What should your business plan contain?
Creating a business plan is a key part of starting any business venture. While you will never use it in this format to attract investors and raise capital, it can be vital in helping all entrepreneurs ask and think through essential questions.
Nowadays, business plans are used as an internal roadmap for running the business as pitch decks have taken over when it comes to collecting the necessary materials. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend Peter Thiel (see here) that I recently covered. Thiel was the first angel investor on Facebook with a check for $ 500,000 that turned into over $ 1 billion in cash. Additionally, I also commented on a pitch deck from an Uber competitor who raised over $ 400 million (see here).
Don’t skip this part of the process. However, don’t let that become a distraction and stop you from starting a real business, either.
For key information on why, when, and how to create a business plan and emerging alternatives for startups versus small businesses, check out my Forbes article on How to create a business plan.
There are many variations of business plans today. Above all, with the rapid growth of lean startups. A few minutes on Google will provide you with plenty of free business plan template options. The following is adapted from SCORE Association Recommended overview of categories, which covers most of the basics for exactly what to include in your business plan.
It is the most critical part of your business planning. If you never come up with a comprehensive business plan, make sure you create a fantastic executive summary. This pulls together all of the key pieces of your plan and will often be the deciding document that decides whether commercial lenders or investors will benefit from seeing the rest of your documentation or continuing a relationship with you. For additional tips, you can also check out the summary template I recently covered on Forbes.
This section now provides a more detailed overview of your business.
- The purpose, mission and vision of the company
- Information on starting a business
- Who are the founders
- Location and geographic markets served or where you are present
- Current status and stage of activity
- All notable achievements to date
List the products and services for which your business has been formed. How do you solve the main problem and serve the community with your business?
- Definition of the basic product or service
- Stage of development
- Screenshots or diagrams
- Current pricing
- Past test results
- The future products and services that you hope to develop and deploy
This is another section that is an absolute must, even if you never develop a full-fledged business plan in its entirety. This contains key information that all financiers and potential investors will want to know. Even if you hope to get by using a pitch deck to raise the capital you need.
It is also an essential guide for yourself as a founder and for your growing team on what needs to be done and how.
Every minute invested in this section can pay big dividends in the long run.
- Competition and market research
- SWOT Analysis (Strengths, Weaknesses, Opportunities & Threats)
- Target market research (total market size and total addressable market (TAM))
- Brand and product positioning
- Elevator locations and slogans
- Target customer personas and profiles
- Results of all tests carried out so far
- Marketing channels to use
- Marketing budget
- Cost per action (CPA) estimates
For more information on this section, you can see the article on Forbes titled How to Create a Marketing Plan.
This is your opportunity to organize and demonstrate your understanding of this industry and this business.
- Facilities and space required
- Technological needs
- Equipment requirements
- Supply chain management
- Logistics and distribution plans
- Order and fulfillment process
- Quality checks
- Legal and accounting needs
Management & Organization
This section of your business plan will help you identify your own needs and demonstrate to investors and other licensing bodies and agencies that you are the team to do the job.
It basically shows your management and industry experience and who will do what.
- Founders and management team
- Any owner and shareholder
- Board of directors
- Consultants and special advisers
- Key team members and department heads
Provide an honest overview of where you are and where you reasonably hope to go, provided you get the financing you need.
- Current balance
- Financial data for the last 2 years, if applicable
- Financial projections over 12 months and annually up to year 5
- Profitability Analysis
- Cash flow projections
- Income and expenses
In this section, you can also include start-up costs and funding requirements, or funding and loan applications.
Start-up costs should be comprehensive, have an additional cushion built in, and focus on physical product or IP development and growth. Not what you want to pay yourself as a salary.
If you are fundraising, be sure to include a repayment schedule for all loans, the use of funds, the fundraising rounds tracking trail, and the milestones you plan to achieve by then. .
Include all other information, references and documents required here.
This will typically include:
- Statutes and statutes
- CVs of founders and key team members
- Insurance copies
- Trademarks and patent filings
- More in-depth research data or links to references
Much like your first attempt to code a website, practice your pitch, or ride a bike, it won’t be perfect. Do your best. Get outside expert advice. Don’t wait to think that your business plan is perfect and cannot go further. Otherwise, there’s a good chance you’ve missed your window of opportunity by far.
It is also crucial to understand that nothing in this document is set in stone. Almost everything is going to change absolutely over time. Roles will change, marketing will change, financial projections will change, and your menu of products and services may change.
After raising funds for startups, leaving them and interviewing many of the most successful founders and angel investors on the DealMakers Podcast, I have to experience both the struggles and the victories in the life of a startup. Things change quickly overnight and for this reason you need to adapt quickly to the market and change whatever is necessary.
It’s a great guide and exercise. It is a gateway to take the next step. Do it, start taking action, and stay flexible.
Creating a business plan remains a valuable part of starting any new business venture. The formats and models of business plans may have evolved and new documents like pitch decks are becoming even more important.
Although bypassing this process, many entrepreneurs will find that they have huge gaps in their ideas and may fail when it comes to answering questions from serious investors. Using this template, you will cover most of the bases and be able to move on to the next steps with confidence.