If you've recently started a new business, you've probably wondered about the importance of developing a business plan. Do you really need one? Is any specific computer software needed to create one? How exactly do you write a detailed business plan? Just because there are some questions arising, many entrepreneurs overlook the importance of writing a plan down.
What is the business plan, then? Some think it's just another meaningless piece of paper, but they could not be more wrong. It is, in fact, the most acceptable way to convey all key information about your company's objectives. We'll go through the most crucial details with you if you're not familiar with the concept.
Business plan as a map to success - why is it important for IT companies to have it?
An IT solutions company business plan is like a map - it contains an outline of your company's objectives and describes how you want to achieve them. If formed properly, a business plan can help you assess your success and schedule for the future. According to one study, entrepreneurs who create a formal business plan are 16% more inclined to reach viability in a competitive market. This factor alone could persuade to invest some time into constructing a business plan. Let's take a closer look at some other reasons.
Reason 1: To successfully start and grow your IT business
Even if your business is just a small startup, a solid IT department business plan is essential for its growth. Many small businesses fail due to the lack of well-defined business ideas and poor market analysis - it's a big mistake.
To write a business plan, you need to verify your data, rethink your sales strategies, and consider how you want to reach potential customers. It can help you identify possible weaknesses before you make the big decisions. Looking at the numbers, you can also allot your funds and plan purchases more efficiently - seeing a bigger picture here is a huge advantage you should make use of. You can also look up business plan templates online to see how this section should look.
Reason 2: To get inspired
Small business or not, when researching the business situation, you have to take a look at your competition and the overall market. Learn more about your customer segments, analyse your balance sheets, and calculate your start-up expenses, as educating yourself in the field of consumer needs and industry trends may inspire you to try a different approach or adjust something in your company's long-term plans. New ideas are essential to business growth, and writing a business plan based on what you find out can inspire you to get creative with fresh concepts.
Read various IT industry business plans online - there are a lot of free templates and examples on the Internet. You might find an idea you like in one of them and want to use it in your company's business plan as well! Knowing how other business plans are structured and what information is included in them can definitely benefit you in the future. Proper research is one of the keys to a winning business plan, especially for small businesses.
Reason 3: To prove to potential investors that you are reliable
Possible investors and lending institutions will want to know if your company is viable. To raise capital, you need to be taken seriously - and without a formal business plan that includes proper financial statements, you can anticipate a rejection.
You need a plan to demonstrate that you are accountable and responsible, with a viable market for your services. Show how you want to reach your financial milestones, and convince investors that your business idea will be efficient. Explain what you need the funds for and how you are planning to manage the financial resources - remember to mention any additional revenue streams you might have. Having an appropriately written plan can give you a considerable competitive advantage on the market.
Reason 4: To set and communicate your objectives and marketing strategy
A good IT company business plan, based on extensive market research will certainly present your ideas meticulously. You can announce your business plans and prospective marketing initiatives to future business partners and key members of the company. The financial information you provide, such as operating costs, financial forecasts and cash flow statements included in the plan can let both your management team and prospective customers know, what exactly are your goals for the company.
Present your business goals to your target audience, and use the business plan as a depiction of how determined you are to achieve your pursuits. Nevertheless, remember about setting realistic goals - your objectives must be measurable, as overly ambitious ones may appear too difficult to achieve. A well-planned approach will motivate and inspire not only you but also your IT company's employees. Furthermore, a good marketing strategy will indicate to your business partners that you are willing to face challenges and do your best.
Reason 5: To evaluate the success of your business
You should revisit your business plan after some time has passed, maybe even on a follow-up event with your team. You can then determine whether you met your objectives by reviewing the strategic plan you worked so hard on. Examine the cash flow statement, think about the customer relationships established, and see your business from the customers' perspective.
Did you achieve your goals? Is your company doing well, or do you need to make some changes? Is there any noticeable progress? Your stakeholders and clients will undeniably want to know how your company is doing. Having a business plan makes it easier to present the results later by allowing you to compare specific periods and results of planned actions taken.
