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Creating A Business Plan

Updated: Jan 10, 2020

So you have your core idea for your business, but you’re unsure where to start. Maybe you've been at it for a few years, and need some organization for loans or investors. Or maybe you’ve hatched a great product or service, but your new potential business partner wants to see your plan. Whatever the case may be, if you have a business you should have a Structured Business Plan. Not only will a strong plan set you apart with investors or loan banks, but it will also give you many invaluable insights for your business or proposed idea.

Many ideas seem great at first, but when you take the time to write out the business plan from start to finish, you may start to realize it is unsustainable. With hours of research, studies, & market analysis, you can get a clearer picture of your business’s success rate. Your first business plan should be a rough draft of your business. This allows you to see shortcomings in your profit margins, shipping or manufacturing costs, so you can now plan accordingly before you go belly up for a number of reasons. 

“Failing to plan, is planning to fail.”

It may seem daunting at first but its nothing you haven’t already thought of, so its just time to put it all on paper, or a laptop.

To start off, there are two main types of business plans to choose from:

Traditional - Much more comprehensive, filled with carefully worded descriptions of your business, market, marketing style. Along with in-depth financial history, and/or projections, plus an appendix with things from your team's resumes to your building's lease. 

Startup/Lean - This is a more contemporary view of the business model, a much more efficient way of seeing your business on paper. Instead of taking days or weeks to compile your traditional plan, this plan can be completed during your lunch break but should also be updated every month or so. Of course, if you are just in your startup phase of deciding what your business is all about the lean or startup plan, is the way to go. This will give yourself, and your partners an idea of where you’re headed.

The four basic principals to keep in mind for a Lean Startup Plan are...

Strategy: Summary with bullets only of your purpose as a business. What is the problem for customers, what target demographic needs the problem solved, and what solution are you offering to the problem?

Tactics: Products, Promotion, Target Market, Sales Strategy. Once you have the strategy, what actions do you need to execute in order to get this off the ground? This section is very helpful to delegate tasks for your team, so you have realistic goals set in place.

Milestones: Metrics, Tasks, Schedule. This is the section where you map out your path to success, you have the research of your market, the people and goals lined up, now you can create a schedule to adhere to so you can achieve your milestones!

Forecast: Sales, Spending, Cash Flow. You can never predict the future, however, you need to set realistic expectations for your business. Remember the laws of supply and demand when you are making your estimates. If you have a startup loan to work with, how long will it last you with your current budget, and how long until you get it back?

This Lean Startup Plan is truly for people already inside your company, a way to plan your path and chart your progress. Since it is such a quick plan, it should become outdated rather quickly. Management should keep your lean plan alive, revising it every month or at least every fiscal quarter. Again, this type of plan is to put your business on a structured path, a set of goals, tasks, and realistic expectations of where this path will lead you. So don’t be discouraged if you can’t live up to your first draft. You will learn more and more about what your team can accomplish, and what you need to change in order to be successful in your venture each time you revise your plan.

When in doubt plan it out, execute and check results. Adjust accordingly and plan again

Now if everything goes according to plan within a year to three you may have the need for a more formal plan to attract the approval of an investor or your bank. You can use your lean plan as a great first draft or outline for your Traditional Business Plan. Where your typical lean plan may only consist of a page or two at most, a Traditional Business Plan can be an easy 25 pages to over a hundred for more established businesses. That being said, you shouldn’t shoot to just fill out a book for investors to thumb through, you need to do a lot of in-depth research and be able to show it in a concise way here.

There are many ways to structure your business plan, short or long, however, the core attributes stay the same:

Executive Summary: Why are you needed? This is the first page the investor will read but the last you should write. It's simply a teaser page to get the investor to look through the rest of your plan.

Description: What's your plan? This is where you dive deep into what your business is and why you think you can make it thrive. What advantages for the customer are you bringing to the market?  Market Analysis: How will you merge into the industry? This is your in-depth research into your industry. You will describe the industry itself, what your target demographic is, and how you plan to compete with existing companies.  Organization & Management: How will you accomplish this? This is where you can boast about your strengths. Do you have an expert team behind working with you? Or maybe you have an exclusive supplier that gives you an edge on the market. This is also the place to take the time and show how you will run day in and day out. Focus heavily on your logistics here. Marketing & Sales Strategy: How will you get to your customers? Marketing is much more than just advertising. How will you talk and sell to customers, how will those sales help your business grow? From community involvement, distribution, and public relations, how will you keep your business afloat? Products or Services: What makes your products special? This is the time to showcase your products, the advantages it has against its competition, and talk about your suppliers and any advantages you may have because of them. You will list out your price structure, and why you chose your prices. Funding Requests and Financials: How will you return funding? This is one of the most important sections to an investor or bank so be sure to have it revised by an accountant. It goes over your business's financial history and the forecasts for the future. Also, if you are searching for funding you need a section listing what you need and why you need it, prior to your financials section. Appendix: How can you back your claims? This is an optional section, however if you have any graphs, contracts, press coverage or anything else that can highlight your business, you should keep it here for reference. These attributes can be listed, combined, and broken down a number of ways, but you need to find what works best for your personal venture. There are many many free templates out there for you to browse around and start with. Look here to start browsing:

You basically want to get across a few key things to investors: Is there a big problem or a big opportunity for a product? Who and how many have this problem? Why they want it solved, how they deal with it now, and why they should turn to you. Do you have a team that understands the market, problem, and product? Why and how will you win this market? Do you have a sensible business model? How do you plan to keep customers?

This list above is a great framework for your Executive Summary, which leads us to the breakdown of our business plan:

Executive Summary: Again we must reemphasize the importance of completing this topic last when you build your plan. It is the summary of your entire business plan, so of course, you can not summarize something you have not made fully yet. The framework above really is the best framework to start out your summary, but you need to be very concise with your word choice. You need to inspire the investor to flip through to the next pages in your binder, but you need to have enough factual basis to come off as strong and professional. You do not want to write a sales pitch about your business, rather take the strongest points of all your business plan and list them here in a structured order. Another good framework to get started is, to begin with, your company and its products. Move on to your mission statement, then into your management structure and target market. Show your strategy to compete in the market, and forecast the future of your business, or of the industry, it is in. If you have good relationships with investors already be sure to speak on that as well. You want to refrain from going too in-depth into unnecessary points, you will have plenty of space to wow your investor in the next section. Remember, you want to inspire the investor to invest her time first and foremost to look through the rest of your plan, which will then inspire her/him to invest in your company.

*Tips on writing an inspiring mission statement*

Description: This in many ways is a more in-depth summary of your business plan. You want to start off with your mission statement if you did not already put it in the above Executive Summary, and a brief overview of what started your business. If you had a realization of what your competitors lacked or a relationship that you can capitalize on, be sure to go into detail about what inspired you to begin. Especially if you have certain suppliers or partners that make it possible for you to pursue this market. What type of niche are you bringing to the table? What sets you aside from the others already established in your field? You have to go into your legal structure of course (*Best Legal Structure For my Business