The business plan is the backbone of your company
If you’re interested in entrepreneurship, you’ve probably also heard about the paramount importance of a business plan. Maybe you’ve even downloaded one of the endless number of templates you can find online. And maybe - just maybe - you’re already exhausted from just thinking about climbing the business plan 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! It’s actually not that hard.
Writing a business plan 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.
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.
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. A great business plan will help you build your business and get you ready to present your plan to potential investors.
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When your done reading, you'll know
- What you will get out of planning your business and why you should write a plan
- Exactly what to put in your business plan
Why should you write a business plan?
We’re going to take a wild guess and say that the entrepreneur inside you would probably rather jump straight to building your product than write a business plan. But writing your business plan is building your business. And we recommend that you get started while your idea and your motivation is fresh!
Here are the main reasons why you shouldn’t cut corners on this one:
No pain, no money gain
You’ll need a business plan if you want to raise money for your idea. Yup. We know, we just said that the business plan is not just a document for investors. But if you do need money, you will have to show banks and investors that you have a good handle on how to make your business succeed.
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.
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 booksmart
Okay, we’re pretty sure you get it 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. Your business plan isn’t the place to sound booksmart. It’s the time to make yourself understandable, professional and to convince and intrigue your team as well as external stakeholders.
Here's what to put in your startup business plan
You don’t have to be a business expert to write your business plan. Focus on one section at a time and before you know it, you’ll cross the finish line. We promise! Here are the sections you should include in your business plan:
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
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 clever solution to that problem
- Your company’s unique value proposition
- The market you want to enter
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
Time to get to know who you’re up against. This section should present:
- Your competitors
- Your competitive advantages
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
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
Unless you’re able to see the future, you’ll need to think about the risks and challenges you may face on the road ahead.
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 so awesome.
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.
Useful tools for business planning
Create your canvas. Write your business plan. Do your finances. Get startup schooled and present everything to anyone. It’s simpler, faster and more impactful than ever to start a business
The Lean Startup
In The Lean Startup Eric Ries challenges the traditional way of thinking business. In fact, it breaks with the very idea that you can think a perfect product. Instead entrepreneurs have to test and validate ideas and products as they build them.