They say failing to plan is planning to fail, and when it comes to building a business, that term is incredibly relevant! If you’re going to present an opportunity to someone else, whether it’s an investor, partner, consultant or another third party, a business plan will allow you to showcase all of your company's key information and convince them to come on board. A plan in your head is not enough. Creating a plan not only helps you grow, it allows you to find all the flaws that you might have missed.
They key is to keep it simple. Avoid buzzwords and unnecessary information, the goal is not to make a slick and shiny document, the goal is present a solid business opportunity! Don’t try too hard, stick to the basics and keep it clear. So how do we write one? Let’s take a look.
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Note: In depth business plans are important for showing other people: shareholders, investors, partners etc. If it’s just you, I encourage you to start with a Lean Canvas, which will allow you to get started much faster. Sometimes first-time entrepreneurs tend to get tied down with a chunky business plan that needs to be ‘perfect’. Planning is important - but don’t spend so long on it that you don’t even start! For more, check out my article ‘A 10 Step Guide to Starting a Business in Under 24 Hours’ here.
1. Executive Summary
This is a summary of the business plan, with a snapshot of the following sections. A short and sweet version of what the reader is about to discover. This is very important because you need to grab their attention right away. Business plans aren’t traditionally the most riveting things in the world to read, and if you bury key information inside the document, you might lose the buzz (or worse - they might skim read it and miss the best parts!). Clearly summarise your business and also state what you’re asking for in the summary.
TIP: It's often easier to do this part at the end, when you have all the information.
- Business overview (an elevator pitch of what you do, including the customers, how you carry out your business and what makes you different).
- Success factors (reasons why you will succeed)
- Any success achieved to date
- Company overview (when it was formed, the structure, registered office etc)
You'll also include a few sentences on each of sections 2 - 8 below, to give a brief summary of it all (which is why it's handy to do it at the very end).
2. Industry analysis
You need to thoroughly research your industry, your target market and the competitors already in the industry. If you haven’t taken the time to do this, you shouldn’t be asking people for money or partnerships, let alone starting a business at all. Do your research!
- Market overview (size of the industry, revenues, trends etc)
- Customer analysis (detailed outline of your target customers and their needs)
3. Competitive analysis
A list of all your competitors, big and small, direct and indirect. There are ALWAYS competitors, if you think there are none, you either haven’t done any research, or you’re literally doing something that is so incredibly strange that it may not be a good idea at all (and not in a cool 'think different' way. There needs to be a market. If your plan is to sell smelly shoes for $200 each, it’s just a bad idea).
- Direct competitors (other businesses that do the same or very similar thing as you).
- Indirect competitors (other businesses aren’t exactly like you, but serve the needs of your target customers. E.g. a pizza chain might include frozen pizza from Coles as an indirect competitor).
- Competitive advantages (what makes you a better solution to your target customer, and how you can increase your market share. This part goes into quite a lot of detail, because it’s very important to third parties).
For all competitors, you need as much info as you can get. If they are public companies you can see their revenues and their balance sheet on the stock exchange . If they are small private companies, you can take a look at their businesses to see what they’re doing well, see what they’re doing poorly, the types of customers they serve etc.
4. Marketing Plan
This section is all about how you’re going to get your products or services into the world. How will you grow? Time to figure that out. I love this part!
- A list of all your products / services and detail on each (description, benefits, price, strengths and weaknesses)
- Promotions plan for all channels you will use (e.g. social media, blogging, videos, influencers, partnerships etc). It’s always a good idea to go into depth here because it shows you have a clear plan of attack with real examples, rather than just listing a bunch of things that can ‘hypothetically’ work.
- Distribution plan, for where customers can buy your products or services (e.g. online, in-store, through partners, in shopping centres etc).
5. Operations Plan
Every business has its own system of operations, and you need to focus on getting organised so things can run smoothly. Ignoring this can result in chaos!
- Key operational processes (everything that happens within your business, e.g. sales, manufacturing, importing, accounting, product development etc)
- Milestones - what goals do you want to hit, both short term and long term? Put an exact date on them, as well as they key things that will happen (e.g. October 2017, revenue hits $15,000 per month and new staff hired.
6. Management Team
A list of everyone involved in the business, with a background on each and a reason why they are a good fit to the company. People want to know who else they're going to be working with!
- All current members of the team and their roles
- All management team gaps (who you need to hire in future, e.g. a CTO, CFO etc.)
- Board members
7. Financial Plan
Now we get to the money! This is one of the most important sections because for every business (including non-profits), the money is the engine of the business.
- Revenue model - how will you make money and how many different revenue streams are there? List them all and how they work.
- Funding requirements and use of funds - how much money do you need, and how will it be used?
- Exit strategy - what is your plan for getting out of the business? A sale? A merger? An acquisition? Even if you don’t plan on selling (because you might not have even started yet!) you’ll need to think about how you’re going to cash out one day.
- Financial projections. This bit is absolutely critical. These numbers need to include how much the startup costs are, expected revenues, estimated growth, when you will break even, when you will be profitable and any other key financial information. It will play a critical role not only in convincing others who are investing in your business, but will also help to see how you can efficiently grow your revenue in a larger scenario. This cannot be skipped, especially if you’re asking someone to give you money!
This can include any information related to permits and leases etc. and any research you want to attach.
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If done correctly, this business plan structure can create a solid foundation for your company. It’s also important to make it unique, so include something innovative and creative, to help your plan stand out from any other competitors or investment opportunities the receiver may be looking into. Happy planning!