines
  • Business loan application to a bank

3. Show market data

Readers of your business plan will heavily focus on how well you know the market. So it’s imperative that you invest considerable effort into developing a market analysis. 

Exceptional market research demonstrates your deep understanding of the opportunities up for grabs, inherent threats, and external risks that are out of your control.

Through semi-fictional customer personas, you can dig deep into details like potential customers’ buying habits, income levels, age, and level of interest in your product or service. 

During your research, you’ll uncover who your competitors are and find out about their strengths. Use all that information to make a case on how your business can better serve the market and potentially surpass more established players.

4. Explain your products/services

With a firm grasp of the market landscape and potential customers’ pain points, it’s time to detail the products and/or service your business will offer.

Specifics will vary depending on your chosen solution and the industry where you’ll operate. However, all product or service descriptions will generally cover:

  • A comprehensive explainer of each product/service 
  • The pricing model for the product/service
  • Customers who will benefit from your solution
  • The supply chain and order fulfillment strategy
  • Current or pending trademarks and patents 
  • External contractors or consultants involved 

5. Outline your marketing and sales plan

Here’s where you’ll need to explain how your business will attract and persuade paying customers. Your market research and customer personas will prove useful when detailing specific marketing and sales tactics. 

You should also explain how you’ll cultivate customer loyalty, which is crucial if you want to create repeat business and spread brand awareness.

Additionally, a distribution strategy should also be included to give a comprehensive picture of all sales channels and the cost to sell each product/service. 

6. Create financial projections/business financial analysis

If you’re just starting out, you may need to attract external financing. Creating financial projections will show potential investors when and how the business will generate enough revenue to earn decent returns. 

You’ll typically provide data on expenses, sales, and profit estimates on a monthly or quarterly basis. This will encompass a three-year period, at the very least. 

If you already have a running business, seeking additional investors may still be part of your overall funding strategy. 

But existing businesses will also need to create a business financial analysis. The latter will include a balance sheet, cash flow, and profit-loss statements, among other things. 

Financial projections and analysis will help keep the business in check — making sure your overall goals are grounded in reality.

7. Describe your business operations

This section will detail how your business will run day in and day out. 

A summary of the business structure and a concise rundown of team responsibilities will give a good picture of whether or not you’ll be well-equipped to accomplish your business goals.

Identify the people who will execute the business’s routine functions and long-term strategic plans, Make sure to emphasize exceptional skills or experience that give you a competitive edge.  

8. Provide additional information in an appendix

Any important information that wasn’t mentioned or only partially explained should be included in an appendix. You can reference these materials or documents throughout the different sections of the business plan. 

You’ll typically attach the following in this section:

  • Licenses
  • Special permits
  • Contract agreements
  • Trademarks and patents
  • Bank statements
  • Audited financials
  • Credit history 
  • Equipment lease

9. Write the executive summary

Although this is the first section of a business plan, it’s usually best practice to save this section last — after you’ve fleshed out the more detailed sections discussed earlier. But ultimately, it’s up to you if you want to write out this section first!

Since it’s the first thing that people will read, the executive summary should highlight your overall business goals, product/service offerings, and path to financial sustainability. 

This section should highlight the broad strokes of your business idea and get potential investors excited. Think about the executive summary as the written version of your elevator pitch. It shouldn’t be more than a page long. 

💡What is a business plan?

A business plan is a document explaining how your business will make money and who your customers are. It can help you clarify your overall goals and demonstrate profitability to prospective lenders and investors. 

Business plans are usually revisited and updated routinely over time. As the business grows, there might be new market insights and financial projections that need to be accounted for.

 

Get a free Business consultation from Loft

Got more questions on how to write a business plan or how to successfully launch your new venture? Reach out to our team. 

At Loft, we have an array of resources and services to help startups and growing businesses reach their milestones. 

Get in touch with us for a free business consultation — it won’t cost you anything but your time. Contact us via email or give us a call at +63-917-899-1111.