Every small business needs a plan for success. Simply stated, a business plan is your strategy for bringing your product or service to the marketplace. I am so fed up with people starting businesses without a road map for reaching their business destination. That said, I am going to walk you step by step through writing one. No more excuses! This is the first of a three part series on how to write a business plan.
Your business plan outlines what you see as an opportunity, why it would be a successful enterprise, how you plan to market it (who’s buying and why), and how much money will your business make (for you and potential investors).
It does not have to be complex; it can be as minimal as 10 pages or as long as 40 pages or so. The length of the plan is not the issue, it’s the quality of the strategy outlined in the plan that really counts. Whether you start a small lawn care service or a major manufacturing firm with 100 employees, your plan needs to be well-researched and have reasonable financial projections. All businesses need is the same thing— a business plan that the owner can follow to accomplish his or her long-term business goals.
Here’s my video on how to write a business plan.
Writing a business plan is a good exercise. It will force you to describe the elements of your business foundation. It will also help you answer key questions including:
- What business are you in?
- Why are you in it?
- Who is your target customer?
- What problem will you solve for your customer?
- What is the growth potential in your market?
- What skilled labor will you need to meet your company needs?
- How will you generate start-up capital?
It will help you think through how you will actually run your business. There is a basic format that will help you create a logical plan that will cover the essential elements you need to include. They are the following:
- Cover Page
- Executive Summary
- Business Description
- Market Analysis
- Marketing Plan
- Operations Plan
- The Management Team
- Intellectual Property Strategy
- Revenue Models/Cash Flow Projections
Cover Page
This is the first page of the business plan. It should include the date, name of the business, the names of all business owners, and contact information for the key contact person. The cover page should also be marked and treated as confidential to limit its exposure to potential competitors.
Executive Summary
This should be written last, after the document is complete. The executive summary gives an overview of the important aspects of your business. It provides a brief description of the product or service; that generates interest in your business idea. It clarifies the size of the market opportunity, communicates your marketing strategy and your unique selling position in the marketplace. It summarizes how much money you will need to start or to grow; and estimates your year-over-year expected profitability. It should include a paragraph or two on each section of the business plan. It should not be more than two pages. Here’s a recent post on how to write an executive summary,
The Business Description
This is the explanation of your business idea. It should be brief, well-thought-out, and easy to understand. Make sure not to include any proprietary information about your business. For example, you would never learn the recipe for Kentucky Fried Chicken in the restaurant chain’s business plan.
Here’s an exercise – Describe your business. Make sure your description is complete and concise. It should be one page or less
Your business description needs to answer the following questions:
- What is your product or core business service?
- What is your unique value proposition?
- How will your product or service meet the needs of your customers?
Here’s a link to purchase Business Plan Pro software, which is the best option on the market.
Get going on your homework, and start your business off right this year with a business plan. Stay tuned for part 2 of How To Write A Business Plan, coming next week.
Melinda F. Emerson, known to many as SmallBizLady is one of America’s leading small business experts. As a seasoned entrepreneur, professional speaker, and small business coach, she develops audio, video and written content to fulfill her mission to end small business failure. As CEO of MFE Consulting LLC, Melinda educates entrepreneurs and Fortune 500 companies on subjects including small business start-up, business development and social media marketing. She has been featured in the New York Times, Washington Post, Entrepreneur, Wall Street Journal and Black Enterprise Magazine. She hosts #SmallBizChat weekly on Twitter for emerging entrepreneurs and publishes a resource blog www.succeedasyourownboss.com Melinda is also the author of the national bestseller Become Your Own Boss in 12 months; A Month-by-Month Guide to a Business That Works. (Adams Media 2010)
Creating a business plan can be overwhelming but it’s crucial to building a foundation for a new business. The way you’ve broken down the steps makes them more manageable and show the value of planning ahead.
In the last 5-10 years there has been a significant move away from writing business plans. Instead angel investors, like myself, prefer to see a collection of what we call the core six documents, starting with a 5 year P&L. When handed a business plan we just read the first page (summary) and then flip to the financials, which tell us much more about the business and the team, than the “fluff” in the middle of the plan.
If you are starting a business, I would suggest you put aside the business plan and build the critical documents necessary to get up and running plus be far better prepared for investment. More on this can be found at www.thefundableentrepreneur.com. Specifically this post explains more: http://thefundableentrepreneur.com/forget-business-plans-build-the-six/
All the best of luck!