The Business Plan Is The Backbone Of Your Company
If you’re interested in entrepreneurship or dreaming of starting your own business, you’ve probably also heard about the importance of a Business plan. Maybe you’ve even downloaded one of the endless numbers of templates you can find online. And perhaps you’re already exhausted from just thinking about climbing the Business Planning mountain. If you don’t exactly know where to begin, writing a Business plan can seem like a daunting task. But don’t lose faith! With the right knowledge and tools, It’s actually not that hard.
Writing a business plan as a startup doesn’t have to be a 30-page task. Luckily, more and more investors want to see short, precise, and to-the-point business plans that won’t take them forever to chew through.
This doesn’t mean that your business plan isn’t a vital document for your business. And it doesn’t mean that it’s not a big task either. It just means it’s doable, even without a business degree.
When You're Done Reading, You'll Know
- Why you should write a business plan
- What you will gain from planning your business
- What elements to include in your business plan..... And everything in-between 🧠
So, What Is A Business Plan? 🧐
The business plan is the backbone of your company. Contrary to popular belief, it’s not “just” a document you need to present to your bank or to potential investors. It’s essentially the creation of your business on a piece of paper. While a piece of paper isn’t an actual business, it is a great way to prepare, control, and grow your idea into an actual profitable business.
A great Business plan will help grow a business up to 34% faster. It also gives you a sense of direction, making it 16% more likely to reach profitability. A Business plan is also a tool to raise the money you need for your idea by showing investors you know how to make your business succeed.
Don't spend endless amounts of precious time writing a long, formal, perfect document. Instead, think of your business plan as a short(er), sharp, work-in-progress description of your business strategy. Continually reevaluate and update it, and use it as a tool to gain a more extensive understanding of your business and the mission you're trying to accomplish.
Are you looking for a digital template for your startup business plan? We've made one. And it's fully guided and filled with examples from real-life business plans too! Sign up for Cuttles and start your planning today. We have a freemium edition so that it won't cost you a penny!
Why Should You Write A Business Plan?
We're going to take a wild guess and say that the entrepreneur inside you would probably instead jump straight to building your product than write a business plan. Right? It's in human nature to want to skip what is complex, demanding, and tedious. It's universal that people don't want to do homework or their taxes, and business planning sure feels a lot like a mixture of the two.
But to add some perspective, writing your business plan is an essential part of building your business. And we recommend that you get started as soon as possible while your idea and your motivation are fresh!
Here are the main reasons why you shouldn’t cut corners on this one:
No pain, no money gain
The sad truth is that you'll need a business plan if you want to raise seed money for your idea. Actually, you'll need one every time you are raising funds. We know we just said that the business plan is not just a document for investors. That is very true. But if you plan to go out and pitch your startup to investors, you will have to show them that you have a good handle on making your business succeed, and the tool for that is a business plan. It's an essential requirement that almost any investor worth their salt needs to see to access if your idea and plan are valid.
... If you would like to learn about where and how to get startup money, this is the article for you!
🧬 You’re building the DNA of your business
Writing your business plan forces you to think about every detail of your business. It will ultimately make you smarter about the market, your customers, and your competition. It will also help you make important decisions, overcome critical challenges, and minimize the risks that inevitably come with building a startup.
Writing is technically thinking. When you put all the different pieces down on paper, you'll be able to see your company from a birds-perspective, clue all the fragmented pieces together, and see the bigger picture. You'll be able to detect if your master plan makes sense or if you need to make some changes before you hit a wall.
Remember, most startups fail. Almost 90% doesn't hit the three-years-of-operation mark. What's crazy is that 50% of startup failure is related to poor planning, so if you're serious about your project, you need to find a way to do business planning. Having a solid plan is key to making your business a success.
Set goals, achieve milestones, prioritize and strategize
Building a business is all about setting goals and reaching them. To do that, you need to strategize, prioritize, and work hard, of course. While a business plan won’t do the hard work for you, it will help you know where to focus your resources and energy.
No need to be book-smart
Okay, we’re pretty sure that you understand the value of business planning now. Let’s move on to actually writing the thing. We’re not going to lie. It will take time to write the first edition of your business plan. The most important things to remember are to keep your business plan short, to the point, and always, always, always have your audience in mind.
Steer clear of technical terms that no one understands. It’s time to make yourself understandable, professional, and to convince and intrigue your team as well as external stakeholders.
What Sections Do I Need In My Business Plan?
