A business plan is essential to your company's success. After all,
seven out of ten businesses fail within five years. We know, you're starting a new business or moving to expand and you got to stay focused on the positive -- the last thing you want to talk about is failure. But, for 70 percent of businesses, failure is the reality, and a major cause of said sad failure is a lack of planning. Whether it's insufficient market research, financial planning, management, lack of social media or webpage, or something else, these mistakes all boil down to a lack of planning that can be traced back to the roots of your company: the business plan.
A business plan is, of course, integral in selling your company to potential investors and bankers. But, just as important, the process of writing a business plan involves you and your partners taking a real look at what you want the future of your company to look like and how you're going to make it happen. Although business plans are like snowflakes, this write a better business plan guide is to give you some things to consider, no matter the size of the company. Follow our steps and use our free business plan template or our other sector-specific business plan templates as sort of a checklist when talking about and creating your own plan.
Before putting pen to paper (or fingers to keys)
Before you begin, it's necessary to brainstorm, making sure your team is prepared to answer these questions:
- Why are we starting/ ready to expand this business?
- What makes our company different? How can we differentiate ourselves?
- What solution are we providing? How do we provide it?
- Who are we? Be ready to introduce your management team, any key players and advisors.
- Who are your customers? Target business?
- How are we going to fund our business? How much money do you need to start?
- What needs to happen to break even?
- How are you able to make a profit? In one year? In five years?
There are dozens of other questions, sector-specific or otherwise, you should be asking, but
these eight are the questions that your business plan must address in a clear, concise, strategic and realistic way. (Yes, being an entrepreneur is about dreaming, but nobody but you and your mom care about your dreams -- investors want to know what you can do for them and they want you to offer some sort of guarantee.)
Piece by piece
A business plan can get to be rather long -- just make sure it's not too long! You want to make sure you include every important bit, so organization is crucial. With that in mind, we are going to break down the pieces of a business plan. There is no hard-fast rule for private business plans, however remember to follow whatever example a bank or loan agency gives you down to the letter. For a regular plan, however, as long as you address all the key points, there can be room for some creativity; we are just sharing with you the most common headlines and sections found in well-received plans.
This is where you (succinctly) introduce your vision. Try to make sure your exec sum answers these questions:
- What sector are you in?
- What products/services do you provide?
- Who is your target audience?
- What does the future of your industry look like?
- How is your company scaleable?
- What are the next steps?
- Who are the owners of your company? Backgrounds? Experience in sector/business?
- What motivated you to start your company? Why now?
Use our genius,
free executive summary template to delve deeper into how to craft a great one.
Yes, this part is important to you and your team. However, this isn't
quite as important to your audience as you think it is. Follow the KISS rule: Keep It Simple, Stupid. Your mission statement should include your
goal and the
objectives that will lead you toward it; your
industry, how you see it evolving in the short and long term, and who your
customers are. Your mission statement also says
who you are, and talks about the strengths of you and your team. This is where you, in part (and in brief,) sell the features and benefits of your company.
Products and/or Services
This is, of course, what you do and what you plan to sell it for. This is also where you sell the benefits of the features of what you have to offer. Previously, we told you about
how to create an online business plan. One of the many wows of an online plan is that you don't have to just describe what you're selling on boring black-and-white printer paper -- you can show it! You can use videos, photos, links and other interactive tools to engage the reader or perspective investor and to show them the viability (and attractiveness) of your products/service, not just tell them.
This being a business plan and all, it's important to list the cost of the products/services you are providing:
- How much does it cost to produce? versus How much will you sell each piece for?
- Is there packaging?
- How will the client purchase the product?
- What system will you use to bill them?
- Are there extra costs in getting it to the customer? How will it be transported?
The products/services section should also differentiate your new business:
- What makes your business different?
- What gives your product or service an edge in the marketplace?
- What distinguishes it from competitors?
If you are selling a product, sell the general idea of it and its benefits in this section, but don't get too technical. Leave any sort of diagrams or complex designs for the addendum, while inserting the phrase: "For more detail, visit the addendum Page #."
OK, by now you should have proven what you want to do and how will make it happen. Now they want to know how you're going to get the word out. This is where you prove you know what you're talking about and that you and your team are ready to provide a service to a proven audience. Your marketing plan should be the result of a blend of first- and (reputable) second-hand research into your marketplace. Break down your marketing plan into sections, grouping by market topic. We suggest these seven:
- Your Customers: Are you B2B or B2C? Who are your customers? How do you plan on reaching them? Where will you sell your product/service? How will you garner feedback from them? How will they know you care?
- Your Competition: Who are your direct/indirect competitors? What's your advantage? Don't be shy here -- tell them you are better and why.
- Your Niche: Or market or sector. For our sister site Quote Roller, clearly our niche is sales professionals in SMBs. For PandaDoc, we don't really have a niche -- it's really anyone who interacts with documents. Again, what separates you from your competitors -- how will you make yourself room in the niche?
