When you are serious about starting a business, the first thing you need to do is write a business plan. Business plans serve several key functions that make them essential for a successful start-up of a new business. Not only do they serve as a roadmap to guide you through the early days of your business, but they also serve as an opportunity to research market conditions, competitors, and potential pitfalls that you may not be aware of. .
Business plans are both an analytical and planning tool, two essential elements in starting a new business. This guide provides you with key information on how to create a high quality business plan that will serve your business today and in the future.
What is a business plan?
As with most ideas, the best way to execute them is to have a plan. A good startup idea is not enough; it must be reinforced by an action plan. [Interested in investing in business plan software or services for your small business idea? Check out our best picks and product reviews.]
A business plan is a written plan that you present to others, such as investors, who you want to recruit into your business. It’s your pitch to these people, telling them about your idea for a startup and how you hope to make money from it.
Why do i need a business plan?
Starting a new business comes with headaches. Being prepared for these headaches – and trying to stay ahead of them – can dramatically reduce the impact they could have on your business. An important step in preparing for the challenges your startup may face is writing a solid business plan.
Writing a business plan helps you understand more clearly what you need to do to achieve your goals. The completed business plan also serves as a reminder for you of these goals. It’s a valuable tool you can refer to, helping you stay focused and on track.
How to present my business plan?
Your business plan can be written as a document or designed as a slide show, such as a PowerPoint presentation. It may be beneficial to create both versions. For example, PowerPoint can be used to attract people and the version of the document that has more detail can be provided to them as a follow-up.
What should a basic business plan contain?
For a startup idea, according to Tim Berry, an angel investor and founder of Palo Alto Software, who wrote on Quora.com, “… the bones of it should include just a few pages to list key strategic points, key tactics, important milestones, essential metrics, tasks and projections, including sales, expenses and cash flow. “
How detailed should my business plan be?
It depends on the nature of your idea and its complexity or simplicity. If you’re writing a plan for a startup, it can be 10 pages or less, according to Berry. To attract investors, another version of this business plan can be developed later, containing more details, such as graphics, specifically aimed at potential investors.
How do I start my business plan without money?
You can use Google Docs and Google Slides (both apps are free). The apps come with templates that you can use to quickly create a business plan.
Microsoft offers online versions of Word and PowerPoint that are also free, and both apps have several business plan templates for you to choose from.
Which part of my business plan should I create first?
The technical details and standard information that goes into a business plan are fairly easy to understand. But there are other things, more abstract, to consider before taking the pen.
Make sure you take the following five steps before writing your business plan.
1. Determine your goal.
Having a plan for making a profit is important, but it’s not the only thing that matters when starting a business.
“Business plans… encourage entrepreneurs to focus on what they’re going to do,” said Alan Williams, co-author of The 31 Practices (LID Publishing Inc., 2014). “This overlooks two other important questions: ‘why’ – why is it and why employees would want to get up in the morning, and ‘how’ – the values of the company, what it stands for and how people representing the business will behave.
Williams advised entrepreneurs to take the time to identify and articulate their company’s core values and purpose – both will serve as a compass for your organization for decision making at all levels. Williams co-author Alison Whybrow said this “compass” can be discovered by having an honest and open conversation with your team.
“One thing a team may want to do is engage in a formal assessment process – examining habits, beliefs, values, and abilities – so that they work from a starting point. clear and have a framework for discussing individual and group work styles, strengths, and blind spots, ”said Whybrow.
2. Build your vision.
The key to business success is having a clear vision of what you want to accomplish as a business, experts say. But before you write a business plan, you need to come up with three to five key strategies that will help you achieve that vision, advised Evan Singer, CEO of SmartBiz, an SBA loan provider.
“Sometimes less is more,” Singer said. “It’s much better to do three things very well versus 10 things not so good.”
An additional and imperative aspect of your business plan is the mission statement, which is the “why” you do what you do.
“The first sentence of the mission statement should be what you are in business for,” said Tina Bacon-DeFrece, president of Big Frog Franchise. “Once you fully understand the why, you need to define ‘what’ you are going to do and ‘how’ you are going to do it. The third and final part of the mission statement should be ‘who’ you want. as customers and how you are going to treat them. ”
Once you’ve completed the mission statement, said Bacon-DeFrece, it’s an easy transition to develop your value proposition statement that defines what makes you unique in the marketplace and how you plan to differentiate and position yourself. your business.
3. Clarify your business model.
Alex Muller, senior vice president and product manager of GPShopper at Synchrony, said that a good financial model includes many details that you put into your formal business plan – for example, hiring, pricing, sales, acquisition cost, expenses and growth. Like a business plan, your model should be reviewed and updated as the realities of your business change.
“Start [answering] what if, ”Muller said. “If I sell this product at that price and it’s the cost of acquiring the customer, what return rates can I get? »When you have finished building [and testing] the business model, then you can go back [and] write a business plan. “
4. Identify your target market.
Identifying a target market can be a tricky hurdle. To narrow your market, Grant Leboff, CEO of Sticky Marketing Club, advised answering the question, “Why am I uniquely positioned to solve the problem?” ”
“If you can’t answer the question, you’ve either got the wrong target market or the wrong offer,” Leboff wrote in a blog post. “More work will need to be done before you start targeting your potential customers. ”
If what you’re offering isn’t the most appealing to the type of customer you want, you may need to tweak your offering or define your target market differently, Leboff added.
5. Test your business idea.
Entrepreneurs should speak with industry experts, potential clients in their target market and other entrepreneurs to determine the viability of their business, said Kara Bubb, senior consultant at Kara Bubb Product Consulting.
“Talk to real future potential customers [and experts], and ask for honest feedback, “Bubb said.” What do they think about your business idea? Who exactly are you targeting? Is the market big? Will your market buy what you sell? Who is your competitor?
Simply writing a business plan won’t make your business successful, but it does give you a roadmap to getting there. The foresight put in the plan identifies the milestones by which you can mark your progress.