10 steps to create a business plan for a new or growing project
Sep 29, 2024
I once read a quote that I liked, which says that "the whole world steps aside for the person who knows where they are going," and allow me to add that "reaching the destination is an ultimate goal that will not be achieved only by knowing your destination but by knowing the best way to reach it."
This discussion leads us to emphasize the importance of creating a robust business plan for any commercial step you aim for, whether seeking to own a commercial project, a private business, grow an existing project, or otherwise.
Without further ado in the introductions, in this article we will explain the basics of a project business plan, its types, and the steps required to create a project business plan model that we hope will be successful.
Let's quickly start by explaining the definition…
What is a Project Business Plan?
It is a strategic document that includes a comprehensive explanation and analysis of your project's goals, the challenges you may face, the opportunities available to you, in addition to financial and operational details. It is like a compass or a roadmap that guides you towards the success of your project, helps stakeholders understand the feasibility of the project and the possibility of its success, and is also used to convince investors that your project is worthy of investment.
The Importance of Creating a Business Plan for Any Project
The business plan has great importance, which is represented in:
Guiding Vision and Converting Ideas into Practical Steps
The business plan helps translate the general vision of the project into realistic and executable steps. It clarifies the path that must be followed to achieve the goals and gives entrepreneurs a clear vision of the current and future stages, which facilitates focus and prioritization.
Evaluating Feasibility and Reducing Risks
Through the business plan, the financial, technical, and marketing aspects of the project can be analyzed before the actual start, which allows evaluating the feasibility of the project and detecting potential obstacles early, thereby reducing the chances of failure and giving the project owner tools to make more conscious decisions.
Attracting Investors and Securing Funding
The business plan is an essential document presented to investors or funding agencies to obtain financing, such as business incubators. It explains how the funds will be used, the expected return, and the structure of revenues and expenses, which increases the confidence of funders in the seriousness of the project and the possibility of its success.
Defining Roles and Responsibilities within the Team
The business plan contributes to clarifying tasks and distributing responsibilities among team members in an organized manner. By defining who does what and when, overlap or duplication of roles is avoided, and harmony and operational efficiency within the project are enhanced.
Operational Guide for Project Management
It serves as the operational reference relied upon daily in project management, as it contains the procedures, policies, and executive steps that should be followed, which makes it easy for the team to refer to it when needed and provides clarity in execution, especially when expanding or hiring new employees, and also helps maintain the continuity of work with the same efficiency when some individuals are absent or roles change.
Measuring Performance and Developing Strategies
The business plan provides measurable criteria for evaluating the progress of project implementation. It allows for periodic review of goals and results, and helps adjust strategies and tactics when needed, ensuring staying on the right track and achieving sustainable success.
Certainly, the types of business plans vary according to their objective and the desired outcome, and there are several types, each designed to meet the needs and scopes of different projects.
Types of Project Business Plans
Project business plans include:
Startup Business Plan
This plan is the cornerstone of any new project, aiming to convert the project idea into a viable business model. It focuses on precisely analyzing the target market, identifying customer segments, studying competitors, in addition to building an effective pricing and promotion strategy.
It also includes setting clear strategies for funding and growth, such as determining the required capital amount, potential funding sources, and revenue and expense forecasts. This business plan is often used when launching a new project from scratch or for presenting the project to investors or supporting entities to obtain financing.
Operational or Internal Business Plan
This plan is used within the company to guide daily activities and ensure smooth workflow, and it is essential for existing projects, focusing on operational aspects such as:
Organizing production operations.
Supply chain management.
Logistics operations.
Production scheduling.
Human resources management.
It is also used as a reference for distributing roles and defining responsibilities among team members, which ensures minimizing overlap and increasing productivity.
Strategic Business Plan
This plan aims to define the general direction of the project over a long period (usually 3 to 5 years), and is used at the senior management level in making critical decisions related to the future of the project. It includes elements such as:
Vision and Mission.
SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).
Defining major goals (Profitability, Market Share, Innovation).
Setting growth and competition strategies.
Key Performance Indicators (KPIs).
When is it used? In the stage of project restructuring, or when setting a long-term development plan.
Growth or Expansion Business Plan
This plan is dedicated to existing projects seeking to expand, whether by opening new branches, adding products and services, or entering new markets. The plan details:
Analysis of new target markets.
Resources required for expansion (funding, personnel, technologies).
Risks associated with expansion and how to manage them.
This plan also clarifies the impact of expansion on current operations, and how they can be integrated or developed to suit the growth phase.
Contingency or Crisis Plan
This plan aims to prepare the project to face unexpected crises such as natural disasters, financial crises, supply chain disruptions, and sudden market fluctuations. It includes:
Potential crisis scenarios.
Alternative plans to ensure business continuity.
Defining those responsible for execution during the crisis.
Internal and external communication plans during emergencies.
Rapid recovery strategies.
When is it used? Within proactive planning, or upon noticing external threats that may affect the workflow.
All types of plans are generally similar in terms of execution steps, but here we will focus on the method for creating a business plan for a new or startup project, considering that this is the basis for any commercial idea and is the first strategic step that may be somewhat vague for many when performing it.
