Creating your business plan is an opportunity to reflect on your goals and on how you will implement the right strategies to grow your business. Whether you need a document to convince potential investors or want a roadmap to stay on the right track while you launch your business, here is how you can put together a solid business plan.
Keep These Three Rules In Mind
These are the golden rules of business plan writing. Keep them in mind as you start working on your business plan.
Keep Your Plan Short And Straight To The Point
If you look at a business plan sample, you will probably find a document that is between 15 and 20 pages. Going over 20 pages means potential investors and partners will skim through your plan.
Think of your business plan as a resume for your business. You need to highlight your strengths, goals, and strategies without going into details. Keeping your plan short will help you go over it quickly when you need a reference for making a decision or setting a new goal.
You can create a shorter version of your plan so you have a summary to show to potential partners and investors. If you plan on applying for a business loan, think about turning your plan into a short electronic presentation.
There is No Need to be Technical
You are an expert in your field and are comfortable with technical jargon. Getting technical in your business plan isn’t an issue if you want to use the document to find a partner who also specializes in your industry.
However, being overly technical will make your plan difficult to follow for a banker or an investor. Focus on explaining how your products or services solve problems rather than getting into details on how your products work.
Address Goals, Strategies, And Potential Problems
Business plan writing is about outlining what your business goals are, how you will achieve them, and how you will address potential issues. Your plan shouldn’t discuss daily operations in details.
Think about the questions people will have about your project and do your best to answer these questions in your plan. If you are creating a business plan to apply for a business loan, your banker will want to know how you will generate enough revenues to make your loan payments on time.
Update your business plan regularly. You should document changes in how you run your business or add information if you plan on targeting a new market.
Creating Your Business Plan
This business plan outline will help you get started. Keep in mind that you might have to make a few modifications since how to write a business plan depends on the industry you are in and on where you are in your business lifecycle.
First Section: Define Your Business
Before you think about business plan writing, take the time to define your project. You need to have a solid grasp of what you want to accomplish with your business before you can write this section.
If you are not sure where to start, do a SWOT analysis of your business. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This exercise is a helpful planning tool that will help you get a better idea of where you stand.
This section of your business plan should explain why your business is going to succeed. List your long-term and short-term goals. You could detail what you hope to achieve over the next year and explain what you would consider as a success for your business.
This is your chance to show you are an expert in your field. Do plenty of research for this section if you only have limited experience.
You should talk about your industry in general, including what it offers to consumers and what kind of demand and expectations it meets. Talk about the size of the market and the future you see for your industry.
Your mission statement should be a short description of what your business is about. Talk about your values, where you are headed, and how you define your brand.
This is where you should present your product or your service. Start by explaining which needs the product or service addresses, and go into details to talk about the product lifecycle or how you will file patents to protect intellectual property.
Your Value Proposition
This is a crucial element of your business plan. Your value proposition or Unique Selling Proposition should tell people why your business will stand out from the competition. Talk about your business’ advantages and how you will leverage these advantages for growth.
Design And Development Plan
Detail how you will make your product or deliver your service. Go into details about the facilities you will use, how you will develop your product, and how much production will cost.
Your design and development plan should also talk about risks and how you will manage them.
Operations And Management Plan
This section should discuss how your business is structured. An organizational chart could be a good way to quickly explain how you will run your business. You should also add some information about the legal structure of your business.
This is a mandatory section. If there are existing partnerships with suppliers and distributors, mention them and explain how you will maintain these partnerships.
If you haven’t secured any partnerships yet, you can either skip this section or talk about the strategies you will use to find the right partners.
Second Section: Your Market
This section will require some research regarding the demand that exists for your products or services. Your goal is to give your audience an accurate idea of the size of your market and explain how you will reach out to customers.
List the strategies you will use to reach out to new customers and explain how you will retain customers. Explain what you consider as a successful relationship with your customers.
Define how you will interact with your audience. If you plan on using a website, don’t hesitate to share more information about this channel. Talk about how you will develop your website, update it, and which goals you hope to achieve with this channel.
Presenting a well-researched profile for your typical customer is the best way to help people understand who your customers are. You don’t have to limit yourself to a single persona if you have an audience that fits different profiles.
Talk about the pain points your customers want to be addressed, list their expectations, and explain how your business will meet these expectations.
Look at the strengths and weaknesses of your competitors. Explain why customers will choose your business and which strategies you will implement to win market shares.
Be realistic with your competitive analysis. You won’t be able to steal market shares from well-established competitors with more affordable products. Explain which strategies you will use to target a different market or to convince a reasonable percentage of customers to try your products.
There is no need to write a thorough analysis of your industry, but you should list the main trends that are shaping your field at the moment. This section should explain how your industry is changing and how your business will stay relevant.
Third Section: Your Finances
If you are writing a business plan for an existing business, this section will mostly be about showing financial statements and explaining what your plans are for future revenue streams. If you are creating a plan for a new business, this section will mostly be projections.
Identify the different revenue streams of your business. Talk about plans to add revenue streams in the future if relevant.
Income And Cash Flow Statements
Add these financial documents to your business plan if you have an existing business. If you are writing a business plan for a business you haven’t launched yet, you should include some projections.
Your balance sheet should include all your current expenses. If you are writing a plan for a new business, you will need to assess what your expenses will be.
The purpose of this section is to calculate how much money you need to make to break even and to show how your business can generate this revenue.
Be conservative with your projections and don’t hesitate to include a financial analysis for different scenarios.
Be specific about how much capital you need for your project and how the funds will be used. You should add some details regarding the financing terms you would agree to.
Fourth Section: Appendix
There are a few documents you might need to add to your business plan. Here are a few examples:
- A resume or another document with more information about yourself and your background.
- Some studies on your industry, competitors, or market.
- Documents with technical specifications for your products.
- Letters of references.
- Legal documents such as licenses, contracts, insurance policies, etc.
- Bank statements and tax documents for an existing business.
- Any additional proof that would support the strengths you identified throughout your business plan.
Creating a business plan requires you to answer a lot of questions about your business and your goals. Look at a sample business plan to get a better idea of how to word your different sections and present your project. You will find useful resources on the Small Business Administration website but you can also get help by joining a local professional association for small business owners or meeting with a small business consultant.