Reason 6: To prepare for the future
The process of creating the plan can help you map out your company's expected future, as proper research will help you grow. A well-researched business plan can help you focus on the most important strategies. When determining your goals, you should consider what might happen in the future and different possible outcomes.
While developing your business plan, research your competitors to learn about their goals and strategies; this will provide you with valuable market insights and allow you to plan accordingly. Find out what the recent trends are and what seems to be gaining popularity - and see if you could perhaps capitalise on that. If you can use the knowledge you get during the business plan writing process to better prepare for the future, it's terrific!
How to write a company business plan?
Traditional business plans include various details about the company plans - general marketing strategy, financial projections, information about the product or service you want to sell, and a company description. You should also declare the business model you plan to operate on and what is your target market. That seems like a lot of information, but instead of a detailed business plan, you can use a lean business plan, which provides the information in a simplified way.
You may wonder how long does it take to write an IT consultancy business plan - it could take one month or a whole year, depending on how complex your ideas are. How much does it cost to write a business plan, then? Professional writing service is expensive, so you may prefer to do it yourself - luckily there is an abundance of free business plan templates on the Internet for every business plan format, and you can use them as a blueprint to construct yours.
What are the different business plan types and which one should I make?
You can choose between a traditional business plan and a lean business plan; the main difference is the level of detail and information provided. Even though writing a lean one is quicker, it would be preferable to use a traditional type if you need a startup business plan. It may be tempting to save time, but unless you understand roughly how to build a lean plan, stick to the classics. Want to know how? Let's take a look at our step-by-step guide on how to write a business plan.
While you can use an online business plan template, let's first learn about the fundamental elements of a business plan so you can create your own in future. A typical business plan should include all of the eight core sections:
- Executive summary
- Company description
- Market analysis
- Product or service description
- Business structure
- Financial plan and analysis
- Sales and marketing strategy
- Operational strategy
A guide on the 8 essential sections your business plan NEEDS to have
Section 1: Executive summary
The executive summary is basically an introduction to your plan - so explain, why your business idea is important, and create what essentially is a persuasive sales pitch. Convey the mission statement and convince the reader that the product or service you offer is indeed something novel and interesting.
What is your vision for the business? Try to limit this part of the plan to 1-2 pages - state your main idea clearly and go forward. Whether you're a new business or an established IT company, assume the reader is unfamiliar with you and provide enough information in the executive summary for them to become acquainted with your business.
Section 2: Company description
In the company description section, you plainly describe your business, starting with providing its name. Include any details such as its background, physical address, who are the leaders and key members of the company, and what makes you different from the competition. Is it an S corporation, a limited liability company, or a sole proprietorship? What exactly is the product or service being offered, and by whom was it originally created? Who founded the business and why?
Section 3: Market analysis
Another aspect to include is the market analysis. Don't worry, it's not as difficult as it seems. In this section, you should assess your market's size, customer demographics, and purchasing patterns. You should also include information about your industry's competition and what keeps your company from losing to other businesses in the same market. Have you come up with some cutting-edge technology? Do you have your own proprietary distribution channels? Are you certain you'll have constant access to the resources you'll need? Provide the answers to those questions in the business plan.
Depending on whether you are a small startup or a bigger company, you might have to conduct a large-scale analysis for that - it is worth spending some time on it though, as this part of the plan can affect your future greatly. Include information about your future expansion strategy in your business plan as well!
Section 4: Product or service description
This part is one of the easiest to go through. Explain in detail, what are you selling. Prove its originality and viability - clarify, why it is your product that will gain popularity on the market. Your promotion strategy and future marketing plans should be described here as well, so the reader knows you have everything planned and ready to go. Remember to capture your reader's attention - present all of the unique features of your product or service, and persuade them that you're bigger and better than the competition.
Discuss the price in relation to the quality of what you offer - many buyers are not interested in a cheap product if it is of poor quality, so try not to focus too much on the low price. How long will the production process take? When and where will customers be able to purchase your product? To have a solid foundation, provide answers to all the questions that come up. A brainstorming session would be a great help.
