Step #1: Understand What You’re Trying to Accomplish
Before even writing the first word of your business plan, take a step back and make sure you’re clear on the purpose of this document. Understanding the roles and benefits of a business plan will give you a sense of direction and allow you to tailor everything to your own unique needs.
What exactly is a business plan and what can it do for you? Well, as explained by Bplans, a business plan can take any shape or size: “If you’ve ever jotted down a business idea on a napkin with a few tasks you need to accomplish, you’ve written a business plan — or at least the very basic components of one.”
While most entrepreneurs will probably want something more formal than an inked up napkin, the point is that a business plan is simply a plan for how your business is going to work and how you will make it succeed. This can be as simple as a few bullet points outlining your strategy, tactics, milestones, and responsibilities, or can take the form of a more traditional, in-depth plan.
Today, it’s no longer expected that business plans be 30- and 40-pages long. You can make a judgement on what your plan should look like based on your own personal goals.
Constantly keeping an up-to-date business plan for your company has numerous benefits. Namely, it is an effective tool for communication; a way for you to easily show others how your business is doing and where it is going. This is useful for securing funding and setting your business apart from competitors.
A business plan isn’t just for other people — it can benefit you by helping you stay on top of your finances, setting priorities, tracking progress, and gaining further understanding of your business strategies and goals.
While business plans are usually associated with the beginning stages of starting a business, it’s actually recommended that you always have an updated business plan on hand.
Step #2: Follow the Steps
Now that you know what you’re trying to accomplish with your business plan, you’re ready to start writing. It helps to break the process up into small steps that can be done at your own pace.
Pick a Format for Your Plan
As you decide on the content for your plan, always keep in mind your target audience and goals. Most business plans follow one of two common formats: traditional business plan or lean startup plan.
Traditional plans are more common, following a standard, detailed structure, and normally totaling dozens of pages. These are the plans commonly requested by lenders and investors.
Lean Startup Plans, on the other hand, keep things short and sweet. Both plans ultimately contain similar information, but very different formats.
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Know the Nine Sections
A business plan will normally include some combination of the following nine sections. It is up to you how much detail you go into for each, but at the very least, make sure you cover all nine sections.
The first page of your business plan, an executive summary, outlines your mission statement — the main focus of your business — in addition to a description of the products and services your company offers, a summary of your plans, and basic information like ownership structure. If you’re planning to ask for financing, you should also include financial information and growth plans.
This is the section where you should go in-depth about your company and what exactly it does. Here you should include important information like your business’s registered name, address of any physical locations, names of important people in the business, and history of the company.
Moreover, this is a place to sell your business. What competitive advantages does your company have? What demand is your company meeting? Who will your customers be?
You need to show you understand your industry and target market. Provide detailed research identifying trends and themes as to prove you know what customers want and why.
Business and Management Structure
In this section, explain how your company is structured and who is in charge. It should also detail ownership and involvement. Also, this section is important for listing your business’s legal structure, such as sole proprietorship, corporation, or partnership.
Products and Services
Detail the products and services you offer or plan to offer. You’ll need to give information on how the product works, pricing models, typical customers, sales and distribution strategies, competitive advantage, and your plans for filling orders. Legal details like intellectual property, copyright, or patent filings should also be covered in this section.
Marketing and Sales Plan
Tailored to the specific needs of your company, devise a marketing and sales plan explaining how you will attract and retain customers.
If your intention is to gain funding with this business plan, this is your time to pop the question. In this section, outline your funding requirements — how much money you’ll need for the next few years and exactly for what purpose it will be used. Specify whether you want debt or equity, the length of time your request will cover, and the terms you’d like applied.
Back up your funding request with some information about your business’s current financial situation. For already established businesses, include: income statement, cash flow statements, and balance sheets for the past three to five years. Also, note any other collateral you could put against a loan.
Additionally, include a financial outlook for the next five years, using forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets.
Here you can provide documents or specially requested materials to support your business plan (e.g. resumes, product pictures, letters of reference, licenses, permits, legal documents, etc.).
Check and Check Again
After all that work, the last thing you want is for your plan to contain a silly spelling or grammatical error. Though it seems silly, a small mistake like that could be off-putting for potential investors who want to know you are thorough and have good attention-to-detail. Also, make sure your writing is consistent throughout — try to keep everything as succinct as possible.
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Step #3: Know Your Resources
If you are at any point overwhelmed or stumped by the process, know that there are numerous resources out there that can help you write a show-stopping business plan. The Small Business Association, for example, has detailed information on writing a business plan as well as several templates you can use as reference material.
If you’re stuck or want in-person advice, you can also make a free business counseling appointment online with an SBA expert. Alternatively, SBA partner, SCORE, has its own independent business planning resources online. The key offering is a step-by-step business template that entrepreneurs can use to lay the groundwork for their own companies. Once you’ve completed the questions and worksheets, you’ll have a full business plan which you can run by one of SCORE’s mentors by making an appointment online.
There are programs you can use that will ask a set of questions and then automatically generate a business plan, such as How to Start an LLC’s Free Business Plan Generator and LivePlan. If you’re simply looking for a supply of templates, websites like Bplans are a great place to turn.