A business plan is more than a document. It’s a guide that helps you outline and achieve your goals. It’s also a management tool that allows you to analyze results, make strategic decisions, and showcase how your business will operate, and grow. In short, if you’re thinking of starting a business or plan to pitch your business to investors, writing a business plan can improve your chances of success.
Writing a business plan doesn’t have to be complicated. In this comprehensive guide, I’ll show you how to quickly and easily write a business plan that will get the results you want. Don’t worry, you don’t have to have a business or accounting degree to put together a great business plan. This guide will show you how to get your plan done step-by-step without any of the complexity or frustration. You can download our free business plan template to start writing your own business plan as you work through this guide. And if you want a visual version of this guide to reference when writing your plan, download our free business planning ebook.
Why write a business plan?
Are you still unsure whether a business plan is worth the time and investment? Can’t you just jump right into starting and running your business? You could, but you’ll be missing out on some key benefits that a business plan provides. Having a business plan will help you in the following ways.
Grow your business faster
Writing a business plan is about establishing a foundation for your business. You’re not predicting the future, you’re working through the core strategy of your business that will help you grow. This initial document isn’t meant to be perfect but is designed to be reviewed and adjusted to help you identify and reach your goals.
Without a business plan as a baseline, it will be far more difficult to track your progress, make adjustments, and have historical information readily available to reference when making difficult decisions. Creating a business plan ensures that you have a roadmap that doesn’t just outline where you plan to go, but where you’ve already been.
Pitch and get funding
Investors and loan providers need to know that you have a solid understanding of the trajectory of your business. You need to prove that there is an attainable and sustainable need for your solution, that you have a strong business strategy, and that your business can be financially stable. This means having the right financial statements, forecasts, and a digestible explanation of your business model available for potential investors. Writing your business plan helps you put all of those pieces together and create connections between them to tell a cohesive story about your business.
Make confident strategic decisions
Often the biggest decisions you’ll make for your business are amidst volatile periods of growth, decline, or even external crises. This requires you to make highly consequential decisions far more quickly than you may like. Without up-to-date planning and forecast information, these decisions may be less certain or strategic than they need to be.
By having a written business plan that you’re regularly reviewing, you can make confident decisions. You’ll have all the information necessary to know when you can hire new employees, launch a new product line or make a major purchase. At the same time, you can also plan ahead in case a decision doesn’t work out as expected, minimizing your potential risk.
5 tips to write a great business plan quickly and easily
Before you get started with your business plan, let’s talk about some “rules” that will make the whole business planning process easier. The goal is to get your business plan done so you can focus on building your business.
1. Keep it short
Business plans should be short and concise. The reasoning for that is twofold:
First, you want your business plan to be read. No one is going to read a 100-page or even 40-page business plan. Sure, you may need supporting documentation for specific sections but you can include those elements in your Appendix.
Second, your business plan should be a tool you use to run and grow your business. Something you continue to use and refine over time. An excessively long business plan is a huge hassle to revise—you’re almost guaranteed that your plan will be relegated to a desk drawer, never to be seen again.
2. Know your audience
Write your plan using language that your audience will understand.
For example, if your company is developing a complex scientific process, but your prospective investors aren’t scientists, avoid jargon, or acronyms that won’t be familiar.
Instead of this
“Our patent-pending technology is a one-connection add-on to existing bCPAP setups. When attached to a bCPAP setup, our product provides non-invasive dual pressure ventilation.”
Write this:
“Our patent-pending product is a no power, easy-to-use device that replaces traditional ventilator machines used in hospitals at 1/100th the cost.”
Accommodate your investors, and keep explanations of your product simple and direct, using terms that everyone can understand. You can always use the appendix of your plan to provide the full specs if needed.
3. Test your business idea
Working through your business plan, and starting with a one-page pitch, can help you test the viability of your business idea long before launching. As you work through everything from your branding and mission statement, to your opportunity and execution, the best thing you can do is get feedback and test different elements of your business. This can be as simple as having a mentor or partner review elements of your plan, or conducting market research and speaking directly to your potential customer base.
4. Establish goals and objectives
You should know what you want to get out of your business upfront. Are you wanting to turn a side hustle into a full-time business? Trying to expand your team or launch an additional location? Knowing what you’re trying to accomplish, and having questions like these in mind, can help you develop your business plan specifically to reach these goals. Now, you may not have every milestone or even specific steps in mind to reach your goals before starting. But that’s the beauty of working through your business plan. It will help you define metrics of success, flesh out your goals and further develop elements of your business to meet specific objectives. You just need a vision or even aspirational goals to start with to better hone in on what’s important.
