Having your business plan in writing can be a powerful tool. It can help ensure that you are starting out in the right direction and will serve as the foundation for identifying and implementing strategies for growth. It can also help others identify holes in your plan and help you think through every critical element of your business. A well-constructed business plan is essential when you are seeking investment or applying for a loan. There will be different versions and the business plan can be shared in part, or in whole, with professional advisors and also to help build business alliances.
The process of creating a written business plan proves critical for identifying your vision, mission, organizational values while setting goals and objectives for your company that all crucial constituents can see, read, understand and help implement as each require. A business plan can also help determine your needs and the timing for growth when it comes to talent, equipment, and facilities.
Your business plan should be comprised of the following main topics: Executive Summary, Company Business Model and Industry Segment, Products and/or Services, Market, Competition, Growth Strategies, Ownership and Management, Administration, Milestones, Critical Risks, Financial and an Appendix.
Some tips to think about before you start writing your plan:
- Don’t start writing until you have worked through the other tools and actually have something to write
- Read other people’s plans (this does come in handy!)
- Make the plan attractive; look at examples
- Know your target; it does make a difference in specific areas:
- Angel Investors
- Venture Capitalists
- Competition Judge
- Read and re-read (there should never be improper grammar or a typo in a business plan)
- Avoid “fluff” and overly flattering language
- Have evidence of good research and cite the source of such research
- Be optimistic, but realistic
- Have an advisory group that will review your plan at various stages, by section and in total
- Be prepared to defend and constantly update your plan as conditions change, no less frequently than annually
The Business Plan Model template sections are described below. Use this guide to work through developing your business plan.
First section to develop is an Executive Summary which includes an “elevator” pitch of your company. It should include an overview your products or services, how you will reach your market, management qualifications, timing and type of investments being sought, desired achievements, why your company is a great investment opportunity, and your exit strategy. This section of the business plan should accomplish the “what” of your company – what you are doing here, and what do you want?
The second section of the plan is the Company and Industry section. This section should outline the vision, mission and values for your company as well as outline goals and objectives moving forward. This piece of the plan should include the type of organization, length of time in business, location of business, and trademarks, patents, barriers to entry and any branding or logo that your business seeks to implement now or in the future. The current status (market penetration, strengths, weaknesses, competition, sales and service record), future plans (strategies and goals, effect of economic, social, technological, environmental, regulatory trends), current state of the industry (total sales, profits, margins, major participants (competitors, suppliers, customers, distributors), future state of the industry (trends and impact factors, where might the industry be in 5-10 years, regulations and requirements, obstacles and opportunities) should also be highlighted. This section should explain the purpose of your company, why you think you are going to succeed, and why the market cares about the product you are offering.
The third section is the Products and Related Services section. This includes product’s purpose and customer requirements, stage of development, comparison to competitors, technological life, services offered and their relation to revenue stream. Other areas of importance include facilities, production of product or the service, subcontracting, product life cycle, dependence on suppliers, patentability, future development plans, and product or service liability. You should spend time outlining the distinct competitive advantage(s) you have over other products or services in the market
The fourth section of the plan goes over the Market you are addressing. Exhaustive research should be done to identify your current market and how much market share you plan to acquire along with information specific to the customers you are targeting, and the added benefit to them to choose your product or service over competitors. You should include past and future trends in the market as well as projected growth potential.
The fifth section is Competition. The plan should detail what you know about the competition, your similarities and differences, who are the major competitors and who is coming up that might become a major competitor.
The sixth section is your Market Strategy, which should clearly outline your position, penetration, goals and approach, pricing, packaging, sales and distribution, after sales support, service and warranties, advertising and public relations. When examining your sales information should be provided on profit by product/service, cost of goods sold, sales and product goals and supply/demand strategy. This should include much of the information you found while researching your market and customers.
The seventh section discusses Ownership and Management. Information specific to personal history, talent and skills, roles and responsibilities, and their primary focus should be provided on owners and key management team members. Other items included in this section are your board of directors, advisors and professional support services that you use or may want to use in the future.
The eighth section is Administration. Your plan should detail administrative support, procedures and controls including bookkeeping methods, management controls and reporting, training, staffing and general policies.
The ninth section of your plan is Milestones. This should include major milestones you have reached, the timeline for critical events such as new product development, or when you are planning to enter a new market, and strategic planning.
The tenth section of the business plan is Critical Risks. This section should include a summary of critical risks that you have already overcome and those that are inevitable or that have potential to develop.
Finally, the last section of your business plan is your Financials. This should include current financial statement, funding requests, use of funds, terms of investment, and assumption made while forming your financial model. The plan itself should provide summary financials in the plan with as many charts and graphs as possible that will help communicate the information. Detailed operating statements and supplemental data should be attached in the form of an Appendix.