There is a reason why so many entrepreneurs don't prioritize business planning – it's a tedious and challenging task. But don't lose faith. Focus on one section at a time, and before you know it, you'll cross the finish line. We promise!If you would like to give it a go on your own, here are the 11 sections you should include in your business plan:
Your concept
What is the main idea of your business? You want to get people to read your whole business plan. That’s why you should start with:
- A catchy introduction
- Your mission and vision statements
The opportunity
Next, it’s all about describing the opportunity you’ve seen. It’s important that you focus on the outside for now and don’t spend a whole lot of time focusing on your company. We’ll save that for later. The opportunity should include:
- The problem you’ve seen in the market
- The smart solution to that problem
- Your company’s unique value proposition
- The market you want to enter
Your product
Now’s the time to present what your company actually wants to do. Go crazy! The product description includes:
- The product you want to build
- Your pricing strategy
- Distribution channels to get your product from desk to customers
The business model
How are you going to make money and what do you need to do to succeed? In the business model, include these things:
- The key resources you need to make things work
- The key activities you’ll need to carry out to make your business work
- The partnerships you’ll need to establish
- A description of your cost structure
- A presentation of your revenue streams and how you’ll ultimately make some cash
Your competitors
Time to get to know who you’re up against. This section should present:
- Your competitors
- Your competitive advantages
Your customers
Who’s going to buy your product? This section of your business plan should provide a detailed description of the customers you want to reach and how. Include:
- Who your customers are
- The different segments you can divide them into
- The value you bring to the people you serve
Your marketing plan
How are people going to know about you? This section is all about how to reach your audience. Write about these things:
- Cover the basics with a SWOT analysis
- The marketing channels you’ll use to reach your customers
- How you’ll build a strong customer relationship
- The brand position you want your business to have
A roadmap
It’s time to break down the road ahead. Describe the steps you need to take to make all of this happen. Include things such as:
- Key milestones you want to reach
- Key actions you need to take
Risks and challenges
The better you are at predicting, avoiding, and planning for the things that can go wrong, and the challenges ahead the more likely you will succeed in the game of entrepreneurship. It's a considerable strength to spend time to reflect on what can go wrong and show stakeholders that you're aware.
Introduce your team
Your team is probably your most important asset. It’s the people who will drive your idea to where it needs to be and the people who will convince investors to bet on you. Present your team and the reasons why it's the right constellation to accomplish the mission at hand.
Traction
What’s your closing statement? End your business plan on a high note by presenting the winning argument that’ll ultimately convince people that your idea and your business is destined for success.
And just a friendly reminder. It's not writing a business plan that'll get you ahead. It's going through the actual planning process and doing the work. Combine that with these steps to start a startup, and you will have a business by the end of it.
Useful Tools & Resources for Business Planning
Planning Your Business Is The Same As Convincing Yourself And Your Stakeholders
In the end, the goal of your business plan is to convince - to show that your startup idea is equitable and thereby convincing yourself and others to invest time and money into your business.
Who else should your business plan convince?
Growing your business involves outside stakeholders. From financial investors to partners and employees. We have listed the key agents of your business venture right here:
1. Investors
To evaluate the potential of your business, investors require a solid business plan. They will want to see that you've thought of everything, have a strategy, and that you're going in a smart (yes, that means profitable) direction.
2. Financial sources
You might need capital from banks or financial institutions. To assess the risks of loans, the business plan provides lenders with the right insights to determine that risk.
3. Employees
Acquiring the right employees to help the business prosper takes convincing. Your plan can help employees to understand the goals and how you plan to achieve them.
4. Partnerships
Over time you might find it beneficial to partner with other companies. The business plan will help convince both parties whether joining ranks is the most beneficial move.
What Are The Main Concerns Of Your Investors and Partners?
We have reduced it to five principles:
- To invest in an industry to which they can relate. So, if you are creating a tech-business, this is the area for which you should look for investors as well.
- To match with a team of people on a personal level. Sometimes it comes down to chemistry. So, if your investors are doubtful about your idea, they might choose to invest based on you, your team, and your professional experience.
- To find a competitive advantage in the market. It doesn't only matter how big a market you are looking to conquer, but whether you have a competitive advantage in that market.
- That your business is not just based on dreams but has a valid position in the market. It is key to show investors that your business can attain substantial growth.
- To show how you plan to cover expenses for your business. This includes the cash flow plan as to how much money you spend and earn.
As your business grows, you may need to refine and change some aspects of your business, such as customer group, product, service, or your target market. When you can identify what challenges your business may be facing, you can adapt to new opportunities.
The bottom Line
If you think business planning is only for business professionals with a five year-degree, you are wrong. Building a business takes work, but anyone can get started with the right tools and mindset to follow their dream. We believe in yours! Ready? Set. Build your business!