How to Create a Project Business Plan in 10 Steps
Creating a successful project business plan requires several essential steps:
First: Writing the Executive Summary
The executive summary is the most important part of the business plan because it provides a comprehensive and brief overview of the project, aiming to capture the attention of investors or funding entities. This summary usually includes:
Project Overview: What is the project and what is its goal?
Target Market: Who are the customers the project targets?
Products or Services: What does the company offer and how does it differentiate itself from competitors?
Financial Strategy: What is the required funding amount and how will it be invested?
Future Outlook: What is the future vision for the project?
The executive summary is usually written within one page, no more, but how?
In one paragraph, provide a quick overview of the project and its core goal.
Follow that with a description of the target market: Who are the potential customers? What are their needs?
Write another paragraph about what you will offer to customers and what added value they will receive?
In another paragraph, clarify how your project will face competition in the target market?
Clarify your financial strategy and the required funding amount and how you will use it to achieve the project goals.
Provide a clear vision for how the project will grow in the long term.
Second: Writing the Project Description (Vision, Mission, and Objectives)
This is a pivotal part of the business plan that clarifies the basic idea of the project and highlights the vision, mission, and objectives it seeks to achieve. This section clarifies why the project was established, what values it adheres to, and what ambitions it seeks to realize. Let's clarify how to formulate each element:
Vision: Represents the big picture of what the project aims to achieve in the distant future, reflecting the project's ambitions and what it hopes to become.
Mission: Reflects the core purpose of the project and what it offers to customers daily. The mission should be clear and direct, and explain how the project contributes to improving customers' lives or meeting their needs.
Objectives: Are the tangible results that the project seeks to achieve within a specified time frame. The objectives should be realistic and measurable, and can be divided into short-term and long-term goals.
Third: Market Analysis
This is an essential part of the business plan because it helps clarify the size of the target market, customer needs, competitor behavior, and available opportunities. A strong market analysis shows investors or partners that the project is based on a precise study and clearly targets a specific segment.
Market analysis typically includes:
Target Market Size: This clarifies the number of potential customers in the market and whether the market is large enough for the project's growth.
Target Customers: This defines who the target customers are and what their needs are, and how those needs can be met.
Competitive Analysis: This involves studying competitors in the market and identifying their strengths and weaknesses.
Market Trends: This focuses on identifying new trends in the market, such as changes in demand or consumer behavior.
Opportunities and Challenges: This aims to analyze the opportunities that can be exploited and the challenges the project may face.
One of the appropriate and simple analyses at this stage is the SWOT Analysis which clarifies (Strengths, Weaknesses, Opportunities, and Threats) to provide a comprehensive view of the internal and external environment of the project.
Fourth: Defining the Project Organizational Structure
This is a description of how roles and responsibilities are organized within the project, clarifying who is responsible for making key decisions, who leads each department, and how information flows between different levels in the company. Defining it from the start helps clarify the relationship between individuals within the project and ensures the existence of an effective system for managing operations.
This part includes:
Organizational Structure Description which clarifies the project's hierarchical structure, whether it is a centralized or decentralized structure, and defines the company's departments and their functions.
Roles and Responsibilities aiming to define every key role in the project and its responsibilities, such as the CEO, Marketing Manager, Operations Manager, etc.
Chain of Command: This aims to clarify how information flows from the higher level (senior management) to the lower level (employees).
Work Teams and Departments: Here, the project is divided into teams or departments (such as the Sales Department, Marketing Department, Shipping Department, etc.).
Experience and Competencies: This means defining the experience and competencies required for each role to ensure the project's success.
Fifth: Description of Products or Services
This explains in detail what products or services the project offers, and how these products are distinguished from competitors. The main goal of this part is to clarify the added value that the products or services provide, and how they meet the needs of the target market.
This part includes:
Detailed Description of Products or Services whether they are tangible products or services, written clearly and accurately.
Presentation of Features and Benefits that customers will receive when using your products or services.
Clarification of Added Value and how these products or services will add real value to customers compared to competitors.
Mention of the Development Stage in case there are products or services under development, clarifying the current stage and future plans for their development.
Presentation of Prices and Pricing Strategies and how prices are determined based on the market and competition.
Sixth: Clarifying the Marketing Plan
This part of the project business plan explains how products or services will be promoted and how target customers will be attracted. This plan should be based on market and competitor analysis, with clear strategies for promotion, distribution, and pricing defined. The main goal is often to achieve growth in the customer base and sustainably increase revenues.
The marketing plan includes the following elements:
Target Market Analysis meaning defining the target customer segment and understanding their needs and preferences.
Defining the Pricing Strategy and how products or services will be priced to achieve a balance between profit and attracting customers.
Setting the Promotion Strategy which clarifies the methods of promotion and the tools or channels used, such as advertisements, social media, or other means.
Setting the Distribution Strategy: How will products be distributed? Will it be online, through physical stores, or shipping to customers?
Setting the Brand Building Strategy and how to build a strong brand identity to distinguish it from competitors.
Setting the Customer Relationship Strategy and how to retain current customers and increase their loyalty to the project.
