As Susan Ward puts it on The Balance, “The business plan is the blueprint for your business You wouldn’t walk over to an empty lot and just start nailing boards together if you wanted to build a house. Starting a business without a business plan is just as foolish.”
The blueprint of a business goes further and is more complex than the blueprints for a static structure, Ward writes. When building a house, the architect has to consider what amount of weight the structure would hold and what types of weather it will encounter; but, for the most part, the design is set and unmoving. With a business, “the business plan for any business will change over time as the business develops, and any particular business may have multiple business plans as its objectives change.”
Don’t let that deter you from writing out as comprehensive a business plan as you can. There are tremendous benefits to this type of planning and organization. Short of actually starting the business, writing out a business plan is the next best strategy for seeing whether or not your business is a viable one. This is because writing a good business plan involves analyzing data and metrics to determine if the business or idea is marketable as well as sharing the plan with others, like potential investors, who can give you your first sense of the type of support and reception your business would receive. “Often, an idea for starting a business is discarded at the marketing analysis or competitive analysis stage.”
Composing a business plan will also help you ensure that you aren’t leaving out any imperative parts of forming a new business, from the big picture elements to the individual details. This process is also, therefore, a good one to work on with a team, or at least some other input. If this is your first business, you’ll need input from people you know who have started businesses or at least a solid amount of research into the elements of doing so. Having more than one head in the planning phase will boost your innovative output as well as ensuring that you cover all the necessary bases.
A business plan isn’t just for you and can make the difference when it comes to finding investors and securing financing for your business. Investors are rarely going to go into a new business venture blind, even if they know you or even if they are as amped up about the business idea as you are. They want to know how dedicated you are to the business because that shows how dedicated you’ll be to seeing everything through. They also want to know that numbers and research that go into a business plan that will show projections for your business’ timelines, profits and so forth. Investing is betting mixed with educated guessing; the more education you can provide to potential investors, the more likely they’ll be to feel secure in placing a bid on your business.
Even if you’ve already established your business, maintaining and checking in with your original business plan can be vital to your success. Checking in with it will allow you to analyze what you have accomplished as well as keeping you on track to your intended goals or revealing that your goals may have changed due to necessity. This is why having a flexible business plan is also vital because when things change, you need to be familiar enough with your business plan to go through and pick out the elements that will need to change out of necessity, what needs to be added or removed to meet your business’ new demands, and so forth. A business plan keeps you on track and goal oriented all the way through, even when your business is surviing and thriving.
The Entrepreneur blog has a basic beginning guide to writing a business plan. This breaks down the process of writing a business plan into manageable elements, utilizing different blog posts and their business encyclopedia.
Some aspects that are important to know so that you can start planning your business plan are as follows:
The executive summary is like an abstract in an academic paper; more than that, however, it is a goal statement, stating what you want for and from your business. They recommend placing this immediately after the title page and/or table of contents in your plan. This can be a bit more emotional than the other aspects of your plan because this is where your heart comes in, your creativity and inspiration for even attempting to start a business in the first place. Whether you’re wanting to change the world or introduce a product the world has never seen, this is how you hook your readers, potential investors, et cetera and this is your reminder of why you’re doing what you’re doing.
Next will be a business description starting with a breakdown of the specific industry you’re looking to enter. This includes the state that industry is in and projections for its future. Add to that new products or services entering that market and how they might affect your future business, positively or negatively.
Include market strategies with details about the market and a breakdown of target demographics and ideas about how best to market your proposed business to those demographics/markets. What are you going to bring to this market and what are the ways you’ll be able to turn a profit within it?
A competitive analysis shows that you know your industry inside and out, you know what it lacks, who is doing what and how well (or badly) they are doing it. you have to know your competitors so that you can know what not to do, what to do more of, and what you can improve upon in order to get an edge up on them.
If you’re developing a product, you’ll want a design plan and development plan that breaks down the logistics of building or producing your product (this can include a service, the brick-and-mortar store, the online store, et cetera). What’s your vision for the visual and/or functional design of your product/service/et cetera? How long will everything take? This is also where you’ll work on a budget for the business.
Operations and management plans break down the day-to-day, week-to-week, month-tomonth, year-to-year function of your business. If it is a service industry, even breaking down the hourly function can be important. You need to know what will be required of your managers, supervisors, and various other employees. You need to know what different divisions you’ll need within the company and what their responsibilities will be. And you’ll need to know what all of that will cost.
That goes into the final basic element of your business plan: finances. Include a lot of financial data, anything you think is relevant and more. Analyze the finances of your competitors, project the finances of the business of your dreams, include your personal finances and any partners for your business, and so forth. Your main audience is likely going to be the people who will be procuring or providing the starting financing for your business, so you want them to know that you’re taking their time and money seriously.
Show them they won’t be throwing away their money because you are passionate about, and highly involved in, your dream business!