A business plan is an important tool for every business. It serves as a blueprint on which your startup or business will be built upon, and creates a plan to launch your business.
Creating a business plan is not a complicated process as many people tend to believe. I want to show you a step-by-step approach on how to create a plan for your business.
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Business Plan Outline
Whether you are starting a new business or expanding the existing one, your plan is made-up of six components. Here's a brief overview of each component before we dive deeper into each one of them.
- Executive summary: Your executive summary is a brief intro to your business. It should describe your business, the problems that it solves, your target audience and your financial highlights.
- Opportunity: This part of the plan answers the questions: What exactly are you selling and in what way are you solving the problem. This is all about your product and services. The most successful companies solve a problem for their customers.
- Execution: Think of the execution plan as your how-to guide for your business. In this section, you will also cover things such as operation, sales, and marketing and how to track your success.
- Company overview: Other than the idea, investors always look at the team. Your company overview is one of the most important points about your company. You'll highlight the history, your management team, location, mission statement and legal structure.
- Financial plan: The plan for your business can’t be complete without a financial plan. Here, you'll gather all the components of the business revenue and startup expenses. Some of the basic things include a sales forecast, income statement, cash flow statement, balance sheet among others.
- Appendix: this is the last part of the business plan where you can include extra information about the business along with additional documents that you want to use to give your reader/investors a feel for your product, marketing, services, company, etc.
The most important thing is to understand each component and how it will affect your business. A business plan template is like a skeleton of the plan. Your work will be to create processes and systems to bring the business to life.
How to Make the Business Planning Easier
Before you create a business plan, let me take you through some rules that will make the entire business planning process quick and easier. Always think about the KISS principle when creating your business plan. KISS stands for “keep it stupid simple“.
1. Keep the Plan Short and Concise
Make your plan to be as short as possible. There are two reasons for this:
- First, it's easy to read.
- Second, your plan is a “living and breathing” document. You'll revise it as your business grows. As you find what works, you'll add it to this business plan.
2. Get to Know Your Audience
It is important to have your audience in mind while writing a plan. For example, if your business is making a proposal for a complex scientific project, use simple language that can easily be understood by investors.
It is true that the project may bring in a lot of revenue but failing to consider your investors may ruin the chances of getting funded. Some investors may opt out.
It is important to accommodate all types of investors while drawing up your plan. For example, use simple and direct language while describing the product. If possible you can offer more information on the appendix of the business plan.
3. Always Build from a Place of Confidence
Creating a plan for your business may appear a big hurdle but that should not be the case. As a business owner, you understand it better than anyone else. During this stage, there is so much self-doubt and fear creeping in.
Here's how to squash that fear.
Create the vision but create it from a place of confidence rather than a place of fear. Then, attach your self worth to the processes and not to yourself. That way, if something doesn't work, you can tweak the process instead of beating yourself up.
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Attach your self worth to the processes and not to yourself. That way, if something doesn't work, you can tweak the process instead of beating yourself up. Click To TweetRelated Help:
Business Plan Format
In the following section, I want to detail out each component to help you create a proper plan for your business.
A. Executive Summary of Business Plan
The main purpose of the executive summary is to introduce your business, expound what you do, and make your expectations clear to the reader. An executive summary is usually the first chapter in your plan.
Some business owners will put it last to re-iterate their mission and end with a nice summary. The advantage of writing it in the last chapter is that by the time you are done, you will have a general idea of what your business is all about. After all, it is a summary of all the other parts of the plan.
Also, an executive summary can be used as a separate document. Keep in mind that investors may request just the first chapter to assess your business. If they are intrigued by the executive summary, they will ask for the entire business plan, a presentation, and an in-depth financial analysis.
Considering the fact that an executive summary is a vital component of the plan, you should ensure it captures crucial details and leaves investors wanting more information about your business.
Executive Summary Quick Template for Your Biz Plan
- A single sentence overview: Right above the page, write a single over sentence under the business name that gives a brief summary of your intentions.
- Problem: Use one sentence to sum up the problem or need in the market that you are trying to solve.