Seventh: Project Funding Request
The request for project funding is a non-essential part of the project plan, as you may need it if you consider targeting investors. It details the amount of money the project needs to start or expand its operations, and how this funding will be used to achieve the project's goals.
The funding request must be clear and convincing, explaining how this funding will help the project grow and achieve profitability. Its goal is to persuade investors or funding entities that the requested funds will be used effectively and will yield returns on investment.
The funding request includes the following points:
Precisely determining the required funding amount.
Explaining the uses of funding and how the money will be used in different aspects of the project such as marketing, production, technology, or hiring.
Clarifying the funding timeline, meaning when the project needs the funding? Are there expected payments or specific stages for disbursing the funds?
Presenting opportunities available to investors such as a share in the project, loans, or potential returns.
Stating future plans and how the funding will contribute to the growth and expansion of the project.
Eighth: Setting the Project Budget or Expected Operating Expenses
Setting the project budget is a crucial step in the business plan where a detailed estimate of expected operating expenses and the financial resources needed to successfully run the project is presented. The budget shows how the money is distributed and used in various aspects of the project, and clarifies the project's ability to generate revenue and manage expenses.
The project budget includes the following points:
Fixed Operating Expenses such as rent, salaries, and administrative costs.
Variable Expenses such as raw material costs, shipping, and marketing.
Capital Costs or investments in fixed assets such as equipment, technology, or infrastructure.
Setup Expenses such as initial costs incurred before starting operations, like website development or legal establishment costs.
Expected Revenues over a certain period based on expected sales volume.
Break-Even Analysis meaning clarifying when income is expected to equal expenses and the company starts making a profit.
Ninth: Risk Analysis
This is an essential step in the business plan where potential risks that the project may face are identified and their impact on the workflow is assessed. Risk analysis helps prepare for crises and take precautionary measures to mitigate the impact of these risks. It includes identifying internal and external risks that may affect the project, and developing plans to deal with them effectively.
The risk analysis process includes:
Identifying Potential Risks whether they are financial, operational, marketing, legal, or risks related to suppliers.
Assessing the Impact of Risks and the severity of each risk and its impact on the project (low, medium, or high).
Developing Risk Mitigation Strategies and reducing their impact on the project.
Developing a Crisis Management Plan and determining how to deal with them quickly and effectively in case they occur.
Tenth: Creating the Appendix
The appendix is the final part of the business plan and is used to include additional information and supporting documents that reinforce and clarify what was mentioned in the previous sections of the plan.
The goal of the appendix is to provide more detailed and accurate evidence and explanations to potential investors or partners who wish to review more detailed information about the project.
The appendix is considered useful when it includes:
Executive Team CVs and information about the team's backgrounds and professional experiences that prove their ability to manage the project.
Market Studies or Research and documentation of any data or research conducted on the target market or customers.
Legal Documents such as legal registration certificates, licenses, and contracts with suppliers or partners.
Detailed Financial Data such as financial projection tables or cash flow analyses that were discussed in the plan.
Photos or Samples of Products illustrative photos of the products or samples that will be sold.
Sources and References a list of any references or sources used in preparing the plan or studies.
Additional Tips on How to Prepare a Successful Project Business Plan
Be Clear and Concise and use a simple and clear style when writing the project business plan, avoiding complex language.
Focus on the Market and provide a detailed analysis of the target market and demonstrate a deep understanding of customer needs.
Highlight the Unique Value and clearly define what makes your project unique and why customers will choose your product or service.
Use Realistic Financial Forecasts and rely on data to support them.
Seek Others' Opinions and share your business plan with mentors, consultants, or potential investors for constructive feedback.
Update Your Plan Regularly with the latest market trends and project developments.
Future Trends to Consider When Creating a Project Plan
Sustainability, it is essential to integrate sustainability practices into the business plan, and clarify how your project will address environmental issues and contribute to sustainability.
Technological Developments, it is important to stay updated with the latest technological trends, and utilize that to explain how they can be used to enhance your project's efficiency and marketability.
Remote Work, with the increase in remote work, consider how your project can adapt to and benefit from this trend, and work on including strategies for managing remote teams and virtual collaboration tools.
Diversity and Inclusion, try to focus on creating a diverse and inclusive work environment, and clarify how your project will promote diversity and inclusion within the team and in business practices.
Continuous Innovation and encourage continuous innovation within the project to ensure progress and continuous improvement.
Conclusion
A well-designed project business plan is an essential tool for any merchant or entrepreneur seeking to turn their vision into reality. It not only serves as a roadmap for project development but also helps in securing funding, managing risks, and measuring performance.
Writing a project business plan may seem like a daunting task, but with careful planning and attention to detail, it can be a rewarding process that lays the foundation for your project's success. Start today, and take the first step towards achieving your entrepreneurial dreams.
Finally, we emphasize the need to pay attention to legal and regulatory considerations and that the plan should include a section on legal and regulatory compliance, defining the licenses, permits, and regulations your project needs to adhere to. Also, define the types of contracts your project will need, including agreements with suppliers, customers, employees, and others.
Lastly, we hope that by following the steps and tips outlined in this guide, you will be able to create a project plan that largely ensures its success.
Mohamed Alkady