Every new business begins with a dream. But all the wishes and what-ifs that are likely banging around in your brain right now won’t be enough to sustain it. If you truly desire to become an entrepreneur, you need to pre-plan your success step by step, and commit it to paper. That’s called a business plan, and almost no one will take you or your business seriously without one.
Business Plan Basics
A business plan is a written document describing the nature of your business, how you plan to achieve your specific goals for this business and the profits you expect to gain as a result. Ideally, every business should have a written plan to use as an operational guide and for communicating its purpose and strategies to others. Furthermore, any business that intends to seek outside funding must have a formal plan in writing that addresses these topics:
Market Assessment Who will buy my product or service? Who are my competitors?
Financial Assessment How much will people be willing to pay for my product or service? Can I make a profit at this?
Self Assessment Do I/we have what it takes to succeed?
Business Plan Components
Think of your business plan as a road map for your journey to business success. Project your plans 3-5 years ahead, but know that you may need to adjust your speed or even switch direction as needs and parameters change. Include these titled sections:
Executive Summary Highlight key strengths of your plan, including where you want to take your company and why your idea will be successful.
Company Description Make this your extended “elevator pitch” to help readers, especially potential investors, quickly grasp the uniqueness of your business.
Market Analysis Show that you understand your industry, target market, customers, competitors and pricing structure.
Organization and Management Describe your company’s organizational structure, introduce ownership and members of your management team.
Service or Product Line Emphasize the benefits you can provide to current and potential customers.
Marketing and Sales Explain how you plan to promote your product/service, create customers and boost sales.
Funding Request Lay out your current and future funding requirements, the intended use of any funds you may receive and types of funding you would prefer.
Financial Projections Summarize your projected income and expenses, past credit history, intended allocation of resources and other financial details.
Appendix Include supporting information/documents: your credit history; letters of reference; resumes of key managers; leases; licenses, permits and/or patents; list of business consultants (attorney, accountant, etc.); relevant research, magazine articles or book references.
6 Secrets for a Better Business Plan
1. Choose a flexible format. Package your plan in a loose-leaf binder that allows you to easily add, subtract and revise individual pages as new facts emerge.
2. Be thorough but concise. Tell your story clearly and concisely; use hard facts; avoid flowery language.
3. Do your homework. Prove your worth to potential investors by identifying your target market; describing how your product or service is unique; and detailing your competitors’ strengths, weaknesses and estimated market share.
4. Make it personal. Introduce your management team; describe their previous accomplishments and show how they will bring their talents to this new venture.
5. Turn features into benefits. Use concrete facts to back up claims. Instead of “ABC product is priced significantly less than its closest competitor, XYZ,” say: “By pricing ABC product 20% below XYZ, we’ll turn a quicker profit and recoup our costs within six months.”
6. Own up to your weaknesses. Don’t give potential investors a reason to deny funding by pretending obstacles don’t exist; point them out, then present a detailed plan for how you will address each problem.