- Your Distribution: Of course, this is a marketing plan, so they'll want to know your tricks for promoting** within said niche. How are you selling it -- directly to clients, to a vendor, online, at a store, an office, freelance, etc.
- Your Advertising: Are you advertising already? Where? When you have more funding, where do you plan to advertise? How will you use advertising to retain customers? Get new ones? Make sure you outline your marketing budget either here or within the financial plan. How much will be spent on print, TV/radio, Internet, direct mail, external ads, etc.
- Your Sales Strategy: Depending on the sector, this could be one of the most important parts of your entire business plan -- how are you going to sell your product/service? Online? A sales team? Telesales? How will you incentivize sales? Will you offer a free sample? Host a free workshop?
- Your Face: You've described how you will market what to whom on where. Now it's time to describe the image you're going to project. This can include your slogan, images, logos, website, social media, etc. Again, building an online business plan can make this part much more memorable.
**Without a doubt, nowadays, your marketing plan had better
include social networks. These are free ways to advertise, so why
wouldn't you use them? And now some stats to explain the added value of Facebook and its many friends:
- Companies that use Twitter have twice as many leads as those that don't.
- Fifty-five percent of all people check out social media before making a purchase.
- Companies with an active blog have 67-percent more leads.
A marketing plan that neglects the obvious, inexpensive benefits of social media has a very visible hole.
This part takes the reader through the day-to-day of your company, explaining the:
- Location/Logistics of your business
- Transportation (if you're selling a product)
- Legal -- Do you need a permit? License? To join a union or other professional organization?
- Inventory -- if you're selling a product, where will you need to store it?
- Providers/Suppliers/Freelancers -- Detailed contact info/pricing of anyone you're outsourcing to
This is a lot of tangible, concrete info, but don't be afraid to add a lyrical (but short) introduction, painting a more visual picture of how your company will work, walking them (briefly) through your day-to-day operations. You can even include a photo or video showing them it.
Writing a business plan isn't just about including all the important information, but it's also about capturing the attention of the reader and convincing him or her that you are a solid team. Show them why you make a good team, and then feel free to add some candid shots of your team happily working together.
This includes a hierarchical chart of your company and how the operations we talked about above flow through it. List the positons and briefly describe the functions of each key member of your business, including but not limited to: board of directors, advisors, technical specialists, accomplished sales people, accountants, and lawyers. Don't be afraid to include smiling head shots of everyone (preferably taken in front of your logo), as a way to introduce the idea of a more complete team and vision. Again, don't be afraid to get creative with this -- it'll show that you took extra time to represent your company as a solid team. We love how our clients
The Honey Agency represents their team as pieces of a busy honeycomb, instead of the more traditional chart. Especially since they're a creative agency, they introduce their team in a fun, memorable way.
Then describe any plans for your staff to expand. Also, reflecting it in your financial plan, discuss any new hires you want to make and why. Your business plan isn't just about where your company is, but where it's headed.
The fiscal piece of your business plan puzzle is the piece investors and loan managers are going to spend the most time looking at. Without proper capitalization and financial planning, even the greatest business idea that fulfills an important need is at a high risk for failing. We offer you afree and open business plan template, which includes an awesome step-by-step, annotated guide and spreadsheet templates for each of the following charts. What must this most-looked-at part of your business plan include?
Cash-flow analysis: This reflects what you plan to sell versus your business expenses. This projects your profit margin.
Profits & Losses analysis: Done in conjunction with the cash-flow, this looks ahead at least a year and includes revenue predictions, including
graphical representations of those numbers.
Break-even analysis: This breaks down how much you have to, well, break even.
Seriously, this is the part they are going to spend the most time looking at, make sure it's thorough and realistic.
As you can probably guess, this is where you talk about the rest, the boring, the things that you probably won't need, but it shows you did your research to include. In addition, this is where you include any technical diagrams. This is also a great place to put references and press about your company, as well as resumes/CVs, adding proof of your awesomeness.
The business plan project manager's job is to organize things in the most persuasive manner. Anything that's not essential and is interrupting the flow of information should be considered being pushed to the addendum.
Now, it's time to perfect it
Read every word of it aloud... twice... to other people. This is how you uncover errors or bits that hinder the flow of your business plan. And remember, length matters. The addendum is there to offer extra info that could be useful, but the business plan should be able to stand alone without it.
Remember, size does matter -- if it's your plan and you're bored reading it aloud, imagine being an interested third party?! Time to cut! Be ruthless!
Before presenting your plan to the people important to your business, present it to the people important to you first. Present it to you team, your family and friends. You know who of your this group will give you candid, constructive criticism -- that's who you want to talk to (and then maybe your sweet grandma who will just make you feel good.) Ask for candid comments, no matter how big or small.
Finally, ask yourselves, with investors staring at a stack or two of business plans, will yours stand out? Don't be afraid to jazz it up, making it memorable with multimedia and full-color examples of your work, and don't be afraid to appear too confident -- as long as you have the goods and numbers to back it up, you're golden.
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