Starting a business is like going into battle. The unexpected is guaranteed. Sure, your plan will likely require adaptation. But don’t think that doesn’t mean you don’t need a plan going in. A good business plan is going to be your guiding light when you’re mired in the fog of your first year and not sure which way is up. A business major learns this inside and out, but it doesn’t mean you can’t learn it also. In fact we’ve always found it annoying that there isn’t better information out there on business plans for people who didn’t go the college route.
So, this is a guide to writing a business plan for people without business degrees:
Some business plans are more involved than others, but all contain the following basic sections. Take your time on each one. Start by jotting down notes. Even a few sentences for each is a good place to start. You won’t finish this in one sitting. It’s a living document. You will continue to update and change your business plan as your own goals change.
*Helpful Hint: Write your business plan from the perspective of the problems your business will be solving, not from your own perspective.
A business plan serves two purposes. The first is to entice investors or bank loans. This is what people typically think of when they think of a business plan, but for most small businesses, it’s also probably the least important. While a compelling business plan is absolutely necessary to have if you are to apply for a loan or other financing, it’s also not going to get you a loan unless you also have a great credit score and secured collateral. That’s important to know from the get go.
The most important purpose that a business plan serves for most small businesses is to help you, the business owner, clarify and organize all of your plans.
Much of the information needed for your business plan is probably already floating around in your head, but it your plan is going to help you organize those thoughts. Your business plan will force you to reckon with difficult subjects that you may have been avoiding dealing with until now. Think of this as an expanded version of the old advice to write down your goals. Think about them. Write them convincingly. Convince yourself.
Writing a business plan can help you understand your own business better. It can help you identify weak points in your strategy. Many of us started our first business without going through this crucial step and have lived to regret it.
An executive summary takes all of the most important information in your business plan and puts it right up top. Write it at the beginning of the process, and then go back and write it again at the end. If you’ve done things right, there’s a good chance your ideas about it will change.
The executive summary will be the most read portion of your business plan. A good one can entice an investor to read on, and a bad one get get your business set aside.
The Executive Summary should contain the following sections:
That’s your executive summary! If it seems like a lot, that’s because it is. But don’t worry about getting it all perfect the first time. This has hopefully got your gears turning for the next sections. And remember, you’ll come back to the executive summary when you’re done and refine it.
In detail, describe exactly what your company does and why it will succeed in the market.
Describe your company strengths. What separates your company from the pack? What is it about your company that will help it succeed? Describe your business’ short and long term goals.
Market analysis is the collection and analysis of data regarding your company’s:
This is a hard section for most small businesses to complete. You’re probably not a marketing expert. Collecting demographic data probably sounds horrifying. Just take your time with it. Regardless of what type of business you are starting, it is actually very important that you begin to build an understanding of the market you will be operating in. Here are a few sites you can use for research:
US Census Bureau
How much will you be charging for your product or service? If you carry many products, list the prices for each. If you’re providing a service, what is the fee schedule for those services? How did you arrive at those prices? How do they compare to your competition? Don’t make the mistake of simply matching your competition’s prices. Look at your total costs for completing a project or product, and then set your price at a certain marginal rate about those total costs.
Marketing attracts potential customers and sales turns them into clients. You need to have a plan for both. How this plan works will vary wildly based on what type of company you are. Are you providing a service or a product?
Sales techniques include:
The key here is to make a cohesive connection between marketing and sales. How are you going to reach customers and how are you going to close? Selling stuff online? Then you should probably have a pay-per-click budget, or be really good at search engine optimization. Are you a contractor who works by word of mouth? When you’re bidding on a project and meeting with the client, how are you asking for the sale? Are you asking for referrals?
A business plan is necessary to apply for a loan, but remember that the following factors are going to be more important to a bank:
*Skip this section if you do not anticipate requiring a loan or seed money for your business.
The information provided in a funding request section is going to need to be tailored to the type of institution you’ll be submitting it to.
Exclude this section if using the funding request is already part of the larger plan. But if you are presenting this section separately to a lender, include it. Briefly explain the company’s function, location, what is sold or what services are offered.
Be specific. How much money will you want to borrow and for how long.
Detail exactly what this money will go to? Appreciating or depreciating assets? Will you be hiring employees, buying real estate, or purchasing equipment.
Explain how you plan to pay your loans back. If seeking a loan, what is the length of the loan you seek. If seeking investors, what rate of return will you offer? What liquidity events will you make available for investors.
That’s it! That’s your business plan. It doesn’t stop here, though. It goes on. Goes on forever. It never really stops.