Section 5: Business structure
Investors and potential business partners will most likely be interested in your business structure. Unless you are a one-person operation, your business structure will almost certainly have multiple levels, and they should be shown in your business plan. List the employees of the company, their positions, and their daily responsibilities. Introduce the management team and board members, giving a good understanding of who is in that group.
You do not need to include lengthy descriptions of each employee; however, remember to briefly explain why they are important to the company and what experience they have in the field they are employed in. You can also include an organisational chart in your business plan as a visual guide.
Section 6: Financial strategy
Money is one of the most important aspects of business, so don't forget to include a section on your financial strategy. This part of your business plan is where you paint a picture of your expected revenues and losses. Regardless of whether you are a small business just starting up or a large corporation making millions, inform the reader about your expected net profit, potential cost savings, and legal expenses. Provide an income statement or a balance sheet if you have them, as they can have a considerable impact on your financial plan.
If your company is new and you do not yet have the data required, be clear about it and inform about any potential financial risks; if you have been in business for a long time, demonstrate your financial stability. The chief financial officer of your business can certainly help you with collecting the required data. Make sure your financial analysis is as thorough as possible. If you have spreadsheets and balance sheets that describe your cost structure, feel free to incorporate these into your business plan. Income statements are a good addition as well. Bank loans, and angel investments are often funding sources for new businesses, and banks and investors will likely want to see your business plans to make sure they can return the loan. An investor in your company can feel confident and know that you have the ability to operate it successfully if you have a proper, adequately written plan.
Section 7: Sales and marketing strategy
Another section of your business plan is your sales and marketing strategy. Here you are supposed to describe your plans for future marketing campaigns, promotion plans for driving sales and your general selling proposal. Writing a brief explanation of how your marketing efforts will affect the target group and influence buyers to choose your product or service is a must.
How will you be getting leads and what is your budget for it? How do you intend to make the world know about what you're selling? After conducting thorough market research, you will most likely come up with new promotional campaign ideas. Be specific - break down the marketing steps that you want to take to conquest the market. Make sure that all your ideas are actually relatable to the product or service you are planning to sell, as not every type of marketing suits every product.
Section 8: Operational strategy
Every business must have an operational strategy in place to ensure that everything runs smoothly at all times. The key to this section of a business plan is to explain how you will operate and what steps you will take to ensure it. Here, you tell the reader how your products will be made (or how the service will be provided) and how you will maintain a certain standard.
Will you have to work with another company, such as a delivery service or a manufacturer? Do you plan to outsource part of the work? List all of the connections you'll need and explain how they'll facilitate the creation of your product. If you have to physically store your items somewhere, explain where and why. It's also a sound idea to include information about any possible risks and safety precautions you want to take to mitigate them.
Optional section: The appendix
After all core parts of your business plan are written down, you can think about adding an appendix. Its purpose is to provide any supporting information or documentation - those can be product tester testimonials, customer lists, information on intellectual property, licenses required for your business to operate and more. If you share confidential information in the appendix, make sure it is secure and inaccessible to unauthorised parties. Because an appendix is unlikely to be included in a business plan template found online, you must be creative here.
Also, keep in mind that the appendix is the last section of the business plan, so if it's multiple pages long and includes large blocks of text, the reader may skip it. Aim to keep your writing simple and easy to read.
The overall importance of an IT company business plan
Not only will it explain the complexities of your business to readers, but it will also serve as a guide for you to take the next steps on your path to success. This strategic tool can assist you in obtaining proper funding and hitting new financial milestones - potential investors will be pleased to see that you are achieving what you promised.
While conducting market research for the market analysis section of the business plan, you can also learn new things about your industry competitors. You might discover as you're describing your product for the business plan that there are some issues that need to be fixed or that the competition has an advantage that you need to be ready for. The business plan will assist you in establishing a focus on what still needs work and not stressing about things that have already been accomplished, thus helping you in achieving your goals.
No matter what type of industry or consumer your product is dedicated to, a good business plan can greatly assist you when climbing to the top. Whether it is a traditional business plan written from scratch by you or made using business plan templates from the Internet, it is an important part of establishing a great product or service, that will influence your business growth.
If you want to learn even more about IT business, you can read more about business plans on our blog.