One of the most daunting tasks for most small business owners is creating a business plan. Sitting down, staring at a blank page or computer screen is never easy, and even less so when you are creating a document that will govern, to some degree, the path of your business for the next few years. However, there are a few things that can make the process a little easier:
- Unless you are using your business plan to apply for finance, it's more of a personal road map.
o This is to ensure that you know at least somewhat where you are going, and have a clue as to the way to get there
- Even if you are submitting your business plan for funding consideration, it does not have to be complex or confusing.
o In fact, the simpler you can make your vision seem (and back it up) the more effective your business plan is likely to be
- Understand that your business plan is NOT intended to be written in stone — it's a working, living document that you alter as the dynamics of your business changes.
Now that we've clarified those business plan fundamentals, let's get into the nitty gritty of how to actually write one.
Spend Some Time Brainstorming
Before you even put pen to paper on your business plan, it's a good idea to sit down and make notes. Write down anything that occurs to you which may apply to your business. Don't restrict yourself to the sections or template of a standard business plan; just allow your ideas to flow onto the paper. This will form the underlying basis of your final document, and will help you solidify the content to include in your plan from a holistic perspective. Once you've gathered all your thoughts on paper, you're ready to start writing the plan.
1. Executive Summary
The executive summary of your business plan is pretty much exactly what it says — it's a summary of the information contained in the rest of the document. Although it is short (around two pages), it's the most important part of your business plan, and should be written last — after you have covered all the other sections of your plan. The reason for this is that potential funders and investors, who are extremely busy and have limited bandwidth, will NOT read your entire plan. To be honest, they will probably read just this part of your business plan to figure out whether to schedule a first meeting with you or not. Therefore, your executive summary needs to be a knockout!
2. Business Overview
In the business overview section of your business plan, you will cover the idea behind your business and the legal formation it become. For instance, you might be starting an online business that sells pet products. This is the section where you will cover that, as well as outlining what legal form the business will take, were they company is based, etc.
Anyone who is seriously considering investing in, or funding your business, will want to know who is behind the idea. They'll essentially be asking themselves "who will be steering the business from business plan to market success?" In this section of your business plan, outline who the key players in the business are going to be (along with their resumes), as well as detailing the management structure of the business. Use this section of your plan to assure investors that you and your team are the best people for the job, but don't lie! If you're lacking in a particular area, for instance, accounting, indicate how you plan to address the issue — for instance, by outsourcing the function. Remember — no one is good at everything!
4. Your Market
Anyone who is considering investing in your business will want to know that there is, in fact, a market for your product/service. Even if you are self funding, you need to know who your target consumer will be! That means examining both the potential demographic your business is aiming for as well as the overall industry landscape. Market research will also help you to avoid costly mistakes. For example, if you are planning to open a fast food restaurant, but the area you have chosen already has five, there's a good chance you need to rethink your strategy, right?
5. Sales and Marketing Strategy
Once you have covered WHO you are going to sell to, you need to be clear about HOW you plan to do it.
- Are you advertising to the general public, or to business?
- Will you leverage only traditional advertising methods, or will you incorporate technology?
- Will you have a sales force?
- What will your USP be, and what will set you apart from your competitors?
All of this information will help you to gain a foothold in the market while you are starting out. If you continue to build on the above, it will be a very worthwhile step toward ensuring the success of your business over an extended period of time.
6. Financial Statements and Projections
Easily the scariest part of preparing a business plan (for most entrepreneurs) is constructing the financial statements and projections. However, there are plenty of free online resources that can help you. There are an abundance of templates that will provide a framework for creating a clear financial picture of where you are right now, what you need to get started, and what your sales and profits will be in the short-term. Alternatively, you could hire an accountant to compile your information into a financial plan. Based on my experience, in the early start-up days, it's always best to be engaged in every aspect of the business — there's nothing worse than trying to present a business plan to investors and not understanding the numbers.
7. SWOT Analysis
Yet another aspect of the business plan that scares many entrepreneurs is the SWOT analysis. This acronym simply means an analysis of your business in terms of:
Spend some time with a sheet of paper for each of the above, and list your ideas. Then simply transfer them to your business plan, and expound upon them with detailed explanations as to how you're either going to mitigate or capitalize on each of them.
8. Supporting Documentation
This is the section of your business plan where you can supply any other documentation that is relevant to your company or which your readers may find interesting. Maybe you are applying for growth funding, and your company or product has won an award — include a copy. Or maybe you operate in a highly specialized environment that requires certification — include yours here. This section can have a substantial impact on how your business plan is received from a risk mitigation perspective.
Take Your Time, and Treat Your Business Plan as a Learning Tool
As you can probably now see, the concept behind your business plan is not that difficult or complicated.
Yes, building a business plan can be a process that takes some time, but it is an exercise that will help you to gain a clearer picture of your company. Furthermore, a great plan will help you to convince potential investors and funders that you are worth the risk.
Think of your business plan as your sales pitch for your business on paper — invest time in making it great.
As a successful, under-30 serial entrepreneur, Gary Whitehill's game-changing endeavors have been featured on television and in magazines and newspapers across the nation. Read more about Gary here.