Before you write a business plan, you need to plan your business.
This might seem obvious, but success for a new company is virtually impossible unless the founder possesses a deep understanding of the products or services to be sold, the marketing strategies to be employed, how money will be raised and the potential customer case.
Writing a business plan helps a business founder define the company’s operating framework by answering important questions, such as:
- Why are you in business?
- What do you do and how do you do it?
- Where are you located?
- How will your company make money?
- Who are your customers?
The United States Small Business Administration (SBA) provides basic educational resources for new business owners, including articles and a video course on how and why to write a business plan. What follows is a summary, along with tips on the proper approach to writing a business plan.
Writing the Business Plan
The first rule of business plan writing is that there are no hard, fast rules. You create the business plan that best helps you meet your goals, which means the plan you write should be as unique as you are, and it should be written with a particular audience in mind.
If you intend to share your business plan with outside stakeholders – to potential investors, for instance – you will want to include a few key elements, such as:
- A company description that outlines the purpose of the business, a detailed mission statement, goals, target market, legal structure, management structure and other relevant, high-level information.
- Market research into the industry, potential customer base, analysis of competitors and other information that demonstrates a deep, working knowledge about the company and its purpose.
- Marketing and sales plans, with information about distribution, public relations, social media policy, community involvement and other promotional elements.
- Financial projections and funding requests, including as much detail as possible about best- and worst-case scenarios, cash flow, the balance sheet and a profit-loss projection.
- An executive summary that provides a clear, concise snapshot of the company, including a brief version of the mission statement.
One Size Does Not Fit All
A business plan is only effective if it helps you meet your goals. Some business owners use the business plan as a detailed blueprint for the company, while others keep it as simple as possible.
The most important feature of a business plan is its usefulness. A business owner should be able to refer to the plan over the course of several years and have an idea whether the company is on the right track.
Elements listed above typically are included in a traditional business plan. Another business plan category reflects the flexibility of today’s startups – the alternative business plan.
The alternative business plan is written with an eye toward rapid changes of direction and fast adaptation, based on responses to market conditions and other factors.
In most cases, a business plan will include elements found in both the traditional format and the alternative format. It is vital that the written plan helps differentiate your new company from its potential competitors.
That means it’s OK to inject a measure of personality into the story you are trying to tell with your plan. This is especially important if you intend to distribute the written business plan to potential investors, or provide it to employees as a primer on the vision and direction of the company.
Your business plan should depict your depth of research, your knowledge of the industry, your vision for your company and a clear path for success.
While the SBA’s comprehensive guide to writing a business plan can provide a useful overview, nothing can replace the insight available through earning an advanced business degree, such as an MBA from the Jacksonville University Davis College of Business.
More business professionals are pursuing career advancement through higher education, and the business knowledge acquired while earning an MBA can help you with the first, most important step in creating a business plan – planning the business.