- Solution: This is your chance to highlight how you intend to solve the problem
- Target market: who is the target of your product or service? It is impossible to say that you are targeting everyone.
- Competition: What are the existing solutions in your market? Are there any substitutes or alternatives?
- Company team and overview: offer a brief explanation as to why you are the right people to solve the problem and the team you have assembled to launch the business.
- Financial summary: highlight the primary elements of your plan in terms of finances.
- Requirements for funding: in case your intention is to appeal for funds from angel investors or banks, you need to include the details in the executive summary.
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B. Opportunity
This is the main part of your plan. It should contain the details of the problem your business is trying to solve, the solution you are offering, and who you are targeting.
This is where you also need to demonstrate to readers why your solution is better than the existing ones. It is a perfect chance to convince your readers that you have a different and better approach to the problem they are facing.
The Opportunity Quick Template for Your Business Plan
- Problem and the solution: begin the opportunity chapter by explaining the problem you are trying to solve. Make sure you are solving a critical issue faced by customers. After defining the problem, the next step is to describe the solution.
- Target market: Who is your target market? Think about what group of people have the problem. What age range? What is their demographic?
- Market analysis and research: Determine your market segments and find out the size of each one of them.
- Ideal customers: After defining your target market, the next step is to determine your real customers. If you were to narrow down your advertising, who would buy your product or service RIGHT now.
- Competition: Here is where you dig deep into your competitors. Try to explain the existing solution to the problem and why yours is different.
- Future products and services: As an entrepreneur, you should have a vision for your business. That’s you should spend write highlight your future plans in terms of products and services in this section.
C. Execution
After completing the opportunity chapter, move on to execution. This includes all the details of how your business is going to operate. You will cover sales and marketing, operations, how success will be measured, and the milestones you expect to attain.
Items to include in the execution chapter of your business plan:
- Marketing and sales plan: Explain the plan to reach your target market, how you plan to sell products, your pricing, and what type of help and partnership you will need to succeed.
- Operations: The operation part is where you describe how exactly the business will work. This includes logistics, technology, and any other details concerning the running of the business.
- Milestone and metrics: This is a brief section of the third chapter. Here. You need to show investors that you clearly understand the steps required for the business to succeed.
- Assumptions and risks: Last but not least, your plan should also give details of assumptions that have been made and are important for the success of the business.
D. Company Overview
This is where you are supposed to describe how your business is structured and reveal who your team members are.
This is particularly important to investors who may be interested in knowing the faces behind the company or business.
Items to Include in Your Company Overview of Your Business Plan
- Team: Most investors are keen to know the team behind the idea. If they have confidence with your team, then they will easily invest in your business.
- Mission statement: Your mission statement should be brief and to the point, highlighting why your business exists.
- Intellectual property: This is usually appropriate in case your business is of a scientific nature or deals with technology.
- Company history: In case you are writing a plan for a current business, you need to give a brief overview of your company history. I like including past successes.
- Business location
E. Financial Plan
This is the final chapter of your plan. It is one of the sections that most entrepreneurs dread. But you shouldn’t feel intimidated. You definitely don’t need an MBA or an accounting degree to create a financial plan for your business.
In most cases, a financial plan lays out revenue and sales forecast for the first year as well as the projections for the upcoming three years. It's best that you start on a shoestring budget and prove the concept first before spending money on anything else.
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Financial Plan Items for Your Business Plan
- Sales forecast: a sales forecast is usually divided into several rows with each row representing a primary product or service.
- Personnel plan: detailing out how revenue will pay for your workers going forward.
- Income statement: also referred to as profit and loss statement, is where you show whether your business is profitable or not.
- Cash flow statement: Although it is usually confused with the income statement, a cash flow statement shows how much cash at hand or in the bank you have at any particular moment.
What Investors Are Looking For
In summary, investors are looking for these five things when investing in your business.
- Ideas and proven concepts that generate cash flow. Money!
- A business with momentum and a proven track record. Success!
- A familiar industry they can visualize the projections. Growth!
- A management team with experience. Experience!
- An idea or a product/service with a competitive advantage. Future!
A great business plan creates the vision for a great company that generates a ton of profit that's more than enough to cover its costs.
