Fail to plan and plan to fail. Seems harsh, but it’s true. Every business needs a business plan. A business plan establishes order and helps you get organized and focused on your business goals so that you maximize your chances for success. Even companies that have been in business for a long time should be updating their business plan at least once a year to refocus.
A business plan helps you streamline marketing and growth strategies, detail business objectives, and outline the next steps you need to take. Crafting a business plan is also helpful for defining your target audience.
Basics of a Business Plan
Every business plan will differ based on the industry, purpose of the business plan, and whether it’s for internal or external use. If your business plan is being used to secure financing, you will want to include details about the legal structure of your business, business history, and financial overview.
There’s no absolute right or wrong way to write a business plan. However, you want your final result to answer a few key questions that are critical to your company’s success. It’s worth it to invest the time and energy from the start. Here are some of the key items to cover in your business plan.
Most business plans start with an executive summary. This is where you can describe your company, what you do, and how you do it. You can describe your recipe without giving away the secret sauce. Keep it short and sweet, as we don’t want to lose their attention before we get to the good part.
What’s Your Company’s Vision?
Asking this question helps you to focus your plan in one direction. All of your critical business decisions will flow from understanding the company vision. When everyone is working toward the same vision, momentum increases exponentially. Without that vision, your business doesn’t know what it’s aiming for or striving for.
Where Does Your Business Operate?
Some businesses are small startups located in a neighbor’s garage. Some businesses are entrepreneurs with a lot of flexibility, that work from a coworking space. Some businesses require a more permanent physical location, like their own private office. For obvious reasons, lenders and partners will look more favorably on a business that operates from a verifiable professional address, versus a business that’s run from a private home.
What Problem Are You Solving for Others?
This section is where you can detail the products and services you offer but focus on the consumer benefits. Figuring out what problems your products and services solve for others is vital to success. Writing those problems and pain points down in your business plan helps to keep your strategy focused and helps partners and lenders see the potential in investing in you. If your products or services don’t serve a purpose and solve a problem, it’s going to be very hard to sell them. There aren’t many who will invest in something they think won’t sell.
Who is the Competition?
It’s good practice to include a market/industry analysis. This is where you can show off your industry knowledge and prove that you’ve done your research. This section should include an overview of your target consumers, industry statistics, and an evaluation of your competitors (be sure to highlight how you are different from the competition).
You get bonus points for having thought through these questions. Some other items you may include in your business plan could be:
- What are your company’s values? How do you execute on those values?
- What is your marketing strategy?
- Do you have a pricing strategy?
- What is the organizational structure of your company?
- What is your unique value proposition?
Again, there’s no right or wrong way to write a business plan. Some entrepreneurs have been known to write up their plan on a napkin – just make sure you’re writing it down somewhere! The point is that you have one and you tailor it to suit your business and needs so that your business has the best chances of success.