A business plan is a written document that describes your business’s objectives, strategies, sales, marketing, and financial forecasts. A business plan helps you: clarify your business idea, spot potential problems (and find potential solutions), set out your goals and measure your progress.
Why It’s Important For A Startup
While some first-time entrepreneurs might ask the question of why they need a business plan, the rest of the business world might counter with ‘How could you not have a business plan?’ For starters, having a well-thought out, well-written plan legitimises your business to any outside influence you seek to capture, partner with, or get advice from, including investors, partners, advisors, mentors, loan officers etc.
Internally, a business plan maps where your business is going, creating a path for you to follow that will detail milestones that range from the appropriation of funds to securing legal documents to hiring staff members. Perhaps most importantly, a business plan defines your business; what it is, what it does, and who buys its products.
How To Take Action?
Writing a business plan can be done from scratch, by using templates, or by hiring a professional to do the work for you. Writing from scratch can be a painstaking process as it relies on you knowing a lot about several different areas of business which might not be feasible depending on what your background is. Business plans can take weeks or months to prepare because of the research involved.
Using a pre-made template can save you some time in terms of formulating different areas of your plan, but it comes with the caveat that business is truly one area where one size does not fit all. If your business is starting a freelance digital photography business, then templates about manufacturing and renting a brick-and-mortar office space are going to be useless.
There are seven key components that every business plan should undertake, according to Entrepreneur.com. Take some time to think these over before committing them to paper (or word processor).
1. Executive Summary – The summary is directed at the person reading your business plan. Here you tell them very clearly what you are desiring, whether it’s investors, market coverage, or finding a partnership.
2. Business Description – This page should describe the industry your business is in and what the economics of it look like presently and in the future. Here you can briefly discuss new products or technology that can benefit or harm your business.
3. Market Strategies – To succeed in business you have to know what you’re up against, and in this instance that means knowing the ins and outs of the market you call home. What defines your target audience? How old are they? Where do they live? How much money do they make a year? How do they like to be advertised to?
4. Competitive Analysis – No matter how clever an idea you come up with, there’s either someone already doing it, or there will be once you start making money! This isn’t just looking online to see what companies are in the same industry in 10-mile radius of yours; it means learning what they sell, how much they charge for their products, how they advertise, what their websites look like, etc.
5. Design/Development – Give the nitty-gritty details about your product. What does it look like? What is it made of? How much do the parts cost? If you’re providing a service, the questions change to who performs the service? Where? How long does it take? What equipment do you need for it? The development refers to how you will grow your company in order to meet your goals, be they for the first month or the first year.
6. Management/Operations – This refers to both the way the company is managed and how it performs day-to-day tasks. You’ll be defining actual roles here for employees, if you have any beyond yourself.
Questions here range both big and small, but all are important. Will you have a physical location? Who will answer the phones? Who will build/maintain your website? Will there be workers on-site building product? How much will you pay employees? How often? How often will you collect revenue from clients? Where will that money be held? Who has the right to hire/fire employees?
Basically, you’re answering every question concerning how the business will operate on a day-to-day basis.
7. Finances – Since this is a business plan and not an investment brochure, the finances come last. This is where you present the company’s finances as they currently exist – from investors to sales to debt to anything else that affects your balance sheet.
Helpful Resources (Books)
When you’re ready to start considering writing a business plan, here are some great written resources to help you along the way.
- The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a new Future by Chris Guillebeau. This book consists of 50 businesses that were founded with $100 or less and succeeded.
- The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries. Enormously popular, it includes a strategy to test your idea before you ever start your first draft.
- The Plan-As-You-Go Business Plan by Tim Berry. A bit of counter-culture from the ideas above, it proposes that you need an outline more than a business plan, and should write the business plan as your premise develops.
Helpful Resources (Blogs/ Videos)
If you prefer your knowledge more bite size or interactive, we also recommend the following blogs, videos, and podcasts to get your business plan on its feet.
- Yesware – No, Writing a Business Plan is Not a Waste of Time
- How to Write a Business Plan by Business Wales
- How to Write a Business Plan by StartupDaddy
Need Help Ensuring Your Business Plan Is Legally Compliant?
Without a solid legal foundation your business will be vulnerable to a range of legal issues. Issues such as tax problems, litigation, privacy breaches, and much more. The easiest way to guarantee your business will be legally compliant is to speak to a legal expert first and then take the appropriate course of action from there.
Start with a free Startup Legal Session. It’s a free chat with a legal expert that will help you identify what you need to be legally compliant.