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| Writing a Business Plan |
A business plan is a document that outlines your business’s plan of action and how you aim to achieve that plan. It can be as detailed or as simple as you would like it to be.
The purpose of writing a business plan can be multifold in nature such as attracting potential investors, employees, or new customers. Business plans can also be instrumental in helping the owner manage their company more efficiently.
Most business plans are similar in nature. The most common components of a business plan are:
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| Business Goals |
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| Strategies to achieve business goals |
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| Potential problems and ways to overcome them |
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| Organizational structure |
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| Financials |
The beginning of your plan should focus on the business idea itself. You talk about the industry you will be operating in, how your business will be structured, what product or service you will be offering, and most importantly how you plan to make money doing it.
Next, you discuss the market landscape. Specifically, you provide insight into who your customers will be, how you will find those customers, and how you will not only convince them to buy, but to buy your products instead of your competitions.
The last section discusses the financials of your organization. This section contains your balance sheet, income and cash flow statements, as well as any other relevant financial ratios like a break-even analysis.
An easy way to insure that you capture all the information you will need to complete your business plan, is to break it up in to the following categories:
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| Executive Summary |
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| Descriptions of the Business |
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| Market Approach |
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| Competitive Analysis |
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| Development Plan |
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| Management Plan |
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| Financials |
If you are wondering how long your business plan should be, the answer is it depends. It depends on what you will be using the plan for. As mentioned earlier the plan can be as short or as long as you like it. The variation in the length will depend mostly on what the business concept is. If the concept is straightforward in nature then you will probably develop a short plan. However, as the complexity of the business concept increases the length of the business plan will increase. Another factor that plays a role in how long your business plan will be is the reason behind why you are writing it. If the reason you are writing the plan is just for internal use then you can develop a more simplified plan. On the other hand, if you are writing the plan to present it to potential investors then you will probably need to provide a significant amount of detail.
If you are wondering if your business really needs to develop a business plan the answer is yes. Every business should have a business plan of some sorts because as the saying goes, “if you don’t create a plan to succeed, then plan to fail.” You should take the time to really reflect on what you are crafting as a business and begin to develop a plan for your business.
Another point to consider is that business plans can be written for your business no matter what stage of growth your business is in. It is well known that startup businesses begin by developing a business plan typically whether it is in the pursuit of funding or merely just to get grounded before launching. A less well-known fact is that established businesses are ideal candidates for business plans too. There are a variety of reasons established companies would need to develop a business plan like figuring out how to handle excess cash or simply to manage hiring moves. Overall a business plan will server as an invaluable instrument that will express the full story about your business to all who look at it regardless of the stage of growth your business is in.
After you have developed your business plan, you are not done. You will need to regularly update your plan as changes occur with your business. The following are several reasons why you might consider updating your business plan:
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| Change in financial period (fiscal year, quarter close, etc) |
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| Seeking funding (loans, equity investments) |
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| Market shifts (consolidations, recession) |
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| Technological advances of your business |
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| Management changes |
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| Milestone achievement (achieving revenue targets, acquisitions, etc) |
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| Former plan is outdated |
Business plans are all similar in nature but vary in the use of the elements that make them up. You will expect to see financial information and business descriptions, but the presentation will vary as widely as the businesses themselves do. You should structure the business plan to best convey your business in the best light to the intended reader.
You will generally find the most business plans can be lumped into one of 4 type categories: miniplans, working plans, presentation plans and electronic plans. Each type is distinct in makeup as well as its level of intricacy.
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| Miniplan – Miniplans are usually less than ten pages in provide high level detail about the business idea, financials, and the marketing plan. The purpose for them is usually to act as a simple tool to quickly convey the idea to potential partners or initial investors. Additionally, miniplans can act as summarized version of the full-length plan. All in all you do not want to use a miniplan to entice a major investor so be mindful of how you utilize it. |
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| Working Plan – Working plans are business plans you actually utilized to manager your business. It should be very detailed in nature but does not have to be long. This is because the intended audiences for this plan are only those who are members of the organization. |
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| Presentation Plans – This type of plan is focused on external audiences like investors or lenders. It is very similar in nature to the working plan except it is developed in a more aesthetically appealing way. The major difference is that most people who will be reading your Presentation Plan do not have full understanding of what happens daily in your business so this will serve as their first introduction to your company. One of the elements you will need to add will be a competitive analysis. |
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| Electronic Plans – An electronic plan is simply a copy of your business plan that is stored electronically that can be shared and or printed from an electronic source. It is primarily a different method of storage and sharing. |
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