5. Don’t be intimidated
Did you know that the vast majority of business owners and entrepreneurs aren’t business experts? They don’t have MBAs or accounting degrees. They’re learning as they go and finding tools and resources to help them. Writing a business plan may seem like a big hurdle, but it doesn’t have to be. You know your business—you’re the expert on it. For that reason alone, writing a business plan and then leveraging your plan for growth won’t be nearly as challenging as you think. And you don’t have to start with the full, detailed business plan that I’m going to describe here. In fact, it can be much easier to start with a simple, one-page business plan—what we call a Lean Plan—and then come back and build a slightly longer, more detailed business plan later.
Key components of a business plan
Whether you’re building a business plan to raise money and grow your business or just need to figure out if your idea will work, every business plan needs to cover 6 essential sections. Here’s a quick overview of each section and to skip to a more detailed overview, click the links below.
1. Executive summary
The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages. Most people write it last, though. Jump to this section.
2. Opportunity
The opportunity section answers these questions: What are you actually selling and how are you solving a problem (or “need”) for your market? Who is your target market and competition? Jump to this section.
3. Execution
In the execution chapter of your business plan, you’ll answer the question: how are you going to take your opportunity and turn it into a business? This section will cover your marketing and sales plan, operations, and your milestones and metrics for success. Jump to this section.
4. Company and management summary
Investors look for great teams in addition to great ideas. Use the company and management chapter to describe your current team and who you need to hire. You will also provide a quick overview of your legal structure, location, and history if you’re already up and running. Jump to this section.
5. Financial plan
Your business plan isn’t complete without a financial forecast. We’ll tell you what to include in your financial plan, but you’ll definitely want to start with a sales forecast, cash flow statement, income statement (also called profit and loss), and your balance sheet. Jump to this section.
6. Appendix
If you need more space for product images or additional information, use the appendix for those details. Jump to this section.
Executive summary
The executive summary of your business plan introduces your company, explains what you do, and lays out what you’re looking for from your readers. Structurally, it is the first chapter of your business plan. And while it’s the first thing that people will read, I generally advise that you write it last. Why? Because once you know the details of your business inside and out, you will be better prepared to write your executive summary. After all, this section is a summary of everything else you’re going to write about. Ideally, the executive summary can act as a stand-alone document that covers the highlights of your detailed plan. In fact, it’s very common for investors to ask for only the executive summary when they are evaluating your business. If they like what they see in the executive summary, they’ll often follow up with a request for a complete plan, a pitch presentation, and more in-depth financials. Because your executive summary is such a critical component of your business plan, you’ll want to make sure that it’s as clear and concise as possible. Cover the key highlights of your business, but don’t into too much detail. Ideally, your executive summary will be one to two pages at most, designed to be a quick read that sparks interest and makes your investors feel eager to hear more.
Business overview
At the top of the page, right under your business name, include a one-sentence overview of your business that sums up the essence of what you are doing. This can be a tagline but is often more effective if the sentence describes what your company actually does. This is also known as your value proposition.
Problem
In one or two sentences, summarize the problem you are solving in the market. Every business is solving a problem for its customers and filling a need in the market.
Solution
This is your product or service. How are you addressing the problem you have identified in the market?
Target market
Who is your target market, or your ideal customer? How many of them are there? It’s important here to be specific. If you’re a shoe company, you aren’t targeting “everyone” just because everyone has feet. You’re most likely targeting a specific market segment such as “style-conscious men” or “runners.” This will make it much easier for you to target your marketing and sales efforts and attract the kinds of customers that are most likely to buy from you.
Competition
How is your target market solving their problem today? Are there alternatives or substitutes in the market? Every business has some form of competition and it’s critical to provide an overview in your executive summary.
Company overview and team
Provide a brief overview of your team and a short explanation of why you and your team are the right people to take your idea to market. Investors put an enormous amount of weight on the team—even more than on the idea—because even a great idea needs great execution in order to become a reality.
Financial summary
Highlight the key aspects of your financial plan, ideally with a chart that shows your planned sales, expenses, and profitability. If your business model (i.e., how you make money) needs additional explanation, this is where you would do it.
Funding requirements
If you are writing a business plan to get a bank loan or because you’re asking angel investors or venture capitalists for funding, you must include the details of what you need in the executive summary. Don’t bother to include terms of a potential investment, as that will always be negotiated later. Instead, just include a short statement indicating how much money you need to raise.
Milestones and traction
The last key element of an executive summary that investors will want to see is the progress that you’ve made so far and future milestones that you intend to hit. If you can show that your potential customers are already interested in—or perhaps already buying—your product or service, this is great to highlight. You can skip the executive summary (or greatly reduce it in scope) if you are writing an internal business plan that’s purely a strategic guide for your company. In that case, you can dispense with details about the management team, funding requirements, and traction, and instead treat the executive summary as an overview of the strategic direction of the company, to ensure that all team members are on the same page.
Courtesy: best business advisory services in UAE
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