As an entrepreneur, writing a business plan may not seem like the most thrilling part of the work lying ahead to launch your startup. And hearing repeatedly that you have to do it doesn’t really help.
Yes, it’s a chore if you’re not much into writing (check out our business writing advice), especially considering that business plans for smaller enterprises average 5 to 10 pages. Just like the worst school papers.
But you need a business plan if you’re looking for investments or financial assistance. Bankers, silent partners, angel investors, venture capitalists, organizations awarding grants, or your stick-in-the-mud wealthy uncle all want proof you’ve thought things through, done your homework, and have a chance of surviving, turning a profit, and growing.
Even if you aren’t seeking funding for your startup, creating a full business plan greatly increases your chances for success. It forces you to figure out if, why, and how your idea is viable. An idea is just the seed; it takes specific information, detailed steps, and defined processes to make it germinate.
We’ll assume you have a workable idea. Include the following sections in your business plan and you’ll be on good footing to see it through, and to convince others that investing in you is a smart move.
Of course, every brand is unique, and so is every business plan. If certain sections warrant more or less information, combine or divide them logically. The following are standard sections; all the information they represent should be included, but it doesn’t have to be in this exact format.
This kicks off your business plan and must quickly sell you and your idea. It’s the whole thing in a nutshell. If it’s not compelling, people don’t read any further. Concisely convey why you’re the right person to do this, what your business will be, what its unique selling proposition and competitive advantage are, what it will accomplish, and how it will accomplish it. If you want funding, include the bottom line here, too. Although this is your opener, it’s usually easier to write it after all the other sections, condensing the essence of it all.
Company and Industry Description
Outline the basic details of your business. What does it sell, who does it sell to, how is it being formed, what is its legal status, who are the key stakeholders, and so on. Also, talk about what’s happening in your industry (trends, challenges, breakthroughs, etc.) and why and how your brand fits in.
Description of Products or Services
Explain what your business sells. While the features of your products or services are important, selling your concept is much like marketing it after launch—people are swayed by benefits. What do you offer that your competitors don’t and how does it improve life for your target market? Also, address major development, supply, production, distribution, and other logistics, plus any trademarks, copyrights, or other intellectual property issues.
Define your target market, including details about their demographics and buyer persona. Demonstrate that there is a group of people with a particular need or problem that you solve in a unique way that makes you appealing. And show that there are enough of them to keep you in business and offer growth potential. Discuss channels for reaching these consumers, as well as the challenges and how you can overcome them.
Presumably, other brands already sell what you’ll sell and have claimed some of the market share. Identify the other players, how big their market shares are, how they’re doing, their strengths and weaknesses, and how you fit in and stand out among them. How will you win market share? What entry barriers will you face and how will you get around them?
You of course need specific, actionable strategies for reaching your consumers. Talk about the ways you plan to market your brand, including outbound and inbound marketing tactics. Also outline your marketing budget and staff. The big mistake entrepreneurs make here is being too vague, simply saying things like “using social media” or “placing magazine ads.” The key here is well-developed, highly specific plans reflecting deep market research.
Use this section to give insights into your business operations. Identify your company’s leadership structure and personnel and state their qualifications. Also touch on your departments and their management, and how you’ll delegate responsibilities. Cover your major processes and other important aspects of how day-to-day operations will run.
Discuss current finances and funding needs, as well as your sustainability and profitability. Disclose your financial situation and what funding you’re seeking, plus how it will be spent. Draw up a financial profile for your brand that lays out its operational costs, budgets, and projected quarterly earnings over the next two to three years, then a few yearly projections beyond that.